Manchester’s liability is more favorable than many communities’

The Village of Manchester is currently in a comfortable position with its liability to retiree pension benefits and health care funds.

While a rising number of communities and government entities across the state struggle with funding even 40 percent of their employees’ post-retirement benefit costs, Manchester is fortunate to be well funded for post-retirement health care benefits and pension, according to Village Manager Jeff Wallace.

As reported in the Bridge Magazine article in this week’s Mirror, many communities–both large and small, but mostly smaller communities with lower tax bases–are finding themselves facing a growing problem with debt owed to retiree pension and health care funds.

Finding that many municipalities are woefully underfunded prompted legislators to pass a law in 2017 that requires communities and public agencies to report pension and retiree health care debt to the Treasury Department and submit plans for corrective action if the debt is deep enough.

Fortunately, careful planning and prudent budgeting has averted this crisis in Manchester for the time being. Wallace explained, “The Village contributes to a contributory money purchase retirement plan, administered by Municipal Employees’ Retirement System (MERS), which covers all eligible employees. This ‘defined contribution’ is different form a pension and has no post-employment costs, similar to a 401k plan. It is pay-as-you-go.”

Under the defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the account and the returns on investment of these contributions. Contributions made by the Village vest over a five year period at 20 percent annually. The Village is required to match the employees’ voluntary contributions to their Section 457 Deferred Compensation Plan. The Village will match up to 6 percent of the employees’ gross earnings.

The village does have an OPEB–Other Post-Employment Benefit–health insurance plan. As of the end of last fiscal year (June 30, 2018) the plan is 83 percent funded. This plan was closed to new employees 10 years ago when the state law changed.

“We hope to have the OPEB 100 percent funded by 2020,” Wallace said.

He added that over the last 30 years, the village has not added staff but rather invested in better equipment, technology, and the use of independent contractors to save money when it is more cost effective. Office staffing has remained stable during that time, and there is one less DPW employee than 30 years ago.

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by Marsha Chartrand

Marsha Johnson Chartrand, a founder, writer, and copy editor with the Manchester Mirror, is a 50-year resident of Manchester. She has a long history of volunteer and community involvement.