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Fayette approves pension planThu, 04/09/2009 - 7:22pm
By: The Citizen
Fayette County employees will now have a guaranteed retirement pension so long as they can make at least five years service with the county. The defined benefit pension plan was approved tonight by the Fayette County Commission on a 3-1-1 vote to select GEBCorp as the plan administrator. Voting for the plan were commissioners Jack Smith, Robert Horgan and Lee Hearn. Voting no was Herb Frady and abstaining was Eric Maxwell, who said he supported the pension plan but didn’t approve of the vendor that was selected. The approval came after several residents urged the commission to vote the plan down over concerns the plan will ultimately be more costly further down the road. Under the plan, employees will not be credited with any prior years of service. The plan calls for monthly payments equal to a percentage of that employee’s salary multiplied by their years of service and 1.5 percent. The maximum monthly payment will be 45 percent of their salary. Employees are required to pay 2.5 percent of their salary into the plan along with the county’s 3.8 percent, a move cited for saving the county roughly $500,000 a year. The plan was designed so that if the county’s contribution exceeds 4 percent of all salary for a given year, the county will shrink the amount of funds it contributes to employees’ individual retirement plans to cover the difference. Financial planner Pat Hinchey challenged that idea, saying that attorneys would take action for employees to insure the county pays the additional costs instead of employees. “The bottom line is this is going to come back on me and come back on my kids,” Hinchey said. Angela Hinton Fonda said in light of the “economic tsunami” the figures used in studying the pension plan’s impacts on the county. “The payout is the problem, it's not the pay-in,” she said, adding that she preferred to raise employee salaries instead of adopting the pension program. Commission Chairman Smith said the county has endeavored to put “as many safeguards in the plan” as possible, but he acknowledged there is inherent risk. Smith said a future county commission could vote to end the defined benefit pension plan if it so chose. But Frady said he was more concerned with future commissioners improving the benefit to employees to a point that would encumber the county. Smith added that the county’s plan will be fully-funded unlike the other types of defined benefit plans for private companies and governments that have gone under. Maxwell said he feels there enough safeguards in place to protect the county. “This decision will not put the county at a risk now or in the future year and saves the county money,” Maxwell said. Fayette’s defined benefit pension plan does not include any cost of living adjustments, officials said. The funds will be managed by an arm of the Association County Commissioners of Georgia that handles a statewide pension program, called GEBCorp. Public Safety Director Allen McCullough, who served on an employee committee that studied the issue, told the commission last week that Fayette’s plan is not as aggressive as other defined benefits plans offered by other local governments. While the county is going to be funding 3.8 percent of employee salaries, other municipalities have averaged 12 percent with some as high as 16 percent, McCullough said. McCullough told the commission tonight that current long-serving employees are not likely to benefit much if at all from the defined benefit pension program. But he thinks it is essential to improving employee retention, particularly in public safety. “When the economy turns around we are going to have another revolving door syndrome particularly in public safety,” McCullough said. “... We are better when we have people that are consistently here.” login to post comments
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