Town looks at police pensions

South Bethany Town Council hashed out a tentative buy-in to the state’s pension plan on Feb. 25.
The town enrolled its other employees several years ago, with a five-year buy-in.

That automatically vested them in the plan, but it takes police twice as long to reach investiture — 10 years.

Buying seven years instead of 10 would be much less expensive — $232,000, versus $352,000.

However, if the officers failed to reach the magic 10-year mark, they would receive nothing from the state pension plan.

Jayne polled for a consensus on three questions — (1) Whether to do this, (2) if so, for how many years and (3) if so, should the town pay outright, or finance.

Members of council will eventually formalize this consensus, in the form of a vote on a resolution, at next month’s meeting (March 12).

In addition, the expenditure may well require public approval via referendum.

Meanwhile, the informal consensus was (1) to buy in, (2) for 10 years and (3) outright.

Council Member Bob Cestone offered the sole voice in opposition, expressing sticker shock — he preferred a lower-priced buy-in.

By way of comparison, he asked his colleagues how they would feel about giving each of their police officers $70,000 bonuses this year. “That’s an awful big perk,” Cestone stated.

Ronan said he leaned toward the seven-year buy-in, financially, but expressed a concern that if for some reason officers couldn’t complete their remaining three years, they would receive nothing.

Lambertson said enrollment in the state plan would permit the town to “buy back the assurance” that the police officers could retire with guarantees of reasonably-priced health care, and the surviving spouse benefit.

She said a seven- (or even five-) year buy-in might have made sense for a younger force, but since all but one South Bethany officer already had already served for at least 10 years, it made more sense to get them vested.

Police Chief Joe Deloach has worked for the town for 25 years. One of the other five officers is a newcomer, but another has 12 years, two have 14 years and one has 17.

Deloach acknowledged the cost, but explained several advantages of the pension plan, as compared with the town plan.

First, he anticipated the pension would help the town attract trained, seasoned police officers, and cited a letter from Milford’s city manager to that effect (they recently bought in all their employees for 10 years).

In addition, Deloach said the state plan would guarantee health benefits at costs no greater than what working employees pay.

“The alternative is, they would have to go out and buy health insurance on the open market, and I think we’ve all seen that those costs can be astronomical,” noted Mayor Gary Jayne.

With the state plan, employees receive a lifetime pension — a monthly check — as opposed to the town plan, which provides a lump sum payout.

“Sometimes, a lump sum might be preferable — in a rising economy,” Council Member Bonnie Lambertson noted. However, according to Council Member Richard Ronan, it might be tough to ration such a payout over many years. “The problem is — how long are you going to live,” he pointed out.

The state plan also includes a death benefit for a surviving spouse — the town plan does not. Deloach said such a benefit went a long way toward sustaining employee morale on the police force.

He said the state pension plan could also save costs, in that it provides for mandatory retirement.

Police officers can retire after 20 years, and receive a pension equal to 50 percent of an average based on their three highest-paid years.

Retirement would be mandatory after 25 years, with that percentage having risen to 62.5 percent.

Even if the town buys in 10 years of prior service, that’s the only time that will count toward eligibility for retirement.

For instance, after more than 25 years on the job, Deloach might be thinking about retirement at some point.

However, even if the town secures his investiture and he steps down the next day, he won’t get his first check until age 62. (He would have South Bethany’s lump sum, until then.)

The town could buy in total years of prior service, which would not only vest Deloach, but also allow him to retire and receive a pension immediately.

He said he’d considered approaching the town with a request for a total buy-in several years ago, but decided against presenting council with that price tag — roughly $700,000.