Fayette County to add $1.4 million to employee pension fund for 2013
The Fayette County Retirement Board has agreed to bring the amount of the county employee pension fund up to its recommended level by allocating about $1.4 million into the pension plan for 2013, the largest contribution made to the fund.
While the county commissioners must approve the amount and include it in the budget for next year.
The retirement is made up of commmissioners Al Ambrosini, Vincent Zapotosky and Angela M. Zimmerlink, Controller Sean Lally and Treasurer Robert Danko.
The retirement board approved the action at a meeting Wednesday.
“We’re going to finally stop kicking the can down the road,” said Lally.
“This action is an attempt to recapture the nearly $18 million loss in 2008.”
Since the 2008 stock market crash, the county has earmarked Annual Required Contribution (ARC) payments for the retirement fund, but never to the full level as allowed by Act 44. The county pension fund was implemented in 1982 and because of positive market activity it remained fully funded until 2008.
In September, the retirement board agreed to enter into a five-year plan to “smooth” or equalize its annual contributions at the recommendation of the county’s actuarial firm of Municipal Finance Partners of Harrisburg and its financial consultant, Peirce Park Group of Pittsburgh.
While the five annual payments will be in excess of the previous contributions of about $1 million, the added amount will bring the employee pension fund closer to the 100 percent level within the time frame.
Other measures were also taken by the board on Wednesday, including the lowering of its expected rate of return from 7.5 percent to 7 percent, which is more in line with current market returns and allows for additional gains for the county.
“Fayette County is one of the first counties to reduce its rate to a more realistic level,” said Lally. “The move provides us with breathing room.”
Lally said that about 520 current, retired and vested employees are in the county benefit program, with current employees contributing a minimum of 5 percent to the fund. He estimated that the county general fund provides about 60 percent of the total contribution, with the employees adding the other 40 percent.
A fully funded pension plan also will allow the county to consider future cost-of-living-adjustments or offers or early retirement to longtime employees.
“It will have a positive effect and offer more opportunities,” said Lally, adding that the county bond and credit ratings also would improve.
To simplify how the county collects its department pension contributions, the controller’s office will now make a biweekly payroll deduction instead of seeking an end-of-year payment.
Zimmerlink said that most departments have within their respective budgets the ARC payments, whether they receive state, federal or local funding. The delay in turning it over to the county coffers sometimes results from the timely receipt of the other revenues and it being turned in to the county. Some, she added, have informed the county that the department can not or will not contribute because of funding restrictions.
“I would think for the most part that it will be easier for most departments,” said Zimmerlink. “But, we will likely have others that will tell us they can’t or won’t.”
In related pension board matters, the members also took the following action:
n Agreed not to implement a cost-of-living increase for the retirees because of anticipated stock market volatility.
n Learned that the county pension fund had been increased by about 10 percent through Nov. 30 and now stands $53 million.