Trending
HOLLIDAYSBURG -- Blair County leaders are making several pension-related changes that they expect will affect future pension recipients while improving the underfunded plan's bottom line.
In a series of votes, the Blair County Retirement Board agreed Thursday to support the creation of a new retirement class for newly hired employees. As a result, newly hired employees will enter what's referred to as the 1/80th class, and they'll receive smaller pensions than those being paid to current employees who are in the 1/60th class.
Creating a 1/80th class has no impact on current employees, said commissioners Chairman Bruce Erb, who also chairs the county Retirement Board.
A table illustrating the change in monthly pension plan payout showed a county employee with an average annual salary of $35,000 and 20 years of service as eligible for a monthly pension of $974 if that employee is in the 1/60th class based on when they were hired. For those in the 1/80th class with the same average salary and years of service, the monthly pension will drop to $730.
The same table also showed a county employee with an average annual salary of $18,000 and 20 years of service as eligible for a monthly pension of $501 in the 1/60th class. But those who enter the 1/80th class and retire with an average salary of $18,000 and 20 years of service will get a monthly pension of $376.
Commissioner Terry Tomassetti said that based on the county's lower-than-market-value salaries, he would support the measure only because it applies to newly hired employees.
Another change the board approved will affect retiring employees who have the option of converting their payroll deductions into an annuity paying 4 percent. That reduced rate, Erb said, is more realistic than the 7 percent rate that has been available.
In 2015, Erb said 15 of 18 retiring employees converted some of the pension payments into an annuity paying 7 percent.
Erb and Tomassetti also acknowledged that there's no requirement for employees to convert their money into an annuity.
"There are other options available, so I'm fine with this," Tomassetti said.
Other changes approved Thursday were aimed at refining factors used in calculating the pension fund's future earnings, future obligations and in calculating the county's annual recommended contribution.
As recommended by the Peirce Park Group which manages the invested pension dollars and CBIZ, a benefits and actuary company that calculates pension plan obligations, the retirement board agreed to reduce the assumed rate of return to 7 percent from 7.5 percent.
In addition, as recommended by both companies, the plan will reflect newly-updated mortality rates, reflecting longer life expectancy than in the earlier rates. While that will likely increase the plans obligations, the board agreed that the results should be more realistic.
The retirement board also agreed with a CBIZ recommendation to reduce the salary increase assumption from 4.5 percent to 4 percent, drawing a comment from Tomassetti who suggested using a lesser amount based on annual raises.
Controller A.C. Stickel said the salary increase assumption reflects not only annual raises but increases achieved through promotions and job-related changes.
Tomassetti suggested 3.5 percent as a more realistic figure and voted against using 4 percent.
The risk of using a percentage that's too low, Erb said, is that it may result in the county being recommended to contribute less to the pension fund than it should be.
For 2016, Stickel reported that the county has finished contributing the budgeted $3 million toward the pension plan, which includes $2 million in proceeds from the sale of Valley View Home. From January through November, the plan distributed pension fund payment to retirees totaling $6.17 million.
The latest earnings report for the plan showed a gain of $2.9 million from Sept. 30, 2015 to Sept. 30, 2016.
Mirror Staff Writer Kay Stephens is at 946-7456.