New retirement plan in place

NAUGATUCK — Retiring municipal workers are still earning guaranteed pension benefits, but new hires will place less of a burden on taxpayers when their working days are over.

Mayor Robert Mezzo says the shift in pension strategies will save millions for local taxpayers in the future, though it will cost somewhat more in the short term.

Some anti-tax advocates, however, say Mezzo and other municipal leaders paid too high a price to achieve the long-term savings.

Under the new retirement plans, each new hire coming to work for the borough will get a package that is equivalent to a 401(k) plan in the private sector — it’s called a 403(b).

In these plans, known as defined contribution plans, both the employer and the employee put money into the worker’s retirement account and future benefits will depend on investment earnings. Over time, this saves the borough millions.

It marks a departure from the traditional pension system, under which an employee was guaranteed a benefit amount based on his or her pay and years of service.

Naugatuck is one of at least 55 municipalities in Connecticut to have at least one public sector bargaining unit, or union, in a defined contribution plan, as opposed to a traditional pension plan. Locally, those municipalities include: Barkhampsted, Bethany, Canaan, Colebrook, Goshen, Kent, Middlebury, Naugatuck, Prospect, Roxbury, Shelton and Torrington.

In order to get the firefighters and police officers unions to agree to waive the old pension plans for new hires, Mezzo, with unanimous approval from the Board of Mayor and Burgesses, needed to sweeten the current retirement deal.

For instance, the former contract allowed each firefighter to retire with an average payout of $70,000 to $75,000 a year, which on a 25­year payout cycle amounts to a $1.75 million package per firefighter.

The new contract boosted the annual payout for soon-to-retire firefighters to $85,000 to $90,000 a year, on average. On an estimated 25­year payout cycle, that amounts to $2.25 million per firefighter.

Jim Jordan, a Mezzo ally and Board of Education member, calculated all of the costs and savings from the firefighters’ contracts when budget critics began questioning the mayor over high pensions. His numbers, which have been backed up by borough Controller Bob Butler and have been reviewed by the Sunday Republican, show significant future savings for Naugatuck.

Jordan’s figures state that because part of the contract requires firefighters to put 8 percent of their annual salaries toward their retirement — they previously put 4 percent — it would add $115,000 to what each firefighter puts aside for their retirements.

So, the former contract with the $1.75 million borough contribution for each firefighter over 25 years would mean the borough would put $5,450 per month toward a firefighter’s pension — or $1.63 million for one firefighter.

The current contract, which will expire once vested firefighters retire, states the borough puts $6,733 per month over 25 years toward a firefighter’s pension — or about $2 million per firefighter over 25 years.

Per the new defined contribution plan that new firefighters are coming in at, the package costs the borough $360 per month per firefighter over 25 years for a firefighter’s retirement plan — or $108,000 a year. Over the long term, that will save the borough tens of millions of dollars.

“Though the Mezzo plan forces us to ‘feel the pain’ up front with increased payout amounts to current firefighters, we are at the same time recognizing incredible savings monthly as we cycle to the ‘new’ firefighters,” Jordan says. “The savings dollars from this configuration only increase in perpetuity with each new hire because the investment portion was only required for the 34 current firefighters. … Overall, the cost saving benefits to the borough of the new contract contains both short term and long term benefits whose total cost savings moving forward are staggering.”

While the fire department is just one example, similar changes were made to the calculations for all municipal employees, including police officers.

The argument made by some of the budget critics, including Matt Katra, who is forcing votes on the proposed town and school budgets, is that Mezzo gave up too much in concessions for the long­term savings. And while they like that Naugatuck will save money in the long run, they argue that the savings are nice, but it won’t really benefit the borough for many years.

Mezzo said those who are critical have never negotiated a collective bargaining plan with a municipal union.

“Anyone who thinks you are just going to go in and change the calculation under the rules we have to play has never negotiated a contract before,” he said.

He said there were two paths Naugatuck could take to achieve pension savings. One was to make incremental changes to the defined benefit (pension) plans where contributions were changed slightly and savings would have been minimal, Mezzo said.

“Or we could have made sure the defined benefit plan has a finite end and make sure all new hires went toward a defined contribution plan,” he said. “That was the path taken. We took the quickest path to get it done. And now nobody walking through the door, aside from an educator who is under the state plan, will get a pension from the Borough of Naugatuck.”

Thus far, the concerns among those who wondered whether not guaranteeing a pension would weaken the applicant pool for new hires seem to be groundless. Last year, the Naugatuck Fire Department tested for new firefighter openings — 540 people applied for four positions.

Naugatuck municipal pensions approved thus far in 2014:

Sean Simpson, $74,868 a year — 20 years as a patrolman/detective

Priscilla Clark, $18,096 a year — 23 years, 11 months as a school nurse

Paul Cantoni, $22,687 a year — seven years as a sanitation laborer

Deborah Ann Morton, $1,613 a year — 10 years as a school instructional aide

*Constance Imler, $16,712 a year — 30 years as a teacher

Todd Brouillette, $97,408 a year — 26 years at Naugatuck Police Department, retiring as captain

Keith Rosenfeld, $14,808 a year — 13 years as town planner

*Anthony Memoli, $19,959 a year — 28 years as a teacher

*Elizabeth Sardis, $19,848 a year — 27 years as a teacher

*Mark Solomito, $20,902 a year — 36 years as a teacher

*Charles Uszakiewicz, $20,564 — 34 years as a teacher

Michael Coon, $37,379 — 29 years as an operator/driver at Department of Public Works

Herminia Cicchetti, $18,769 a year — 24 years as a paraprofessional

Christopher Jones, $33,395 a year — 27 years as a laborer/driver at DPW

John Krajewski, $40,887 a year — 25 years as a DPW mechanic

Steven Macary, $33,531 a year — 21 years, retiring as Zoning Enforcement Officer

Stephen Moran, $37,431 a year — 28 years as a golf course greenskeeper

Paul Moissette, $$33,248 a year — 26 years as a driver/laborer at DPW

Susan Paradis, $8,066 a year — 17 years as a secretary at Naugatuck schools

Sheila Baummer, $16,475 a year –16 years, 10 months, retiring as Recycling and Solid Waste Coordinator

Lydia Bozenski, $15,440 a year — 16 years, 11 months, retiring as assistant to the Street Department Superintendent

Carol Doody, $30,704 a year — 18 years as an account clerk III

Terry Dowling Magnamo, $9,113 a year –12 years, one month retiring as an account clerk II

Lori Gallagher, $38,332 a year — 26 years, retiring as an assistant payroll account manager

Christina Gamble, $15,535 a year — 21 years, retiring as acting director of Naugatuck Youth and Family Services

Roseann Krodel, $11,517 a year — 15 years, 10 months as an account clerk II

Norma Lisieski, $11,881 a year — 14 years, six months as a secretary

Louise Ross, $13,509 a year — 18 years, 11 months as a secretary

Robert J. Ragauskas, $74,260 — 21 years as a firefighter

James L. Roberts, $71,373 — worked as a firefighter

Pamela Ruccio, $20,761 — 22 years, six months as an assistant office manager

James Trzaski, $86,962 per year — 23 years as a firefighter, retiring as captain at the Naugatuck Fire Department

*At one point, Naugatuck used to allow teachers to participate in its pension program. That is no longer the case.