According to the Simsbury Patch, the town maintains three defined benefit pension plans for its employees: the Town of Simsbury Police Retirement Income Plan, the Town of Simsbury General Government Employees’ Retirement Income Plan (covering all employees other than the town’s police force), and the Board of Education Plan. As of March 31, 2011 the three plans combined held assets of more than $43 million.
The town also maintains a 457 plan permitting employees to save money on a pre-tax basis in addition to participation in the pension plans.
The news report said the cost-benefit analysis will look at the cost per year for a period of 20 years for each of the following retirement plan models:
- Current retirement plans: Assumes no changes to the current retirement plans.
- Current retirement plans with modifications: Assumes that the current retirement plans are continued with modifications, suggested buy the third-party provider, designed to reduce overall cost, volatility and risk to the town.
- Frozen retirement plans with defined contribution alternative: Assumes that the current defined benefit plans are frozen and that all employees are transitioned to a defined contribution plan. (The defined contribution plan should be modeled with a 4% matching contribution, a 7% matching contribution and a matching contribution of the third-party provider’s choice.)
- Hybrid plan: Assumes that on a going-forward basis, all employees will be provided with a defined benefit plan with a significantly reduced benefit and a defined contribution plan with an employee contribution and town match.
- Closed plans: Assumes that current employees will remain in the defined benefit plans and that all new hires will be placed in a defined contribution plan. (The defined contribution plan should be modeled with a 4% matching contribution, a 7% matching contribution and a matching contribution of the third-party provider’s choice.)
“The goal here is to get the facts before the town recommends or attempts to negotiate any changes in the current retirement plan structure,” said Thomas F. Cooke, director of administrative services for the town, in an email to the Patch.The deadline for submissions to the request for proposals is July 1.