Commissioners approved the change in a 4-0 vote with Bob Ott absent.
The county has two retirement pension plans. Employees hired prior to Jan. 1, 2010, are enrolled in a traditional defined-benefit plan. Staff hired after that date are enrolled in a hybrid plan, and it is these 964 employees who will benefit from Thursday’s change.
“These employees will see their contributions to the defined-benefit portion of the hybrid-pension plan reduced from 5 percent to 3 percent, which will increase their take-home pay by 2 percent,” said Jim Pehrson, the county’s chief financial officer.
The county conducted an actuarial study examining its investments over the last few years to reach that decision, he said.
“The cost of a defined-benefit plan under the hybrid plan doesn’t require 5 percent now based on the way the economy is going,” Pehrson said. “It only requires 3 percent. So the county can reduce the employee contribution to 3 percent to cover the defined-benefit portion of their retirement package under the hybrid plan. So we’re adjusting the hybrid-defined benefit contribution to be more reflective of what’s required in today’s economy.”
Pehrson said employees are also eligible for a 3 percent merit pay raise.
“After their performance evaluations, employees might not get a 3 percent, it may be an average of 2.7/2.8 percent, and they can have an instant 2 percent increase in your take-home pay just based on this adjustment that the county is making through the contribution requirement,” Pehrson said. “I think it’s huge. The employees I’ve talked to are excited.”
Commissioner Helen Goreham said Thursday’s change was a measure to bring more equity between the two plans. Commissioners rolled out the hybrid plan in 2010 because the old plan was too costly.
The county has 3,089 employees on the traditional plan and 1,915 retirees, human resources director Tony Hagler said.
“The old plan is not sustainable because, as more and more people retire, it’s more pressure on that particular plan,” Goreham said. “You’ve got to provide for more and more individuals who are living longer these days with extended life spans, and the projections were showing that if you had (the traditional plan) it would be unsustainable, and something needed to be done to provide a pension plan that was sustainable, and that’s why the change was made to go to the hybrid.”
Goreham said commissioners would continue to monitor the county’s pension program through its pension board, which is chaired by Pehrson, to see what changes might be needed for sustainability.