October 8, 2012
At the MLGW pension board meeting on October 4th 2012, there finally was a proposed change to the pension system at the MLGW. I have been pushing for changes for some time and here is what they finally proposed as shown on the attached document.
Option 1- They are proposing to change the 25 years and out, regardless of age retirement rule, to 55 years old and 25 years of service or age 60 with 10 years of service or age 70 with 5 years of service. THIS IS FOR NEW EMPLOYEES ONLY AND PROBABLY WOULD NOT START UNTIL JANUARY 1, 2014.
NOTE: There is a significant difference here from that adopted by the City of Memphis and Shelby County. Both the City and the County adopted a similar change except that at the City and the County the 25 years and age 55 is for uniformed personnel only (fire, police and sheriffs) and the rest of the employees cannot retire until 25 years of service and social security age. The proposed change at the MLGW allows new employees to retire at age 55 with 25 years of service regardless of their work duties. This is a huge million dollar difference. I questioned this difference and said that I could see the age 55 principle should apply to linemen and other physically challenging jobs but that general employees should be 25 years and social security age. President Jerry Collins countered that MLGW was different in that they had many talented and valuable employees who are subject to being hired away by other utilities and that this difference was necessary. To me, that does not hold water as this difference would make it easier for them to leave at an early age. To me, these very valuable employees (how many are there ?) should be paid an industry competitive wage to make sure they are retained.
Option 2- Change the joint and survivor option. This adjusts the joint benefit received by the married participant and his/her spouse so that it is eq uivalent to the benefit received by a non-married participant.
According to the report these two changes going forward could save $2.1 million annually. Consider that the MLGW pension payout last year was $86 million dollars.
This is only the initial vetting of this MLGW 2013 budget. Millions more could be saved with pension changes matching the City and the County and many millions more with matching health care costs with the City and the County due to the fact that the MLGW health care costs are much higher. More on these pension and health care issues later in the week.