by Christian Wade
Connecticut cities and towns could save tens of millions of dollars a year in pension costs under a new proposal unveiled this week by state leaders.
The plan, rolled out Wednesday, emerged from a deal between Gov. Ned Lamont and State Comptroller Sean Scanlon to overhaul the Connecticut Municipal Employees Retirement System, a state-run pension system for municipal employees, including police officers, firefighters, and public works employees.
Under the changes, the state would align cost-of-living adjustments with “current industry practice” and re-amortize unfunded actuarial accrued liability from 17 to 25 years and increase the pension calculation multiplier for certain employees, among other reforms, Scanlon’s office said in a statement.
The changes would provide “immediate relief” to municipalities by stabilizing the fund and leveling out employer contributions, saving 107 cities and towns that participate in the pension system more than $32 million in the fiscal year 2024, according to the comptroller’s office.
Local governments would save $843 million in savings over the next three decades under the plan, some of which will require legislative changes and approval from the state Employees Retirement Commission, Scanlon’s office said.
Lamont said the plan is “not only important for the sake of ensuring its continued ability to fund pensions for the workers who have earned them but this is also needed to protect taxpayers by providing financial relief to cities and towns.”
Like many states, Connecticut has seen its pension cost skyrocket in recent years, which has put pressure on cities and towns to cover the costs. Employer contribution rates have increased 75% on average over the last five years, while the plan’s unfunded liability hit $1.1 billion, Scanlon noted.
“And for too long, conventional wisdom was that nothing could be done, and no one should even try, because the towns and labor would never agree on potential fixes,” he said. “That old, broken way of thinking about the challenges our state faces must end and, in reaching this agreement, we are proving it can.”
The agreement is backed by public sector unions, who say it will help buttress the state’s pension system for former and future employees.
“The new changes strengthen the overall system by enhancing worker benefits and lowering costs that would encourage additional towns to participate so that more workers can have the benefit of a pension,” said Jody Barr, executive director of AFSCME Council 4, which represents more than 30,000 public service workers.
Senate Republican Minority Leader Kevin Kelly, who also supports the agreement, said addressing Connecticut’s municipal pension fund crisis is “a bipartisan priority.”
“Towns and taxpayers are overburdened by surging costs,” Kelly said in a statement. “This agreement helps preserve the retirement benefit program and puts it on a path to long-term sustainability. That’s good news for retirees, towns, and property taxpayers.”
– – –
Christian Wade is a contributor to The Center Square.Â
Photo “Ned Lamont” by Office of Governor Ned Lamont. Background Photo “Connecticut State Capitol” by EGryk. CC BY-SA 4.0.
