Pension boards meet with mayor to weigh options
PARKERSBURG — Unless something is done to control costs relating to the city pension plan, the city will continue to lose money over time which could have a greater impact on services and personnel.
The pension boards with the Parkersburg Police Department and the Parkersburg Fire Departments met with Mayor Tom Joyce Thursday to discuss the plan under consideration to close the pension plans to new members and what that means to people on those plans.
Under a plan opted into in 1991, Parkersburg is required by state law to pay 107 percent of the previous fiscal year’s pension payment to each fund. For now, that doesn’t cover all the benefits being paid from the police fund and exceeds the firefighters’ fund by about $600,000.
New hires would become part of the state Municipal Police Officers and Firefighters’ Retirement System, under the West Virginia Consolidated Public Retirement Board. The city and the new police and fire employees would each pay 8.5 percent of the employee’s salary into the fund.
The boards approved motions to send a letter to their current members, retirees and survivors to explain why the city is considering this action and how it will impact them.
”The reason for this measure is to ensure each board’s long-term ability to provide promised benefits to current retirees, survivors and current active employees upon retirement as well as provide stability to the City’s operating budget on an on-going basis,” the letter said. ”Current retirees and survivors as well as active employees upon their retirement will experience no changes in benefits as a result of closing the plans.”
State law requires the city to continue to fund the closed plans for people who are currently on them. New hires will not become members of the plans and will instead become members of the statewide Municipal Policemen’s and Firemen’s Retirement System administered through the West Virginia Consolidated Public Retirement Board.
Members of both boards wanted the chance to go over the plan with their people and get a consensus for how they feel about it before going on the record and officially endorsing the plan.
Joyce did not have a problem with that, but said there is a time limit with city council having to take action on it by November. Both pension boards have meetings in the coming weeks and Joyce said he was supportive of giving the participants in these plans the chance to respond to them.
”I believe closing these plans is necessary and appropriate,” the mayor said. ”I understand there is a lot of concern. No one’s benefits are going to be cut because of this.”
The mayor said people on the current plan need to understand the city will continue to fund it as they have been. The change comes with new hires who will be put on a different pension plan done at the state.
Joyce said the current system has been underfunded since the early 1990s and cannot continue to add new people and remain viable as is.
”Everytime we add new people, the liability continues to grow,” he said.
The plan being proposed would allow the city to fund what it has and allow new hires to be added to the state pension system at a lower cost.
Todd Lambiotte, of the police pension board, asked how the city will be saving money if it has to pay into two pension systems at once.
”I don’t know how to answer that,” he said.
Cost saving to the city will occur more over time than anything immediate, City Finance Director Eric Jiles said.
”Right now, we are are putting in 85 cents for every dollar we pay (someone),” he said. ”The statewide plan is only 8¢ cents. It is much more cheaper for us.”
Joyce said the overall benefits are not that different.
”There is no unfunded liability in the new plan,” he said.
The mayor said the city can’t keep funding the previous pension system as it has been.
”If we continue down this path as is, the city isn’t going to have any money for anything unless we get a big influx of revenue from somewhere,” Joyce said. ”If we don’t do something, many people’s benefits will be in jeopardy.”
City Council will have to act on this measure soon, the mayor said.
Joyce is planning to have the letters mailed today to everyone on the current pension plan.