Malloy Calls for Big Change in Pension Financing

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Governor Malloy has proposed an overhaul of the State Pension System. The concern is that the State will have to contribute a staggering 1.5 billion to the State Employees Pension Fund this year alone. The State Employees Bargaining Agent Coalition’s attorney has stated that any change to the state employees pension is a matter for collective bargaining. Certainly any plan to alter contributions to pensions is a concern to retired teachers.

 

Retired teachers do not have a bargaining agent. Any changes to the Teacher’s Retirement Fund would need to be approved by the legislature. Our State Treasurer, Denise Napier, has stated, “So while the Governor is right to be concerned about the projected growth in the State’s annual contributions to the pension plans, the sobering reality is that paying less now will absolutely mean paying more in the future . . . .“   As you know we have pension obligation bonds. The Treasurer has made it clear that the State should not “take any actions that would adversely affect the bond covenant adopted when pension obligations bonds were issued in 2008 to bolster the Teachers’ Retirement Fund”.

 

Financial analysts agree that the high returns from pension investments in the past cannot be sustained in the future. In response to this fiscal reality, the TRB has agreed to lower its assumed rate of return for pension investments to a more realistic percentage. Unfortunately, this means that the State will have to contribute more to the fund to replace earnings that are not realized. Will this increase result in greater negative backlash against public school teacher pensions?

 

Pension plans across the nation, as well as in Connecticut, are being scrutinized with proposed changes. The changes are to address unfunded liabilities and the ever-increasing cost of pension obligations. As our State Treasurer has said, “any plan must ensure that we [the State] honor our commitments to our retirees. That obligation is inviolate.”

 

Our Governor’s proposals, our looming State debt, along with the spiraling increase in the State’s cost of maintaining pension obligations are major concerns for all retired teachers of Connecticut. Will retired teacher’s defined benefits remain in tact?   Will the State continue to fulfill its fiscal obligations toward our pension plan? When the Legislative Session convenes in February, The Association of Retired Teachers is asking all teachers to join us in our vigilance of legislative changes that will affect the State Teacher’s Retirement System. Please consider being an active participant in safeguarding our future.