Aldermen hear proposal modifying city employee pension fund

MANCHESTER, N.H. – This week, the Manchester Board of Mayor and Aldermen received news that the Manchester Employees’ Contributory Retirement System may require changes in order to stay solvent in the future.

Better known as MECRS, the Manchester City Contributory Retirement System serves as the tax-qualified governmental pension plan since 1974. Although it does not include any firefighters or police officers, who participate in the New Hampshire State Retirement System, it currently includes 711 city employees and 458 Manchester School District employees that work over 32 hours a week paying 5% of their salary into the fund, with the city contributing an equivalent of 34.71% of the employee’s pay into the fund.

This fall, the MECRS Board recommended increasing the employee contribution rate to 5.5% and a raise of the retirement age from 60 to 62 in order to maintain the health and future stability of the fund given changes in life expectancy and salaries, with the fund currently standing at around a $275 million obligation to retired employees. The proposed change would also change the minimum vesting period, or timeframe after hiring an employee must contribute into the system before obtaining funds, from five to ten years.

MECRS representatives coming before the board said that representatives of the city’s employee unions were given an opportunity to provide their input on the changes, but Ward 5 Alderman Anthony Sapienza told the representatives that he heard from two union leaders saying they were not given that opportunity.

Matthew Ciechon, a city employee formerly working within the Public Works Department and now working within the city’s central vehicle fleet, said that a limited amount of union officials responded to the invitation to discuss the proposed changes and none that did discuss the changes opposed them or supported them.

“None of the unions are going to like changes, but by the end of the meeting, they understand why the changes were happening,” he said.

Ciechon, a member of the MECRS board, stated he ran for the board to avoid a proposed hike to 7%, which he felt was inappropriate. Originally, that hike would have been limited to newly hired employees, although this was determined to be an impediment on attracting new employees into city positions. Ciechon also said that different contribution tiers for different employees could lead to jealousy and animosity in the workplace.

Sapienza expressed concern that union employees still may not accept the changes and felt it would have been more appropriate to split the .5% hike between employee contributions and city contributions, but Ciechon said that the board felt that the city’s 34.71% rate was already high as it was.

Manchester Mayor Jay Ruais says he was told that this proposal was a fair compromise and was told on during the meeting that without the compromise, participants in the program may either see fewer benefits in the future or higher contribution requirements to see the same level of benefits.

Although the state legislature has the final decision on the changes, it was indicated during the meeting that state legislators would have been unlikely to accept the proposal without Aldermanic recommendation, which was given during the meeting.