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04/22/2020 08:10 AMQuestions and concerns caused the Board of Selectmen (BOS) to table a discussion about a cost of living adjustment for Guilford’s pensioners, though the Pension Committee had recommended not moving forward with the increase at this time due to financial instability related to the coronavirus pandemic.
After significant discussion, and following a passionate plea from a man identifying himself as a retired Guilford police officer, the BOS chose not to make any decision at the April 20 virtual meeting, with selectmen Susan Renner and Charles Havrda both saying they were not comfortable voting without more information and without speaking to members of the Pension Committee.
The town currently has no contractual requirement with its pension-eligible employees requiring a cost of living adjustment, according to First Selectman Matt Hoey. The last cost of living increase the town approved was in 2008.
Hoey also said there is no timeline for the BOS to make a decision on the issue, though the contract does require the town to review cost of living every two years.
At the beginning of the virtual meeting, a man who identified himself as Jeff Hocking, a longtime Guilford resident and former police officer, addressed the BOS, saying that the lack of any cost of living increases for more than a decade left formed employees feeling, “frightened, disappointed, and frankly abandoned.”
Hocking said pensioners “are sensitive to the present market situation,” but that he was also confident there would be a rebound in the near future, which would buoy the town’s pension fund.
The increase for all pensioners would cost the town about $108,000 annually across 19 years based on the 4.2 percent increase in the Consumer Price Index (CPI) over the last two years, with $68,000 of that for police, according to a letter from the Guilford’s insurance actuary, Windsor-based firm Milliman.
Milliman also presented the possibility of increasing the cost of living by 60 percent of the CPI, which would result in about a $65,000 annual increase over the same period.
Hoey told the Courier that an increase would only apply to a subset of retired town employees—those who started their careers when the town had a defined contribution plan. In recent years, the town has shifted to 401(k)-type defined-contribution plans.
Pension Committee Chair Ray Bower said that his committee’s recommendation came unanimously based mostly on the recent upheaval of global markets, which has negatively affected the pension fund. Bower said he was also concerned about the possibility of Guilford delaying tax payments into the summer due to the pandemic, which could slow cash flow temporarily.
“With the fact that the assets of the plan were down and the coronavirus situation—I mean, there was so much uncertainty, we just felt that it was prudent at this time not to recommend the increase,” Bower said.
The BOS will have conversations with the Pension Committee in the near future, according to Hoey.
Hoey emphasized that nothing has been decided, and that future discussion will cover both current financial circumstances as well as the substance of the contracts.
“We’re not saying, ‘Yes, we’re going to do it…[or] we’re not going to grant’ [the adjustments], but we’ve reserved the right to do so in the future,” Hoey said