Andover faces rising pension costs and must take action to meet the challenge, three local officials said.

Town Manager Andrew Flanagan said the town pays about $11 million per year for pensions for retired municipal employees. That amount is projected to rise to $32 million by 2035, he said.

"We need to come up with a multi-faceted plan," he said.

Some of the options being considered include finding new funding sources and increasing the contributions employees pay into the pension fund, Flanagan said.

Town Accountant Hayley Green said membership eligibility is also being reviewed. At present, she said, town employees who work 20 or more hours per week are eligible for the pension plan.

Nearby communities require their employees to work longer hours to be eligible for pension coverage, she said. Wakefield and Methuen both require employees to work a minimum of 30 hours a week to qualify for pensions.

Thomas Hartwell, a member of the Andover Retirement Board, said only 48% of Andover's future pension liability is funded – meaning that at the present rate of receipts and expenditures, only 48% of that liability can be paid by the town.

Andover has one of the lowest funded pension plans in the state, he said.

"We need to have reform," Hartwell said.

During the last few years, the town expected an investment return of about 8% on the pension fund, he said. Instead, the return was only 4.39%, according to Hartwell.

"You're not going to be able to invest your way out of this," he warned.

Green said she is awaiting an analysis of the pension situation by an actuary, an expert on predicting future numbers of a financial account.

 

||||

This Week's Circulars

Recommended for you