The Reality Of Southbridge's Pension Commitments

Ken O'Brien

Recent discussions on this site have related to issues confronting Southbridge's finances in the context of real estate taxes.

One area of concern is the town's commitment to financing the long-term costs associated with its retirement obligations to town employees.

This area is frequently overlooked when addressing the town budget. In large part this is a function of the fact that the complexity of the issue is beyond the grasp of many.

As I pointed out in a comment on an earlier post:

 According to the town’s most recent bond offering “The total actuarial liability applicable to the entire system [Southbridge’s retirement plan] at January 1, 2014, was $67,505,108; the unfunded liability of the system was $33,179,035."
In addition other post-employment benefits amounted to $47,599,891 based on the latest actuarial analysis completed July 1, 2013. “As of June 30, 2015, the balance in the OPEB Trust was $513,606.”

Retirement Security May Be Sacrificed To Avoid Government Shutdown

Ken O’Brien

As defined-benefit pensions gradually disappear from the U.S. workplace, workers are increasingly relying on 401(k) plans for retirement security.  One casualty of the House budget talks to avert a government shutdown may be a proposed rule requiring investment advisers to act in the best interests of their clients, according to multiple House Democratic sources.

Backers of the fiduciary rule say it would give workers some basic protection by discouraging 401(k) brokers from pushing plans based on the fees going to those brokers' firms -- fees that, over the course of a worker's career, can significantly eat into a retirement plan's potential growth.