Chariho School Parents’ Forum

July 21, 2009

New calculations in = Hopkinton is spending $23,200,056 more for a defined benefit pension than it would if we had a defined contribution pension

Filed under: 1 — Editor @ 9:54 pm

How much do we love our police department? Very much by the looks of how much better we treat them than we treat each other in the private sector.  The bottom line is this – if we used a defined contribution pension (like the real world does) the total amount paid by the town would be $93,013 per employee (using the most recently retired employee as the standard and the same contribution rate (9%) that the employees contribute) for a total of $1,488.210 for all 16 employees (this assumes we stop hiring today and never hire another police officer, you know, like Exeter  – it also assume each employee started 20 years ago – which we know they didn’t and thus salaries will be higher than used in these calculation – but it works for the comparison).

But we use a defined benefit plan – which is much different.  Using the percentages pointed out by Lois and the Dept of Municipal Affairs (they watch this website) we see that the town’s contribution for the newly retired employee who lives the average of 28 years after retirement will be $1,729,042 per employee – for a total of $27,664,686. 

So, what’s the difference?  What would Hopkinton save if we went to a defined contribution plan versus the defined benefit?  We would save $23,200,056.

Calling all lawyers – who out there can convince our town council that it needs to stop treating the police so much better those of us paying the bills? And can you win this fight for less than 23 million because that’s what you would save us.

Here’s the numbers –

  Total $0.09  
Year Pay Emp cont  
1 $30,395.83 $2,735.62  
2 $31,995.61 $2,879.61  
3 $33,679.59 $3,031.16  
4 $35,452.20 $3,190.70  
5 $37,318.11 $3,358.63  
6 $39,282.22 $3,535.40  
7 $41,349.70 $3,721.47  
8 $43,526.01 $3,917.34  
9 $45,816.85 $4,123.52  
10 $48,228.26 $4,340.54  
11 $50,766.59 $4,568.99  
12 $53,438.52 $4,809.47  
13 $56,251.07 $5,062.60  
14 $59,211.65 $5,329.05  
15 $62,328.05 $5,609.52  
16 $65,608.48 $5,904.76  
17 $69,061.56 $6,215.54  
18 $72,696.38 $6,542.67  
19 $76,522.50 $6,887.03 Total paid in
20 $80,550.00 $7,249.50 $93,013.13
1 $40,275.00    
2 $41,483.25    
3 $42,727.75    
4 $44,009.58    
5 $45,329.87    
6 $46,689.76    
7 $48,090.46    
8 $49,533.17    
9 $51,019.17    
10 $52,549.74    
11 $54,126.23    
12 $55,750.02    
13 $57,422.52    
14 $59,145.20    
15 $60,919.55    
16 $62,747.14    
17 $64,629.55    
18 $66,568.44    
19 $68,565.49    
20 $70,622.46    
21 $72,741.13    
22 $74,923.36    
23 $77,171.06    
24 $79,486.20    
25 $81,870.78    
26 $84,326.91    
27 $86,856.71    
28 $89,462.41   Employee contribution
  $1,729,042.90   $93,013.13
all 16 $27,664,686.47   $1,488,210.02
Town’s contribution    
  $26,176,476.46    
       
Defined Contribution Employee $1,488,210.02
    Town $1,488,210.02
    Total $2,976,420.04
       
Difference between defined contribution and defined benefit
      $23,200,056.42

But hey, at least we aren’t the highest paid force in the state (but we are close to it).

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3 Comments »

  1. I’ve seen some comments that we did the pension in lue of healthcare. I’m not sure why we provide healthcare after retirement since just about everyone qualifies for Medicaid. It’s not a program for the “poor” as commonly thought. We happen to be in the middle of some research on Medicaid and I spoke with the eligiblity chief for DHS recently and he said he has only seen two (2) people not qualify, and one is being appealed. That’s in the 25+ years he has been doing this. So why do we provide a pension better than the private sector AND we provide healthcare better than the private sector (and it is WAY better since the police plan doesn’t require nursing home care as does Medicaid. Why do we continue to give away the farm? Because we fear that we can’t win and it would go to arbitration (which is binding), and we don’t have the money to spend fighting it. By the way, Kinder, our attorney, told me he believes binding arbitration is against the constitution. But nobody has had the courage to fight it. I was hoping Hopkinton would be willing to take on that fight – after all we stand to save $23 million over the next 28 years (plus all new employees).

    Comment by Editor — July 21, 2009 @ 11:00 pm | Reply

  2. Is it possible our legal fees fund is depleted from defending the same police department from lawsuits already in the courts?

    Comment by RS — July 22, 2009 @ 8:40 am | Reply

  3. great point RS. Yes, the trust (which we still pay for) has spent its $100k already. Now it will probably come directly to us. Hopefully we don’t try to sweep it under the table with a settlement – if the council really believes the police are innocent, fight it to the end. I don’t think the police are innocent and I say fight it to the end. Its the only way to end this crap once and for all.

    Comment by Editor — July 23, 2009 @ 11:45 am | Reply


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