Tuesday, March 17, 2009

Pension fund should be reimbursed by retirement "savings"

WFSB has a piece on Cheshire's retirement offer.

Before we go further down this road though, I'm concerned about how this offer will work.

I think it would be wrong to "save" money today (via lower staff salary costs) and to put all those "savings" into the general fund.


Because the employees would immediately begin drawing on the pension fund. So it'd be as if we reduced today's spending in the operating budget... but increased the spending in the pension fund. And that would simply mean we're delaying taxes.

I'm fine with the retirement incentive, but if we move forward with it... we should be depositing an appropriate portion of the "savings" into the pension fund.

Besides, there's already a $20,000,000 deficit in the pension fund. Do we really want to further reduce assets, while increasing liabilities? If I were an employee, I wouldn't be happy about that at all.

Tim White


Anonymous said...

Tim, if they know they can get by with X amount of spots not filled...then I don't see how there isn't layoffs if not enough employees accept the offer.

tim white said...

I see your point.