How Big Of A Problem Is Tewksbury's Unfunded Pension Liability?
Future, unavoidable debt has municipalities across the Commonwealth concerned and Tewksbury is no exception.
Question: What is Tewksbury's unfunded pension liability and how bad is it?
Answer: When you talk about the unfunded pension liability of a community, you really also have to talk about the post employment benefit liability. When you put the two of them together, they add up to a budget headache.
Unfunded pension liability is best described as the amount of money the town would owe if everyone working for the town who could retire did retire. In the case of Tewksbury, according to Town Manager Richard Montuori, that number is roughly $65 million.
While that number is imposing, there is a plan in place to address that liability and create a self-sustaining fund to handle future pension payments.
Tewksbury's municipal pensions are handled through the Middlesex Retirement System. The town's annual assessment is around $4 million. According to Montuori, about 72 percent of the town's assessment is placed into a fund designed to eventually fully fund the town's future pensions. In time, that problem will be dealt with.
The bigger problem is the unfunded post employment benefit liability. This includes, but isnt limited to, insurance for retirees. According to Montuori, the unfunded liability for post employment benefits is roughly $160 million. Again, that is for future, potential retirees.
At this point there is no plan in place to address that $160 million.
"We haven’t started putting (together) a fund for other post-employment benefit liability. Right now it's just pay-as-you-go," said Montuori. The town handles overseeing these benefits themselves, as they are self-insured.
Presently, the town pays around $2.5 million per year for those benefits, said Montuori. While the benefits issue has not yet been dealt with, the town manager made clear it is not being ignored.
"It’s an issue and we’re going to need to address it . It’s coming," he said.