City Removes Pension Exemption To Ease Expenses

OCEAN CITY – All Ocean City employees will pay 5 percent of every paycheck toward their pension until the day they retire, thus easing the burden on city taxpayers to foot the bill to pay for their post-employment benefits.

After Finance Administrator Martha Lucey’s recommendation in October to amend a 2004 rule that allows town employees to stop paying into their pension plans after 30 years of service to require them to continue to pay in for as long as they are working, the City Council voted unanimously to approve the motion.

Both Lucey and City Manager Dennis Dare said that 33 current employees don’t pay into their pension plans, and the number will go up substantially in the next few years.

“Another 35 employees will be receiving the added benefits in the next five years without paying in, said Lucey. “This change will help get the pension fund closer to 100 percent than the 71 percent that it is funded currently.”

Councilman Lloyd Martin argued that the approximated $121 per paycheck that these employees, whose income is on average $66,000 per year, would be drastic in the short term, but Mayor Rick Meehan said that it would be made up in the long-term for those employees.

“All other employees began contributing 5 percent back in October of 2004 and there was a significant value to that as their pension percentages at retirement age went from 35 percent of pay to 50 percent of pay, and that is significant.  I think this is fair and legitimate way to do this,” he said.

Dare said that the immediate impact would bring in an additional $110,000 to the pension fund that wouldn’t have to come from the taxpayers by requiring employees to pay 5 percent.

“Of the 33 employees, 17 of them have never paid a penny into the pension fund, and then when they retire, and there’s some that make a $100,000 a year, we are going to send them a check for 50 percent of that. They can afford to pay that especially if the people on the bottom of the pay scale can pay 5 percent,” said Dare.

Meehan argued the increased retirement benefits should ease any sting the 5-percent, across-the-board raise might bring.

“With as fast as they recoup the expense with the raise of pension benefits from 35-50 percent, and the contribution it makes to the pension fund which enable the fund to grow to help secure benefits for everyone, I think it’s a very fair request,” he said.

An ordinance will now be drawn up to amend the plan and should be up for first reading after the holidays.

Councilwoman Mary Knight thought that the move was the right one.

“It does cost the city and the taxpayers money the longer someone works for us.  I think this is the right thing to do, especially with what we are all going through,” Knight said.

A related ordinance came under some scrutiny from some members of the council and the public concerning a post-employment benefits trust that the council voted to fund by way of $3 million over the next 20 years.

When several audience members and Councilman Joe Hall questioned the merits of potentially spending $60 million for employee retirement benefits, City Solicitor Guy Ayres said, “there is nothing in the trust that obligates council to pay a penny in to it, but you did vote to fund it.”

The town has budgeted at least $2 million to go into that fund this year, and Councilman Jim Hall said that despite people who question the amount of money, it is money rightfully owed to those who worked for it.

“This money belongs to these people for their service to the town of Ocean City.  We need to set aside this money so we can pay our part when the time comes to do so each year,” he said.