- change ups
Kent County amends worker retirement plan
Kent County commissioners amended the county’s employee retirement plan last week on two fronts.
The biggest change commissioners made involved extending the pension’s amortization period from 15 to 25 years, a move that will lower the county’s contribution rate over the next three to five years.
The county’s Pension Plan Administrator Michelle Balcom said extending the period would lower the county’s contribution rate from 13.5 percent to 12.5 percent in 2013 and save the county about $1 million that year. The savings are calculated on a payroll that roughly totals $100 million a year, so each percentage-point drop is the approximate equivalent of $1 million.
Commissioners also approved changes to five employee agreements that came as a result of collective bargaining efforts, and those are projected to save the county an additional $1.79 million per year in its total pension contribution.
Balcom said the county’s contribution rate is 7.15 percent this year, which means the county will fund the pension plan in 2010 with about $7.15 million. The rate rises to 9 percent next year. The projected calculations are based on the plan’s investment portfolio having at least a 7 percent return in the previous year. So as Balcom noted, making those projections too far out is risky.
“It’s not a straightforward topic. There are a lot of moving parts, including the amortization period,” said Balcom, who added that the number of retirees and new hires are just two factors that play roles in the equation.
The county’s plan was 104 percent funded at the end of 2008 in valuation assets but not market value. “(Valuation assets) is more than our market value. Our market value was 84 percent in 2008,” said Balcom. “The goal of a plan is to be 100 percent funded.”