EagleTribune.com, North Andover, MA

April 10, 2014

Letter: Andover should raise cost-of-living base for retirees

The Eagle-Tribune

---- — To the editor:

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 warrant to increase the cost-of-living base from the current $12,000 to $14,000 for retirees. 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 of the current public sector employees are paying 11 percent of their weekly pay for retirement purposes, and that is far greater than the 6 percent Social Security tax. Andover employees pay into the town’s retirement system more than $3 million a year. The cost of this $60 per year increase in pension benefits is rationally balanced between the taxpayer and current employees.

The town of Andover is in an exceptionally strong position to pay for a small increase to the retirement benefits. The town has an enormous amount of free cash; the total free cash is clearly in excess of $12.7 million. The small pension increase represents less than percent of the free cash. The town of Andover does not pay into a 401(k) saving programs for the employees, currently does not pay the Social Security tax of 6.20 percent and has an excellent credit rating.

Andover has a stable tax rate. According to Sheldon Cohen, a former assistant town manager for Andover, Acton’s tax rate is 28 percent higher than Andover’s; Chelmsford’s 25 percent higher; Wayland’s 21 percent higher; and Sudbury’s 19 percent higher.

The Massachusetts Legislature contracted with an actuarial firm to study the public sector retirement system. The actuarial 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. The actuarial firm compared pension benefits in Massachusetts to other states. Massachusetts was found to be in the middle of the pack when it comes to benefits paid. However, when the availability of Social Security was factored in, the totality of Massachusetts’ retirement benefits sank to the bottom 25 percent.

Most of Andover’s neighboring communities have increased the pension cost-of-living base: North Reading, Wilmington, Tewksbury, Dracut, Methuen are all at $14,000; North Andover, $13,000; and Lowell, $15,000.

The town of Andover must maintain employment benefits that are comparable to similarly situated communities to support a stable labor force. The costs associated with training police officers and firefighters are enormous. In the event Andover did not provide good employment benefits, those employees would certainly transfer to a municipality that provides reasonable and objective benefits. Those employees are an essential and valuable asset to the town of Andover. The citizens of Andover should not forget what happened to those two firefighters in Boston and the police officer in Plymouth; that could happen in the town of Andover.

Additionally, I am requesting that those citizens that are capable of attending town meeting do so. Pericles, Greece’s greatest statesman, expressed this idea quite forcefully, “We alone regard a man who takes no interest in public affairs, not as a harmless but as a useless character.”

Fred W. Sunderland Jr.