The Greenwich Time reports that the pension fund has lost more than $100 million in value in the past calendar year, while it has seen its liabilities rapidly increase from $255 million to nearly $350 million during the last five years. Officials are wrestling with how to make up for those losses, when the town is projecting a $31 million budget gap for the next 18 months.
“There are no good solutions to this problem,” said Larry Simon, a Board of Estimate and Taxation member and liaison to the town’s Retirement Board, according to the news report. Simon said one highly unattractive and unlikely option would be for the town to significantly increase its annual contribution to the fund. While the town could not afford to pay $20 million a year for the next five years, it could look at the possibility of making those contributions over a longer period, he suggested.
The town could be looking at a negative return of about 20% for the year, which officials said could force the annual contribution amount to increase significantly.
A second option would be for the town to issue general obligation bonds to make up for the loss, but officials pointed out that while that would help spread the cost over time it would also saddle taxpayers with interest payments. First Selectman Peter Tesei, the town’s chief elected official, said he was reluctant to go down that road.
As of October 31, the fund’s assets were valued at $264 million, down from $361 million in October 2007, according to a monthly report produced for the town by its pension consultant. The fund dropped another $10 million in November. “September and October were the worst months since the (1930s),” said James Lavin, the town’s retirement plans administrator, according to the Greenwich Time.
The economic turmoil has caused the town to rethink it annual investment return target rate of 8.5% on its pension fund, which budget officials use to determine annual contributions to the plan. In addition, as part of its negotiations with employee unions, the town has been pushing its 401(k) plan as an alternative to traditional pensions.
« A Little Friday File Fun (12/19)