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Town approves 401A plan
BOMA OKs $434K employee payout


After months of discussion, Farragut’s Board of Mayor and Aldermen finally approved supplements to its new retirement plan during its meeting Tuesday, Nov. 15.

The Board approved a one-time contribution that would pay all employees 2 percent of their current salary for each year of service working for the Town. That cost was estimated to be about $434,000.

The money is set to come out of an unused insurance fund.

The Board also approved a supplemental retirement program in addition to Social Security, which the Board voted to join in April.

The supplemental 401(a) plan would allow employees to put in funds that would be matched, dollar-for-dollar, by the Town, again based on years of service. Employees with five to 10 years of service could put in 2 percent; with 11 to 20 years of service could put in 4 percent and with more than 21 years of service could put in 6 percent.


That plan will cost $29,390 for the rest of this fiscal year, assuming the plan could go into effect Jan. 1, 2012.

None of those votes came without controversy.

Mayor Ralph McGill initially wanted to push off a vote on the retirement plan until a better solution for older employees could be found.

Many of the Town’s long-term or older employees are going to be affected by a Windfall Elimination Provision, which essentially penalizes them for years spent at Town Hall, without working under Social Security.

“That bothers me,” McGill said.

Vice Mayor Dot LaMarche said the retirement debate had gone on long enough.

“I just don’t want to carry it out any further,” she said.

Alderman Jeff Elliott agreed: “I feel comfortable with the options we have. They’re not good; they’re not perfect; they’re not even where I’d like to see them. But I don’t know what else to do or what other options we have.”

Elliott supported a defined benefits plan for Town employees that was voted down in the spring.

Alderman Ron Honken said there weren’t other options that were feasible for the Town to pursue.

“This is a hole that is so huge ... we just don’t have the money to fix the problem. It doesn’t exist,” he said.

Honken did some quick math and said that even if the Town’s entire budget — about $6 million — went toward a retirement program, the employee who would get the most money would still only come away with about $500,000.

“Half a million sounds like a big number, doesn’t it? I’m telling you: no one can retire on half a million dollars, not with the situations we have here, if that’s all they have,” Honken said.

“There isn’t a silver bullet,” he added.

McGill said, “I don’t really think we’re looking for a silver bullet. I think we’re looking for at least a bronze bullet.”

“You can pick any color you want,” Honken said, “The money isn’t there.”

“The best that could happen is that we make it less worse. I wish I could come up with some happy ending, but I’m telling you, there isn’t one,” he added.

Honken eventually made a motion to approve the lump sum payment, which LaMarche seconded, and which was unanimously approved with Alderman Bob Markli absent.

Honken and LaMarche also motioned to approve the supplemental retirement program, again unanimously approved.

McGill and LaMarch requested Town administrator David Smoak continue to look for plans that might better help long term or older employees.

Honken asked that the Town set aside money each year for educating employees on retirement plans and money management.

“There is a certain amount of responsibility to preparing for retirement,” he said.

“This is a very, very good plan. ... But having a good plan and not knowing what to do with those dollars still won’t get you where you need to be,” he added.

 

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