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[quote=Anonymous]Pat Herrity (Board of Supervisors) weighed in with some thoughts on pensions:

It is Past Time for Serious Pension Reform. The last Herrity Report contained my detailed thoughts on serious pension reform.  I have summarized those thoughts below.  For the full version please click here.

Most of our residents are in complete disbelief when they learn that Fairfax County offers, and continues to offer, a pre-social security supplement benefit - also known as the second pension.  Employees that started working for Fairfax County right out of college can retire from the County as early as age 55. In addition to their regular pension benefits, which are more generous than surrounding jurisdictions, County employees get a second pension benefit that provides the employee a County-paid benefit equal to social security payments until they reach social security age. Unlike actual social security payments, which saw no increase last year, the County's second pension recipients receive a guaranteed 3% increase.  Serious pension reform in Fairfax County is past due and it starts with elimination of the second pension benefit for new employees.

Here are just some of the reasons I believe we need to eliminate the pre-social security supplement for new general County and school employees:

This benefit does not help recruit or retain employees. Compensation plans should be designed to recruit and retain employees - this benefit does neither.  The benefit is not valued as much as salary by the employees we are trying to recruit. Because the benefit is not paid unless you retire, it encourages employees to retire earlier.
    Fairfax County is the only jurisdiction in Virginia to offer this benefit.
    It is an expensive benefit that adds 6% to the cost of every payroll dollar. This benefit cost the County $35M and the school system $75M in FY 2016.
    The cost of providing this benefit continues to grow and is unsustainable. As people live longer, the cost of providing this benefit continues to grow and continues to crowd out important County and school programs.
    The cost of this benefit is unpredictable. Because this is a defined benefit, poor market returns can significantly increase the cost of the benefit.

As discussed further in the link pension reform starts with eliminating the pre-social security supplement, but we must also address the County's retirement plan and the school system's supplemental pension plan (ERFC). This includes changing the retirement age, phasing out the County's DROP program (allows for retirement payments prior to retirement), reducing the high costs of administering the benefit plans, and investigating the conversion to a hybrid plan like the rest of the counties in Virginia have done. I have not addressed several other pension issues including the optimism of the pension return assumptions and the funding level of the pension liability. We need to keep our promises to our current employees, but must move our compensation programs into the 21st century for new employees.

Our hard working County employees and teachers continue to ask for salary increases to get them to market averages.  Unfortunately, too many of our compensation dollars are going towards pension benefits which competes with the ability to fund employee and teacher raises and attract high quality candidates for openings.  The cost of benefits for County and school employees range from 60% to 80% on top of each payroll dollar, compared to 25 to 35% for most private companies. Growing pension liabilities also compete for funds with the high quality services that our residents expect.

I have been working to address the County's overly generous and unsustainable pension costs since 2010. I spoke about the County and school pension issues repeatedly during the meals tax debate as a prime example of where the County needs to get spending prioritized and under control. Largely as a result of the meals tax discussions, several of the County's civic associations, business groups and community groups have joined me in the call to reform the County's pension benefit programs.

The goal of these reforms cannot just be to make our pension benefits sustainable and affordable, but to change our total compensation packages so that we can do a better job of attracting, retaining and rewarding a quality workforce. Despite a delay in discussing our pension costs, it appears that the Board is finally prepared to look at pension reform. Hopefully this time we end up with meaningful pension and compensation plan reform and not a few more nibbles around the edges. We need to keep our promises to our current employees, but must move our compensation programs into the 21st century for new employees.[/quote]

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