Pension Changes Offer Town Long-Term Savings

At its Tuesday meeting, the Town Council signed off on a new police union contract and on changes to town employee pension plans that officials said would bring long-term savings to the town.

Local 331, International Brotherhood of Police Officers, agreed to changes in the union’s contract for July 1, 2011 through June 30, 2015 that both sides called fair.

“We had two objectives — to reduce our defined pension liability and to increase health insurance cost share and co-pays,” Town Manager Kathy Eagen explained to the council.

She said both sides worked very hard, and though the contract itself is financially neutral, pension changes set the town up for significant savings.

Highlights of the contract (as Eagen outlined in the meeting agenda):

• Private duty jobs to be paid at employee’s current rate of pay up to the rate of detective at step maximum. Employees of sergeant rank and above will receive detective rate for private duty jobs.
• Modest increase in shift premium for shifts B and C
• Modest increase in dry cleaning and show allowances
• Office visit copay to increase to $15
• Annual maximum on prescription to increase to $2,500 mail order prescription; not included in maximum accrual
• Health insurance cost share to stay the same at 15 percent for the first two years, increasing 1 percent in the third and fourth years
• Cost of Living Adjustment to be set at 2 percent through first three years and up to 2.5 percent in the fourth year.

The police union agreed to changes in how pensions are calculated that will move toward calculations based on salary, not average earnings which are sometimes inflated by overtime.

The average earning calculation will be based on a four-year period instead of three, which will be capped at 105 percent of an existing employee’s base salary. For employees hired after the contract signing, pensions will be capped at 85 percent of base salary. 

The changes, made to the Town of Farmington Code, Chapter 51, also include language indicating a move away from using insurance companies to invest retirement funds.

New town employees represented by the American Federation of State, County and Municipal Employees Local No. 1689, the CSEA/SEIU Local No. 2001 and those unaffiliated, will no longer be eligible for the pension plan.