Obligated at least once every four years to consider a cost-of-living adjustment (COLA) to town employee pensions, Wilton’s selectmen, at their meeting Nov. 2, voted all in favor of a 0.5% increase for fiscal year 2016.
The town’s pension plan mandates, “It shall be the policy of the Board of Selectmen to review, at least once every four years, the effect of any increases in the consumer price index, or similar indices of inflation, on the adequacy of retirees’ allowances.
“Such review shall consist of, at the minimum, obtaining data on the magnitude of inflation since the most recent adjustment, and cost estimates from the plan actuary on appropriate and reasonable adjustments.”
Sarah Taffel, director of human resources and labor relations and administrative services for the town of Wilton, presented the selectmen with the plan actuary’s annual evaluation report, which included a history of Wilton town employee COLAs.
For 2016, the actuary recommended an assumed COLA increase of 2.5%.
Explaining, Taffel said, “When the actuary looks at the state of the plan, its assets and its liabilities,” it makes assumptions, “assumptions as to the rate of return on your investment, assumptions as to what people are going to earn in salaries and in increases, assumptions about employee turnover — there’s a whole host of them, and one of them is this COLA assumption.”
Taffel also furnished the selectmen with an article on the Social Security Administration’s (SSA’s) choice not to issue a COLA for 2016.
“Social Security actually has a very express directive about whether or not they give COLAs,” Taffel said.
The SSA is limited by federal law to issue COLAs only when inflation can be measured by the consumer price index for urban wage earners and clerical workers, the period of consideration being the third quarter of the last year in which a COLA was administered — 2014 in this case — to the third quarter of the current year.
Wilton’s pension plan, however, is not as stringent as the Social Security Act with regard to COLAs.
“It’s really discretionary,” Taffel said, “but it is required [that you] have some firm grounding in what’s going on in the economy” And so, having the actuary’s report, a history of Wilton town employee COLAs, the SSA article, and statistics reflecting the consumer price index for urban wage earners and clerical workers, the selectmen began their deliberations.
Selectman Deborah McFadden argued for an increase, but one “considerably lower” than COLA increases approved by the Board of Selectmen in the recent past.
Michael Kaelin said, “What we did last year was 1.5%, and the year before was 1.25%, and not only is Social Security at zero, but the recent numbers are all negative, so I’d be at 0.5%.”
“I’d be comfortable at 1.5; I’d be comfortable at 1,” said Dick Dubow.
“My company has never given me a COLA increase,” Ken Dartley said, “so I’m very comfortable with zero.”
First Selectman Bill Brennan said, “The strong element of data in this whole thing is the Social Security Administration has decided, because inflation has been so flat, not to increase the Social Security COLA.
“We have terrific employees, but I don’t think anything more than half a percent is warranted.”
After discussion, Dubow made a motion for a 1% increase, but was seconded by none.
Brennan then motioned for a 0.5% increase, was seconded by Kaelin, and put to a vote, the resolution passed 5-0.