OCEAN CITY – Last year’s pension plan contributions were reviewed at this week’s Mayor and Council meeting, and a request was made for approval of this year’s payment process.
Finance Administrator Martha Bennett Lucey told the Mayor and City Council she would like to see the pension plan payments spread out over three payments, as occurred last year.
“We traditionally have contributed to the pension plan every year in September,” she said. “Last year we did a change where we paid it over a three-month period. I’m recommending that we do that again this year. The plans had a very good year last year. The return of investments was 36 percent.”
Pension Trustees have recommended contributions of a little over $2 million this year for the General Employees Pension Plan. In reviewing last year, Lucey said, “The General Employee Plan had the best experience, the funding of the plan increased from 70 to 77 percent funded. On average, the plans have yielded 7.75 percent since 1988.”
“For the General Employee Plan there’s a funding ratio of 77 percent. The amount contributed according to our actuaries assumptions is $2.1 million, the lowest amount since 2007,” she added. “The trustees did a five-year smoothing last year that has worked out very well for us, to keep the contribution level. This year general employees covered payroll reduced from $20.5 million to $19 million, over a $1 million reduction in covered payroll because of the changes made in personnel.”
Lucey was assertive throughout the entire presentation on how beneficial it was that all plans had become very conservative over the last year.
“This is a good outlook in that the actuaries assumption are made conservative and that the amount required to be funded for next year is down over $300,000 for the General Employees Plan,” she said.
The trustees also had made recommended contributions of close to $3 million for the Public Safety Plan.
“The Public Safety Plan increased funding from 68 percent to almost 71 percent,” Lucey said. “We did not have a change in personnel that we saw in general employees; so covered payroll is approximately the same. The amount of funding required is $150,000, more then last year. So, this plan is a little bit more different, but likewise it did improve funding from last year.”
“With the two plans together the request for funding is less than what was paid last year and less than what was in the budget for this year,” she added.
Finally, the trustees made a recommended contribution of close to $3 million for the Retiree Health Insurance.
“The third part of the plan is the request for the Retiree Health Plan,” said Lucey. “We have an actuaries study done every two years. We are going to have one done this winter to base contribution for 2011. But this year will be the same as the last two years at $3.1 million.”
This pension plan is a decrease of close to $200,000 from the financial year of 2010’s actual expense.
“All three of the funds together is $87,773 last time it was budgeted for this year,” she said. “It is a very conservative plan and I feel very strong in the way the funding has been, and the changes that the trustees have made. These plans are very viable and have become much stronger over the last two years.”