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.

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rzz's picture
Submitted by rzz on Mon, 04/06/2009 - 4:43pm.

until they yank it away. Fight for your own money in your own name. Everything else is transitory and can be taken away and disappear.

Submitted by yaya on Sun, 04/05/2009 - 8:20am.

If you attend the meetings or read the news articles for the facts hidden behind the sensationalism, you will learn that this retirement plan actually saves hundreds of thousands of our tax dollars per year. It is cheaper and more sustainable than the current system. In addition, the plan matches, though at a substantially lower benefit content, other surrounding private and municipal plans. It is true that benefit plans, improperly managed, have harmed companies in high profile stories in recent days. The Citizen uses this hook to entice readers and rouse public comment. However, when looked at from an economic standpoint, this plan is a win-win scenario for taxpayers, employees, and county services.

NUK_1's picture
Submitted by NUK_1 on Mon, 04/06/2009 - 6:12pm.

If defined benefit pension plans could save employers $$$, why have they been almost entirely replaced and rejected by private sector companies and remain for the most part a governmental boondoggle?
About the only sector in the economy that is still gung-ho on defined benefit plans that are open-ended gateways to out of control costs is federal, state and local governments.

If you believe the BS the County is shoveling on how this plan will save money long-term, I have some oceanfront property in Arizona that is also a "great deal." If the Commissioners want to pitch this as purely an employee-retention/recruitment option, that would be one thing. Fudging numbers and pie-in-the-sky projections and dreams are the only way defined benefit pension plans "save money" over conventional choices.

Submitted by bullgod on Sat, 04/04/2009 - 12:40pm.

If the plan saves us taxpayers money, why not support it? Also, if it benefits those who help us in times of need, why not support it? If it keeps good employees with the county, why not support it? I really don't see any negatives about it. All those opposed really should consider all of those things before you just say that it is a bad idea. Here's to hoping that it not only passes, but passes without any problems.

SPQR's picture
Submitted by SPQR on Sat, 04/04/2009 - 7:35am.

What's the driver for putting a totally dysfunctional system like this in place? There is obviously a payoff/reason political or other for it somewhere. Nepotism? Naivety? Short term political expediency? surely its not incompetency.

rock78's picture
Submitted by rock78 on Fri, 04/03/2009 - 10:32pm.


Most private employers are moving away from defined benefit plans. Perhaps the council knew how many votes would support this joke of a bill. BTW, the vesting point is a completely moot one. Gov't jobs have one of the HIGHEST retention %s, but hey, to the average voter a 5 year vesting period should mean something! To conclude, this bill is full of horsesqueeze. I sincerely hope we all can cross party lines and remove the dung that comprises our current county council.

I suggest all of us in the private sector cry wolf.....It's worked out quite well for all fayette county employees. I assume Dark Madam is waiting on her chance to post. As a private sector employee who could get laid off tomorrow, I find the arguement ridiculous. After all, we have groundskeepers with no formal secondary education to worry about people!!!!!!

No worries though, folks. Git, sniffles5, Jeffc, and hack will take care of the additional tax burden for us.

Submitted by NeedtoKnow on Fri, 04/03/2009 - 9:16pm.

I am a county employee, and a Fayette County taxpayer. I am against this plan as both. As an employee, I am being forced to contribute 2%. I currently contribute nothing, and that is *my choice* and should continue to be so. I should have the right to choose to NOT participate in the plan (meaning I would not get anything out of it at retirement, too).

As a taxpayer, I see this as being a Very Bad Thing for the future. As has already been said, many businesses and governments have kicked this to the curb due to the costs. It is ludicrous that the county is going against common sense and starting this, especially now!

Gene61's picture
Submitted by Gene61 on Fri, 04/03/2009 - 5:57pm.

In true screw the tax payer fashion, the soaking of the middle class comes to Fayetteville.... So can we appy for jobs today, I want to get my 5 years in quickly..

So you hope retain emplyees by once again sticking your hands on our pockets.When this plan explodes and it will, how can we the tax payer benefit from this plan? Thought this was a time of chnage in America, so where are my benefits?

SPQR's picture
Submitted by SPQR on Fri, 04/03/2009 - 4:38pm.

to all the Fayette taxpayers subsidizing a retirement package that has been long gone from the private sector. Many of you will be paying for benefits you have personally lost. What is the rational that makes this necessary for only government employees?

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