ANDOVER — Time is of the essence for town officials’ decision to borrow about $160 million to pay off its pension liability, members of the Investment Committee agreed at their most recent meeting.

The advisory committee, made up of residents who are finance professionals, has been analyzing a variety of potential outcomes if the town borrows money to fulfill the town’s unfunded pension system. Earlier this summer voters approved spending up to $185 million through borrowing because taxpayers stand to save money over the course of the next 20 years before the state-mandated date to have pensions fully funded.

Town officials’ plan to save taxpayers money is dependent on two important aspects — low interest rates and a return on investment that is higher than said interest rate — because the Retirement Board will use the borrowed funds to invest.

“The clock is ticking, the Fed is turning around. Many of the central banks around the world have raised their rates. The clock is ticking,” said Nancy Kimelman, a member of the Investment Committee.

Andover’s pension system was chronically underfunded for years and for about the past decade there have been talks about how to remedy that. With investment rates hitting record lows members of the committee estimate the town will be able to borrow at about a 2.5% interest rate and have an average 5.75% return on investments every year.

The town’s Retirement Board Actuary Linda Bournival walked the committee through multiple scenarios including really great, good and the equivalent of a 2008 worst-case scenario.

In nearly all of Bournival’s scenarios the town has a favorable outcome. That’s why she choose the $160 million figure to borrow through a process of elimination.

“You don’t want to borrow yourself into a surplus,” she said, explaining that the town doesn’t want to take out too much money because then it will be paying off the debt of money it didn’t need.

There’s the potential for “minor emerging” unfunded years if the stock market under preforms, Bournival said, however, a 5.75% return on investment is also “conservative,” she said.

The town is also building up its own reserves, said Assistant Town Manager Patrick Lawlor. He explained the town will continue to save for the pension system and put that money into a general reserve fund so it can be spent on other projects if it’s not needed for the pensions.

Because once the money goes into the pension system it cannot be used for other town expenses, even if it performed really well in the stock market, he said.

Kimelman and fellow committee member Brian Carbone are currently working on a memo synthesizing the committee’s comments from the meeting that will then be voted on by all committee members. Then the committee will take a vote on recommending that the Select Board borrow the money and will present that recommendation to the board later this month.

The committee will likely give a range of how much to borrow based on the interest rate the town can get from a bank when the bond is put out to bid, Kimelman said.

Then, the Select Board will put it out to bid and make the final decision.

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