Fairfax County supervisors on June 26 agreed to consider in the future a series of pension-reform measures for new employees, including raising the minimum retirement age, expanding eligibility requirements, lengthening the salary-averaging period and removing a pre-Social Security benefit.
Supervisors are considering the measures in an effort to make the county’s pension system more sustainable in the decades to come.
Supervisors, during a meeting of the board’s Personnel Committee, winnowed down the range of options to be debated to these:
• Option 1A: Raise the minimum retirement age in the Employee Retirement System (ERS) from 55 to 60 or at age 65 with at least 5 years of service.
• Option 2 would boost ERS eligibility from the Rule of 85 (i.e., the combination of an employee’s age and number of years worked) to 90. Doing so would require most employees under age 40 to work about 2.5 years longer, said Philip Hagen, budget-services coordinator with the county’s Department of Management and Budget.
Supervisors noted that the board in 2013 had increased the requirement five years from the Rule of 80. The board that year also capped the amount of sick leave that could be used for retirement purposes to 2,080 hours for participants in all three retirement systems.
• Option 3A would increase the salary-averaging period, which is used to calculate employees’ benefits, from the final three years of service to the final five.
• Option 4 would eliminate the pre-Social Security supplement given to workers enrolled in the Employee and Uniformed retirement systems. Critics have noted that many surrounding jurisdictions do not offer this benefit, which the county provides between an employee’s retirement and when Social Security kicks in.
While supervisors generally agreed the above items should be considered, they also agreed to parse Option 9, which would eliminate a provision that boosts the calculated retirement annuity by 3 percent annually.
The proposed reforms would apply to county employees hired after July 1, 2019, and would not affect any current workers.
Supervisors emphasized that teachers would not be affected by the proposed changes because they participate in a different pension system. Many other school-support employees would be affected by policy alterations board members will be considering.
When crafting the series of potential pension reforms, a county work group reaffirmed the government’s commitment to a defined-benefit plan and strove to create a plan that could be sustained in the long term, said Supervisor Penelope Gross (D-Mason), who chairs the Personnel Committee.
The work group also hoped county officials would help employees plan for retirement, arrange for the succession of workers who entered the Deferred Retirement Option Program after retiring and continue to monitor the costs and market of health-care, with an eye on finding cost-saving opportunities, she said.
“We’re not considering these changes to be punitive to our employees,” said Board of Supervisors Chairman Sharon Bulova (D). “We want their retirement to be there and be available.”
The meeting was not without levity. Supervisor John Cook (R-Braddock) was delivering pointed criticisms of the county’s pension proposals when the Government Center’s fire alarm began sounding.
“See? It is an emergency,” he joked.
The proposed changes likely would not be enough to sustain the pension system in the future, especially given that the country is due for another economic recession, and the impact on county taxpayers also must be considered, Cook said.
Supervisor Jeff McKay (D-Lee) worried that increasing the minimum retirement age might harm the county’s ability to attract and retain high-quality employees.
Gross, who noted employees planning for retirement must become more knowledgeable than in decades past, said supervisors still have many pension-reform issues to iron out.
“It will be an interesting discussion,” she said.
The McLean Citizens Association (MCA) long has advocated for changes to the county’s pension programs.
Louise Epstein, who chairs the group’s Budget and Taxation Committee, said county officials unrealistically assume that annual investment returns on pension contributions will be 7.25 percent. Despite some shortcomings, the new pension proposals show some promise, she said.
“While [MCA] would have liked to see the supervisors support more changes, including the proposal to increase county employees’ contributions to their pension plans, the changes the supervisors agreed to consider will help make the county’s three pension plans financially sustainable,” Epstein said.