Connecticut Leaders Agree to Reform State Pension System

Connecticut Governor Ned Lamont and Comptroller Sean Scanlon announced earlier this month they have reached an agreement with municipal and labor leaders deal to reform the Connecticut Municipal Employees Retirement System.

Lamont and Scanlon state that the deal will save more than 100 cities and towns in the Constitution State more than $840 million over the next 31 years, including more than $32 million in fiscal 2024.

Scanlon, who became the state’s comptroller in January, is overseeing a working group made up of labor and municipal leaders that was created to address the rising cost of the state-run pension plan for municipal public-sector employees. According to Scanlon’s office, employer contribution rates increased an average of 75% over the last five years, while the plan’s unfunded liability tops $1.1 billion.

Following six weeks of talks and negotiations, the working group agreed to six reforms, including amending cost-of-living adjustments and re-amortizing the unfunded actuarial accrued liability to 25 years from 17 years. The group also agreed to increase the pension calculation multiplier for those with longer service and to offer a deferred retirement option plan in an attempt to encourage retention of municipal employees.

Additionally, the group agreed to improve data collection related to the state’s municipal pension plans to help inform governance structure best practices, as well as other ways to make the plan more attractive to new towns.

“Reaching an agreement on the future of our municipal retirement system is not only important for the sake of ensuring its continued ability to fund pensions for the workers who have earned them,” Lamont said in a release, “but this is also needed to protect taxpayers by providing financial relief to cities and towns.”

AFSCME Council 4, a labor union that represents approximately 15,000 municipal government and board of education employees in Connecticut, supports the reform, stating that the changes strengthen the overall system by improving worker benefits and lowering costs to encourage additional towns to participate.

“During a time when pension benefits in Connecticut have eroded over the past decade, we are excited this agreement is a win for municipal and BOE employees,” AFSCME Council 4 Executive Director Jody Barr said in a statement.

Some of the reforms will require legislative changes and approval from the Connecticut State Employees Retirement Commission. Scanlon’s office said it is seeking to pass several legislative changes this session and has agreed to continue the working group into next year to consider additional reforms.