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Town staff provided Social Security opt in/out choice

Farragut’s Board of Mayor and Aldermen voted to allow Town employees to have the individual choice to opt in to the Town’s new retirement system during its meeting in late July.

The decision comes after months of discussions and votes to draft a new retirement system, which would enroll Town staff into Social Security and into a 401(a) plan, in which the Town and each employee would contribute 4 percent of each employee’s payroll.

The vote on Thursday gives Town employees the option of not changing.

“The effect of this is that we could end up with two retirement systems,” Human Resources director Janet Curry said.

“Quite frankly, I’m confused,” Mayor Ralph McGill said. “I thought we were fixing a retirement problem when we dealt with this earlier this year. But it seems to me the route we’re going to go just makes it more confusing.”

Town administrator David Smoak told the Board at a previous meeting that staff wanted “anything other than what we have now.”

The crux of the problems with the current retirement plan is with long-term employees, Curry said — the same employees who would not reap the benefits of switching over to Social Security.

In the current plan, the Town contributes 8 percent of each employee’s payroll into a retirement fund, with employees having the option of contributing themselves. Historically, no employees have contributed to their own retirement plans.

Because of the debacle long-term employees find themselves in, Town staff overwhelmingly favored a referendum process that would allow each employee to decide for himself whether or not to join Social Security.

But Curry acknowledged that could become an accounting headache, particularly considering each employee’s decision applies to the staff position, not the person.

In other words, Alderman Ron Honken said, if a “head widget maker” opts out of Social Security but then leaves the Town, anyone hired to fill that position would have to live with the original head widget maker’s decision. The new widget maker would have the option of petitioning the Social Security Administration to allow him to enter, but each change to the Town’s retirement plan would have to be made on an individual basis.

Honken had additional questions as well.

What would happen, he said, if the Town has eight employees who all had the same job title? If half of them opted into Social Security and half out, would the SSA recognize the people as individuals or as one position? And what would happen if the Town hired a ninth person for the same job title? Would they automatically be enrolled in Social Security?

Town staff said they didn’t have an answer.

“I want to make sure we have all the answers. The target doesn’t seem to be clear yet,” Honken said.

“This is government at its worst,” he added.

Vice Mayor Dot LaMarche moved to adopt a “divided referendum process” and Honken “reluctantly seconded.” The motion was unanimously approved with Alderman Jeff Elliott absent.


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