The results of the survey provide the Task Force with the empirical data to illustrate that most of the retirement systems, who responded, are in good financial condition. This corroborates data previously gathered by OPM staff during their review of the pension information contained in the municipal audit reports filed annually with the Office of Policy and Management.
The Office of Policy and Management’s research showed that in its aggregate the 65 entities who are underfunded account for a $1.2 billion dollar total Unfunded Pension Obligation (6/30/95). The survey results reflect that the unfunded pension benefit obligation for the 13 severely unfunded entities account for $928 million. Fire Districts represent $45 million of this total and are not included in the OPM data. The Task Force studies determined that while the unfunded pension benefit obligation is significant in size it is concentrated on a few municipalities.
The survey results were used to determine what benefits are included in a typical pension plan provided for Police, Fire, and General Employees. This information was also used to determine whether plans that are severely underfunded differ greatly in benefit structure from those that are well funded. The study determined that in the Connecticut municipalities that answered the survey, issues of benefit structure and plan design had little effect on a plan’s funding status.
Under its “Recommendations” section, the Milliman and Robertson report states that “based on the information gathered by the survey, it appears that the discipline to make the required contributions is the most influential factor separating the well funded plans from those that are woefully underfunded.”
The majority of the members of the Task Force felt that all municipalities should fund their retirement obligations in accordance with sound actuarial principles. However, the Task Force fell short of recommending that this be mandated by law due to sensitivity to the issue of imposing mandates.
As a result of the Task Force work, there is a database of information regarding municipal retirement systems. The existence of this database has already been proven useful. Several towns have used preliminary data to make self-assessments. It is anticipated that this database will be made available to all municipalities.
The Task Force made recommendations in three general areas;
1. Study the expansion of MERF
2. Establish preventive measures
3. Legislation to allow Pension Obligation Bonds with state oversight
The Task Force was pleased to learn that the number of retirement plans with funding difficulties was far less than originally expected; and that, in actuality, many municipalities in Connecticut sponsor pension plans for their employees in which the net assets of the plan exceeds the plan’s pension obligation.