Agreement Reached on Police Pension Dispute

An agreement has been reached between the town and its police department that establishes a cap for calculating police retirement pensions. It should resolve a long-running dispute that has been the sticking point in police contract negotiations for years.

The pensions of retired police officers will still be based on an officer's final average earnings. With overtime, the final average can be substantially more – nearly double in some cases – than an officer's base salary.

Under the new agreement, however, pension awards shall not exceed 130 percent of the officer's base salary, a change that Town Councilor Jim Diaz said should save the town hundreds of thousands of dollars in the years ahead.

“I’m happy to say that we were able to receive a cap,” said Diaz, who is chairman of the council's finance committee and has played a leading role in negotiations.

In announcing the agreement, Diaz used the example of a Ledyard police officer who retired after the 2003 contractual change that allowed police pensions to be based on "W2," or total earnings, rather than base salary.

That officer, the first to retire under the new system, received a pension that was equal to 193 percent of his base salary. Diaz estimated that had the cap been in place, it would have saved the town as much as $410,000 over 25 years.

The agreement was the result of more than two years of arbitration, during which department members worked without a contract. The 130 percent pension cap was included in the town's last best offer, but was rejected by the police union, which asked to be included in the state Municipal Employees Retirement System (MERS).

Diaz said the town thoroughly researched the MERS option, but decided against it because it was not property funded. He said MERS currently is facing a multi-billion-dollar deficit.

"We decided it was not in the best interests of residents or retirees, because if we were to join (MERS) at this point, we could end up funding all those years that the state didn't fund it," Diaz said.

He said the cap was necessary because it allows the town to budget for retirement pensions, and also makes it possible to pay them.

"It's not fair to residents or to retirees to promise something that we can't pay for," Diaz said. "This won't help with the pensions that have already been awarded, but we will realize a benefit in the future," he said, possibly as soon as next year's mill rate.

Ironically, the agreement settles a contract that expired this summer.

Diaz said negotiations for a new contract will begin as soon as the town's new Human Resources specialist – a position created in this year's budget to help avoid protracted contract disputes – is on board.

"I think the town tried very hard to settle this contract without mediation or arbitration, as evidenced by the due diligence we did with the MERS proposal," Diaz said.

"It's easy to promise the world and then not deliver. We wanted to promise something we could deliver," he added. "That's our responsibility, and I think we have done that with this agreement."