I am urging — exhorting — the good citizens of Andover to contemplate voting in favor of the Andover Contributory Retirement Board’s article on the Town Meeting warrant to increase the cost-of-living base for retirees from the current $12,000 to $14,000. Currently in Andover, the public-sector retirement system only applies the cost-of-living adjustment raise to the first $12,000 of the pension benefit and is limited to 3 percent of the inflation rate. The cost-of-living adjustment is applied to the full amount of the Social Security benefit and the entire inflation rate.
Current Massachusetts public-sector employees pay more into the retirement system than the Social Security tax. The majority are paying 11 percent of their weekly pay for retirement purposes, far greater than the 6 percent Social Security tax. Andover’s employees pay more than $3 million a year into the town’s retirement system. The cost of this $60 per-year increase in pension benefits is rationally balanced between the taxpayers and current employees.
The town of Andover is in an exceptionally strong position to pay for the small increase to the retirement benefits. The town has an enormous amount of free cash (in excess of $12.7 million). The small increase in pension cost represents less than 1 percent of the free cash. The town of Andover does not pay into a 401(k) (retirement) savings programs for employees or the 6.20 percent Social Security tax and has an excellent credit rating.
Andover also has a stable tax rate. According to Sheldon Cohen, former assistant town manager in Andover, communities with a higher tax rate than the town’s include Acton (28 percent higher), Chelmsford (25 percent higher), Wayland (21 percent higher) and Sudbury (19 percent higher). (Andover Townsman, March 20)
The state Legislature contracted with an actuarial firm to study the public-sector retirement system. The firm found that the public-sector pension system cost to Massachusetts’ taxpayer is lower than most peer states, especially when compared to the costs in states that also pay into the Social Security system. When compared to other states, Massachusetts was found to be in the middle of the pack for pension costs. However, when the availability of Social Security was factored in, the totality of Massachusetts’ retirement benefits sank to the bottom 25 percent.