pensions face uncertainty
Gregory B. Hladky, Capitol Bureau Chief February 02, 2001
HARTFORD — State Treasurer Denise Nappier and several teachers unions warned Thursday that the teacher pension fund could face serious problems down the road unless the state contributes its full share.
For years the state has contributed only 85 percent of the amount that experts say is needed to keep the teachers pension fund solvent in the long term. Nappier and the unions urged the governor and lawmakers to increase the amount to 100 percent and said it would save money in the long run.
"No single issue facing our pension system — and the fundamental integrity of future state budgets — is more important than fully funding the state’s annual pension contributions," Nappier said.
The state is contributing $214.7 million this fiscal year to the teacher pension fund, or 85 percent of the $252.5 million experts say the state should be contributing.
Nappier said this is a perfect time for the state to move up to the 100 percent contribution level.
She said as a result of high pension fund investment returns and actuarial quirks, the state only needs to put in $210.7 million for the coming fiscal year and $221.2 million in 2001-02 to fully fund its contribution.
Continuing to limit the state contribution to 85 percent of full funding is going to force the state in the future to "contribute more … and end up with less," Nappier said.
Pension experts say the number of teachers retiring each year is more than double the number of retired teachers or their beneficiaries who die each year. The result of that equation is that the amount of benefits being paid out is steadily increasing.
There are currently about 22,000 retired teachers or their beneficiaries receiving benefits from the fund, according to William J. Sudol, administrator of the state Teachers’ Retirement Board.
He said projections are for about 1,452 teachers to retire this fiscal year, and more than 1,600 by 2004-05. He said the fund is "probably losing about 500 (pensioners) a year" as a result of deaths.
"There will always be a net gain in the population (that depends on the fund)," Sudol said.
"The teachers pension fund would need an immediate infusion of $2.2 billion in order to reach the level necessary to finance projected payments to members of the system who depend on hard-earned pension checks for their future financial stability," Nappier said.
The Connecticut Education Association, the Connecticut Federation of Education and Public Employees, the Connecticut Association of Public School Superintendents and several other labor groups are all pushing for an amendment to the state constitution to require full funding of the fund.
Gov. John G. Rowland’s staff was noncommittal about the proposals for fully funding the teachers pension fund. "We’re certainly open to discussion about that," said Dean Pagani, the governor’s press secretary, who said the issue will be dealt with in the budget plan Rowland will offer next week.