Town retirement fund performing better
GREENWICH — Greenwich’s retirement trust fund to pay for pensions of former town employees has been performing better of late than it has in the recent past, officials in charge of the fund said Tuesday, allowing the town to reduce its contribution to retirement costs.
Joe Pellegrino, chairman of the town Retirement Board, called a meeting Tuesday morning of the board and others in town government to plan how to continue making progress in closing the gap between return on investments and the yearly obligation.
“We need to have a plan,” Pellegrino said. “We need to have a strategy.”
The town’s scheduled contribution to close the shortfall for the 2018-19 fiscal year is slated to be $21,136,000 which is a reduction from the $21,932,000 in the current year’s budget. Pellegrino said it is the continuation of a “better trajectory” for the plan over the last four or five years including better professional asset management.
According to the latest report from Boomershine Consulting Group, which was compiled as part of a study dated July 1, 2017, there are 2,255 people covered by the retirement system in town. It is open to members of the Greenwich Police Department, Greenwich Fire Department but closed to other town labor unions.
As of the 2017 report, there are 253 current public safety officers in the plan and 639 people who are grandfathered in from the other unions before the plan was closed off in subsequent contract negotiations. There are also 309 public safety retirees covered in the plan and 1,054 classified retirees from other town unions.
At Tuesday’s meeting, Gregory Stump, chief actuary and vice president of Boomershine, said if things proceed as planned, the amount of Greenwich’s liability will decrease and the funding ratio paid for by return on investment will increase. And since Stump said his firm is operating under “reasonable assumptions” he felt it would.
All in the room on Tuesday — who also included members of the Board of Estimate and Taxation, Representative Town Meeting and other — indicated their desire to see the plan perform as well as possible, as it took a major hit during the economic downturn of 2008.
“Our performance did not keep up with the times over a long period of time and that’s why we have a gap,” Pellegrino said. “That’s where we are today and we’re trying to right that ship.”
Pellegrino said in looking at the town’s investments, he believed it was a diversified portfolio that minimized risk for the town.
“Nothing is going to shoot the lights out, but the thought is over a longer period of time we should have a better return per unit of risk we’re taking,” Pellegrino said.
Stump said his firm performs studies every five years to see trends in labor. What is clear from the last study, conducted two years ago, is people are retiring later. While that means the town doesn’t pay out the benefits as early as it used to, the study also found that people are living longer, which means the benefits are then paid out over a longer period of time.
“That kind of balances out,” Stump said.
BET member Andy Duus, who serves as the finance board’s liaison to the Retirement Board, said the town should explore getting out from under its pension obligation by offering a buyout to everyone covered by the plan. The money would be provided by the value of the town’s assets in its investments as well as money raised through a bond issue and a new pension plan could then be put in place.
“This is a path to solve this issue in one stroke,” Duus said.
However there was a great deal of skepticism over that plan among the others in the room, including regarding how it would be received by town employees.
“There’s a lot of obstacles to that,” Stump said.