Utility considers changing pension plans

Nov. 14--The Brunswick-Glynn County Joint Water and Sewer Commission's human resources committee discussed on Wednesday the possibility of moving from a defined benefits pension plan to a defined contributions plan.

With a defined benefits plan, an employer agrees to pay an employee a specified amount annually after retirement depending on how long the employee has worked for the employer.

A defined contributions plan is more like a 401(k) retirement plan, in that employers match employee contributions to a retirement account.

Utility commissioner and Brunswick Mayor Cornell Harvey said he was in favor of moving to the defined contributions model and didn't see why the JWSC should grandfather any current employees it at all.

Director Andrew Burroughs responded that it was the course of action recommended by the JWSC's legal counsel. If the utility did decide to switch, it would not affect anyone that's already retired.

Harvey said the city had done the same in the past, switching all employees from a defined benefits plan to a defined contributions plan. It hadn't gone over well, but the city wasn't able to afford the pension plans.

A defined benefits plan is not sustainable in the long term for the utility either, he continued. Defined benefits plans tend to become so bloated that government agencies can't cover the full pension liability, which he said is the reality the city faced.

When asked how much time it would take for the utility to fully fund its current pension plans, Burroughs answered around 10 years.

Committee Chairman Donald Elliot said switching to defined contributions without giving current employees the option to keep their defined benefits plans would cause "turmoil" among JWSC employees.

The utility currently has a 15 percent annual staff turnover rate, Burroughs said, adding that most employees would be on a defined contributions pension plan after only a couple of years even if the utility allowed those currently working for the JWSC to keep their current pension plans.

Wayne Neal, a committee member and county commissioner, said the utility may have an even larger turnover problem if it forces everyone to switch to a defined contributions plan.

The discussion also comes just after a major change in the utility's health insurance coverage, Burroughs said, about which many employees aren't happy.

Elliot said the full utility commission will discuss it at some point.

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