Saturday, July 18, 2015

Police Pension Revelation


A recent front-page article in the Connecticut Post noted the potential decimation of the Bridgeport Police force in the coming year due to a rash of retirements. The paper placed the blame on the new police contract that went into effect this year. Although there were things in the contract that the police did not like, the major reason for the retirements is a tremendous increase in pension benefits.

For some reason the Bridgeport Police Department has been allowed to transition its retirement plan to the Connecticut Municipal Employees Retirement System. Apparently, the City of Bridgeport will no longer be responsible for police retirement benefits. The responsibility has been shifted to the taxpayers of Connecticut who fund the Municipal Employees Retirement System.

I can see why the Bridgeport Police Department liked this arrangement. In the first place, the State of Connecticut is less likely to go bankrupt that the City of Bridgeport. More importantly, for senior police officers the new plan is a huge windfall.At the end of the article, the Post quoted David Daniels, a retired police lieutenant who plans to run for mayor as an independent this year. Daniels provided a rare reveal.

“I was making $80000 as a lieutenant when I retired last April, which meant I could retire at $40000. But when we switched to the state system, which looks at the three best years, that bumped it up another $20000. Would you stay?”
Instead of taking early retirement at half pay, the lieutenant was able to immediately retire at 75% of pay with no additional pension contribution on his part. He probably would have had to work another 10 or 15 years in Bridgeport to get a comparable retirement benefit. Moreover, he is still young enough to get another job somewhere else, or even become Mayor of Bridgeport.

To put things into perspective it is useful to calculate how much money it takes to provide Daniels and the other retirees with this retirement windfall. It would take about a Million dollars earning 4% interest to provide an annual income of $40000. But it will take an additional $500000 to provide the extra $20000 per year. Multiply the $500000 increase by the expected 30 other retirees this year and you get an additional $15 Million pension liability that the already underfunded State plan has to contend with. 

There are almost 400 members of the Bridgeport Police Department. If they all get a boost comparable to the one Daniels received, that will eventually cost the State over $200 Million.

The rash of retirements has left the Bridgeport Police department seriously understaffed but officials explain that the shortage is being met with increased overtime. Of course, they don’t mention that the increased overtime is only going to boost final average pay and facilitate more retirements for other officers approaching early retirement age.

I know that people will say that police officers and other civil servants work hard and deserve all they bargain for. But they never bargained for this incredible windfall. They bargained for half pay at early retirement, not 75%. Wouldn't we all like to retire after 25 years of employment on 75% of our highest three years salary?


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