Tuesday, January 18, 2011

Pension reform with town unions

Although I haven't seen it mentioned online, I understand that at last week's Council meeting the new Library Union contract was adopted. Included in the contract was the elimination of defined benefit pension plans (DB) for new union employees. Going forward, new library employees who are union members will only be offered defined contribution pension plans (DC).

DB plans are a traditional pension. DC plans are similar to a 401(k).

Contrary to what I've heard from many candidates for office, ending DB plans and moving to DC plans does not necessarily save money now or in the future. A DC plan may cost more or less than a DB plan, either now or in the future. It's really a tossup. But there is a huge benefit.

DC plans allow organizations to properly match taxes with services. DB plans do not allow that because you never know what the future cost will be for a DB plan. It's all just based on actuarial assumptions that are, IMHO, pie in the sky since they're predicated on Keynesian economic theory. And Keynesians, such as Governor Malloy, believe that money grows on trees. Money doesn't grow on trees. Everyone -- except a few policymakers -- knows that.

Anyway, the Council -- particularly David Schrumm -- and the TM deserve credit for making this happen. It certainly took a while. The library union had been operating under a contract that expired on June 30, 2009... and this new contract probably expires by June 30, 2012. Regardless, it's done.

Looking forward, the Council will need to ink deals with both the Town Hall and PW unions soon. I believe their contracts are also long overdue. But there is an upside to the long outstanding negotiation process.

A town's history is part of the overall view taken by the arbitrators. So when you consider that the Town has eliminated DB plans for future union hires for both the Dispatchers and Library unions, as well as non-union employees, there's a distinct possibility that the arbitrator will reach the same conclusion for both the PW and TH unions.

And if both of those unions reach agreement with the town to eliminate their DB plans for future union members, then the only remaining DB plans on the town side will be the Police Union and volunteer firefighters. So to recap where DB plans are headed for future town employees / volunteers:

1) Dispatchers union -- ended June 30, 2006

2) Non-union employees -- ended June 30, 2008

3) Library union -- ended January 11, 2010

4) Public Works union -- under negotiation

5) Town Hall union -- under negotiation

6) Police union -- continuing, current contract expires June 30, 2012

7) Firefighters -- no contract negotiation, but when I asked a few years ago it was suggested to me that the issue be raised after no one else has a DB plan.

So in terms of future town employees, that's where our DB plans stand now. Slowly, but surely, the Town is making real progress on this.

Tim White


Anonymous said...

more of Tim trying to claim credit for something he did not do
No action when on the council
talk talk talk
never got it done
never chaired a committee
never saw anything through
talk talk and try to claim credit
needs the town and this blog

Anonymous said...

Hey dope from 10:56......Tim was the only one pushing this over the yrs.....lkast time I checked it took more than one person to pass something.