Local communities working on pensions

In Michigan, we pride ourselves on working hard and keeping the promises we make to our neighbors. So when policymakers start talking about local governments’ “mounting retirement debt” and the potential cost to taxpayers, we pay attention.

The recent Detroit News editorial (“State isn’t done with pension reform,” July 6) on retirement reform brings this important issue into the spotlight, but overlooks much of the important and innovative work local communities such as Canton Township are already undertaking to bring their retirement obligations into line.

In Canton Township, we worked collaboratively with the township board, leadership and employees to offer a sustainable retirement and health care plan in order to attract and retain quality employees. We adopted a hybrid retirement for our new employees, rather than the traditional defined benefit retirement plan. As a way to address our current liability, we worked with employees to determine a reduced benefits structure on a going-forward basis, with increased employee contributions, while protecting their accrued benefits. In addition we addressed our retiree health care obligations, also known as other postemployment benefits (OPEB), by placing all new hires into a 401(k)-style retiree health care savings account and established a trust to begin to prefunding our legacy retiree health care plan.

This and other innovative steps to manage retirement costs, along with difficult choices, had an immediate positive impact on the township’s financial health and unfunded liability. In fact, as a result of our actions, pension costs have decreased by nearly 10 percent. Through these proactive steps, Canton Township is working toward fully funding our pension plans.

Hopefully the Legislature would look to encourage all local governments to follow a set of best practices to manage their retirement obligations and not harm those that have already taken responsible steps to manage costs.

Wendy Trumbull,

finance and budget director

Canton Township