Commentary: Potential for Progress on Pension Reform

Commentary: Potential for Progress on Pension Reform

The Fairfax County Board of Supervisors finally appears poised to make additional changes to the county’s unsustainable pension plan. After delaying action for the last three years, a number of options have been put on the table for the board to consider at its June 26 Personnel Committee meeting. There has been some board support for adopting the entire package but the outcome is far from certain. If the package is adopted it will reduce pension costs for new employees by 19 to 25 percent and will still leave county employees with a pension plan better than any of our surrounding jurisdictions. While I believe the board missed the opportunity to develop an overall compensation plan that would provide a mix of salary, pensions, and benefits that would attract the best employees and teachers, these changes are meaningful and I support all of the changes to the general county employee pension plan and most of the changes to the public safety plans.

Currently, employees that begin employment with the county right out of school can retire as early as age 55 with a full pension benefit that is higher than those of surrounding jurisdictions. On top of that pension benefit they get a benefit unheard of today — a pre social security supplement — as early as age 55. The pre social security supplement is an additional county paid supplement that equals the social security payment they would have received if they were 67. Unlike real social security payments that increase with cost of living (less than 1 percent last year), this county paid benefit increases at a guaranteed 3 percent. These retirement benefits are far in excess of what is typical in today’s work environment — even in the public sector.

Fairfax County currently has an unfunded pension liability in excess of $5.5 billion. Pensions alone currently cost the county 30 cents on top of every payroll dollar (about 70 cents if you include all benefits). Funding our pension liabilities competes with employee and teacher salary increases and our ability to fund the high quality of services county residents have come to expect. Since joining the board in 2008 I have been advocating to address our compensation and pension issues.

County staff did an outstanding job of simplifying this very difficult material. Here a link to the details: The changes are anticipated to take effect for new employees hired after July 1, 2019 and because they appropriately impact new employees only, the savings will be in future years.

The proposed changes are summarized below:

  • Increasing the Minimum Retirement Age from 55 to 60 and set it at 50 for public safety employees

  • Increasing from the Rule of 85 to the Rule of 90 – full retirement at salary plus age for general county employees

  • Increasing the Salary Averaging Period from 3 years to 5 years

  • Eliminate the Provision that increases the retirement annuity by 3 percent annually

  • Increase the Employee Contribution Rate by approximately 1 percent

The changes were presented as a package and there was some support for enacting the entire package of reforms; however, the board may advance a more limited package of reforms at its meeting on June 26. Unfortunately, it appears as though the public will not have a formal opportunity to weigh in on the reforms until after the package has been selected and it comes to public hearing in September or October this year. It is important that supervisors hear from residents before the Personnel Committee meeting on June 26 with their opinions on the package.