Groton's retirement fund still short, even after 11.6% investment gain
Groton - Groton 's retirement fund brought in an 11.6 percent investment return during the 2013 fiscal year, an actuarial report showed Thursday.
But Groton also has an unfunded pension liability of $23.1 million based on new accounting standards, according to the report by Hooker & Holcombe Inc., discussed Thursday at the town's Retirement Board meeting.
The accounting change will affect all municipalities as of the coming fiscal year but will not drastically change the amount Groton must contribute to the fund compared to previous years, said Timothy A. Ryor, senior vice president and consulting actuary with the firm.
Ryer said the liability does not change regardless of accounting method.
Groton stretches its investment returns over five years, to "smooth" out the impact of good and bad years, Town Manager Mark Oefinger said.
"The smoothing works both ways," he said, adding, "Smoothing is part of having a discipline so you over time do the right thing."
The town saw an overall loss of about $1.1 million in the plan's valuation, because it suffered a nearly 16 percent loss in market value during the 2008-09 fiscal year.
But the fund has shown four straight years of gains and will begin to turn around, Ryor said.
The recommended contribution for the town and school department for the coming fiscal year is about $3.2 million, the report shows. Ledge Light Health District would have to contribute about $6,800, and the Poquonnock Bridge Fire District would have to contribute about $414,800.
Contributions are determined by an actuary who looks at items including investment returns and the amount of payroll.
Town Councilor Genevieve Cerf told the board she's concerned about Groton's unfunded liability.
"So even though Wall Street has recovered, we're not going to recover?" she asked.
Ryor said the town was making progress.
Groton City Councilor Jay Dempsey asked how long it had been since the town gave retirees cost-of-living increases.
Oefinger told him it had been six or seven years and that the town didn't feel it was the right time given what it had been through financially.
"It's not that we don't value our retirees," he said. He said some communities give such raises automatically every year, "which is truly unsustainable."
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