Bristol RI Police 080612 Milliman Presentation

7/31/2019 Bristol RI Police 080612 Milliman Presentation

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Town of Bristol, RI

Proposed Police PensionPlan Changes

August 6, 2012

Rebecca A. Sielman, FSA


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Current Pension Plans for Police Officers hired prior to March 22, 1998 are covered by

Bristols private pension plan.

As of July 1, 2011: 7 active employees plus 44 retirees

Officers hired after March 22, 1998 are covered by the

Rhode Island Municipal Employees Retirement System

(RI MERS).

As of July 1, 2011: 32 active employees plus 1 retiree


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Goals of Study Project Provide a reasonable benefits package that will attract

and retain the employees that the Town needs.

Develop a framework for delivering benefits with anacceptable price tag for the Town, both short-term andlong-term.

Ensure that the private pension plan emerges fromcritical status within a sufficiently short timeframe.

Strengthen the Towns ability to control costs and benefitsat the local level.


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Proposed Changes Active officers who are currently in the MERS plan will

transfer to Bristols private plan.

Any current MERS retirees will stay in MERS

Approximately $2.5 million will be transferred from MERS toBristols private plan

Benefits from Bristols private plan will be based on each officers

entire period of service in Bristol

Future officers will be covered by Bristols private plan.

Benefits provided to the MERS / future officers will not be

as generous as benefits provided to current members ofthe Bristol private plan.

Other wage / OPEB concessions are proposed.


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Key Provisions of Pension Plans Member contributions how much of the cost of the

benefits do members pay while they are working?

Retirement eligibility at what age and/or years of service

can a member retire with full benefits?

Benefit multiplier what is the formula for determining

benefits at retirement?

ex. pension = 2.5% x [average earnings] x [years of service]

Cost of living adjustment (COLA) how will the benefit

increase after retirement to keep up with inflation?


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Comparison of Key Provisions

ProvisionCurrent Bristol

Private Plan RI MERS (eff. 2012)Proposed Bristol

Private Plan

Membercontributions

9% - 13%, depending on

funded status

8% plus 3% to new DC plan;

employer will also contribute3% to DC plan

13%

Retirementeligibility

Any age with 20 years ofservice

Later of age 55 andcompletion of 25 years ofservice1

Any age with 25 yearsof service

Benefitmultiplier3% for the first 20 years+ 1% for the next 10years

2% for the first 37.5 years

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2.1% for the first 25years + 1.5% for thenext 5 years

COLA 3% (compounded) 0-4% depending oninvestment returns;suspended if plan is less than

80% funded; applies only tofirst $25,000 of benefits;starts 3 years after retirement

2% non-compounded

1 Members close to retirement may be grandfathered at age 522 Members close to retirement may be grandfathered at 2.5% for pre-2012 service


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Other Concessions Contributions to fund retiree medical benefits (OPEB)

will increase from 1.5% of pay to 6% / 6.5% / 7%

Increased co-pays for office visits.

Changes to prescription drug coverage.

Healthcare premium cost-sharing will increase based on

date of hire:

Current Proposed

$25 per pay period 10% of premium

10% of medical premium 15% of medical + dental premium20% of medical premium 20% of medical + dental premium


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Long Term ProjectionsCurrent Private Plan, No Changes

Exceeds 60% funded threshold(critical status) in 2019

Normal Cost disappearsas the last active members retire

Amortization Paymentdisappears as the plan

becomes fully funded


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Long Term ProjectionsPrivate Plan With MERS Officers Added1

Exceeds 60% funded threshold(critical status) in 2017

Assets includeapprox. $2.5mtransfer from

MERS

Normal Cost goes up overtime with salary growth

Amortization Paymentdisappears as the plan

becomes fully funded

1 Projections are for a plandesign very similar to the

final proposal


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Long Term ProjectionsOverall Cost Savings

Pension: the costs for the current private plan plus MERS versus the proposed private plan changes.

OPEB: reflects the increase in employee contributions to prefund OPEB benefits during officers working lifetimes.

Medical / dental: reflects the changes in employee premium-sharing, co-pays, and prescription drug coverage.

Note: long-term costs for pension andmedical benefits are difficult todetermine and depend on manyexternal factors such as investmentreturns and medical inflation.


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Cost Impact Key Results Based on long term projections, the Town should save

roughly $250,000 per year for the next approximately 8

years. Beyond that point the cost to the Town may be higher

than with the current program.

The revised pension plan is projected to exit criticalstatus (less than 60% funded) a few years sooner than isprojected to happen with the current program.


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Bristol RI Police 080612 Milliman Presentation

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