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County to adopt controversial retirement plan?Fri, 04/03/2009 - 3:33pm
By: John Munford
The Fayette County Commission is expected to vote next week to implement a defined benefit pension plan that would provide employees with up to 45 percent of their salary paid monthly upon retirement. Although the news has been littered with local governments and private companies whose defined benefit plans have become extremely costly and even gone under, county officials contend this plan will save the taxpayers money. A defined benefit pension pays out a certain amount per month to retired employees until their death, unlike other retirement accounts which are restricted to the amount of money in the account upon retirement. The county is expected to vote on adopting the defined benefit pension plan at its meeting Thursday, April 9 at 7 p.m. Commission Chairman Jack Smith previously has said the plan reduces the county’s total commitment for retirement by more than $500,000 because the county will be paying 6.3 percent of payroll towards retirement instead of eight percent. There is also language in the plan that if the county’s defined benefits contributions eclipse four percent of payroll, a corresponding reduction will be made in the contributions toward employees’ 401 and 457 retirement accounts, Smith has said. County employees will be contributing toward the plan along with the county. Employees will not get credit in the plan for previous years of service. That clock would start ticking upon adoption of the plan, which is up for a vote at Thursday night’s county commission meeting. Public Safety Director Allen McCullough, who served on an employee committee that studied the issue, told the commission Wednesday that Fayette’s plan is not as aggressive as other defined benefits plans offered by other local governments. But the hope is by offering defined benefits the county will be able to retain employees particularly in areas such as public safety, which have recently had relatively high turnover rates, McCullough said. The committee is recommending that Fayette offer its defined benefit pension through Governmental Employees Benefits Corporation, a subsidiary of the Association County Commissioners of Georgia. Reasons for going with GEBC include lower asset management fees, and the corporation will handle all actuarial, administrative, fiduciary and legal services so the burden will not be placed on county employees, McCullough noted. Under Fayette’s proposal, an employee will receive a monthly pension equal to 1.5 percent of their monthly salary multiplied by the number of years worked for the county with a maximum total of 45 percent. There is also no cost of living provision in the pension plan. According to county officials, other details of the defined benefits plan include: • Full vesting after five full years of employment with the county ... if the employee doesn’t make it five years they forfeit the rights to any retirement benefit; and retirement eligibility is reached at 65 years old; • The monthly retirement benefit is equal to 1.5 percent of their salary for each year of county service with a maximum of 30 years; • The maximum retirement benefit is 45 percent of an employee’s pre-retirement salary; • The county will only be contributing 3.8 percent of salaries to the defined benefits plan as opposed to 4 percent under the current retirement plan structure; • If for some reason the county’s contribution to the defined benefits plan increases, the county will reduce by that amount the contributions to the defined contribution plan that will remain; and • The funds are required to be audited annually. The county will also continue to offer its traditional 401 and 457 retirement programs as well. login to post comments
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