A study group of Bulloch County government employees from various departments is asking the county commissioners to adopt a defined benefit retirement plan – in other words a pension – and move away from their current 401(a) defined contribution retirement savings program.

After hearing from the study group Wednesday, two commissioners indicated support for one pension program option. All of the commissioners informally agreed to make a decision after a 60-day “due diligence” period, giving the committee and themselves time to gather feedback from a broader representation of the county workforce.

The study group, with about a dozen members, has been working on the topic off and on since last winter. They have heard mostly support for the direction of the change, said the committee’s chairman, Capt. Marcus Nesmith of the Bulloch County Sheriff’s Office.

“I think everyone has received good feedback on this,” Nesmith said. “There haven’t been too many people that have just said, ‘No, this is a terrible idea and I don’t want it to happen.’ There have been some good questions that have been asked, but for the most part I think most employees that we’ve talked with want to see some type of change.”

The elected Board of Commissioners, all present, had the employee committee in for an extended lunchtime work session, along with Greg Gease, field services manager for ACCG Retirement Services. An arm of the Association County Commissioners of Georgia, ACCG Retirement is plan administrator for the county’s current program and would be for the new one.

With data from county administrative staff and the ACCG’s actuarial team, Gease helped the committee present a menu of options, or “scenarios,” for a pension plan and details about how the county could transition to it.

But after noting that it was not his role to recommend any one of the options, he said that a pension program is not inherently better than a defined contribution plan.

“I don’t have a bias one way or the other,” Gease said. “I’ve got really well designed defined-contribution plans. I’ve got very poorly designed pension plans. I’ve also got very well designed pension plans and very poorly designed defined-contribution plans. It ultimately comes down to how they’re funded. If there’s enough money, you can make any plan work.”

Existing plan

One advantage of a retirement savings plan like the county provides now is that if an employee dies before using up their retirement nest egg, the remainder becomes an inheritable family asset. But the contrary disadvantage, as Gease also noted, is that when retired employees outlive the contents of their 401(a), the plan ceases to provide anything.

In contrast, a pension provides a guaranteed income as long as the retired employee lives, but then ceases when that person dies. An exception is survivor benefits, designated to a spouse or other family member, for which the pension plan could also provide some options.

Gease also said that, of Georgia counties that have made a change in their retirement plans during his years on the job, a large majority have gone in the opposite direction, from pensions toward defined contribution programs.

But recently one county has changed to a pension program, another that had changed to a 401(a) is looking at changing back, and one or two others have asked for studies, he said.

‘Not the norm’

“I don’t know if it’s the trend. I just know it’s not the norm,” Gease said. “Again, some have done it. We’ve had two do it very recently, and they’ve done it for some of the same reasons y’all have talked about it, competitiveness, being able to bring in quality folks, because in the public safety sector, they like that word, ‘pension.’”

He said Bulloch’s current retirement program isn’t a bad one of its kind.

But Nesmith said accumulating enough money in their 401(a) to leave it to their heirs isn’t a reality for many of the county’s employees.

“None of us and no one that I know that has worked with this county for 25, 30, 50 years, has generational wealth to leave with what we have now. …,” he said. “What I’ve heard is if you retire and you die in two years, then you leave this generational wealth to your family and the 401(a) wins. If you live seven years or longer, the pension wins.”

Some uncertainties

If the county launches a new pension program, current employees could use their 401(a) assets to buy credited years of service, thus increasing their potential payments in retirement. But not knowing how many employees, especially younger ones, will fully buy in prevents county officials from determining the plan’s exact cost in advance.

The option that two of the elected county commissioners said they favor, and which Nesmith indicated the committee will be describing to other employees, was Scenario 3, forecast to be the least expensive to the county.

It would set a normal retirement age of 65 after at least five years of service, also fully vesting after five years. But early retirement would be available with full benefits at age 60 with 30 years service or reduced benefits at age 60 and 10 years service.

Benefits would be determined by multiplying employees’ average annual pay by their years of service and by 1.5%, called the “multiplier.” In every option, the average pay would be based on the highest paid five consecutive years out of the last 10 before retirement.

Projected to require almost $22.7 million at launch and with an approximate $20 million asset transfer from the current program, that plan could have an almost $2.7 million unfunded liability to start, but that cost to the county could be amortized over 20 years. After launch, the county’s estimated annual required contribution would be $1,049,900, or its recommended contribution (a higher amount to keep the program financially healthier), $1,065,500.

Commissioners speak

Commissioners Chairman Roy Thompson noted that he doesn’t vote, which is true as long as a tie doesn’t occur among the six district-elected commissioners. He said he would leave it to them to choose an option but expressed an opinion against changing employee benefits if it will lead to further tax increases.

“It doesn’t really much matter to me what is chosen, but I am not an advocate of raising taxes to pay for benefits,” Thompson said. “I’m an advocate of raising taxes to furnish raises, like we did this past year, for all employees.”

Commissioner Timmy Rushing and Commissioner Curt Deal said they wanted the committee to proceed with getting more feedback on Scenario 3 in preparation for a commission vote.

“I understand nobody wants taxes to go up. I don’t either. … Nobody in this room I think wants that to happen,” Rushing said. “That is a chance that may happen. But not just for the public (safety) parts but the county, especially Bulloch County at this point in time, we need to be attracting new employees.”

“Now that it’s been stated, I think we need to pick one,” Deal said. “In my opinion, I think that we should zero in on Scenario 3. That’s just my opinion. I think it’s doable. I think it’s doable maybe for the next few years with what’s been paid in.”

County Manager Tom Couch, participating by phone, recommended the 60-day “due diligence” period.

Commissioner Anthony Simmons said the county officials need that time.

“We want to keep employees and we want them to be happy, but we don’t want to raise taxes either,” he said. “We have to make a decision one way or the other. With 60 days to look at it hopefully we can come out with something that’s going to please our employees and keep the taxpayers happy too.”