COVINGTON - County employees could soon have a new retirement plan.
County commissioners are considering switching from a defined contribution plan to a defined benefit plan per the recommendation of a committee appointed to look at different options for employee retirement.
Currently, employees have a defined contribution plan, or 401(a), in which a percentage of their income is placed into an account and invested each year. The retirement benefit is based on the account balance at the time of retirement.
Employees may contribute up to 4 percent of their annual salaries, with the county contributing up to 2 percent.
Under this plan, employees assume the investment risks, and with the current unstable stock market, some employees have taken heavy hits, according to Becky Heisten, human resource director for the county.
"If we're totally dependent on the stock market and the stock market plummets, we've got nothing," she said.
So, the committee is recommending the county switch to a hybrid plan that would allow employees to keep their 401(a) plans and add a defined benefit, or traditional pension, plan.
Employees would contribute a percentage of their salaries on a pretax basis, with employer contributions determined by an actuary who takes into account age, length of service and expected investment returns. The retirement benefit would be paid out in a monthly sum, with the county to assume the greater investment risk.
"The county will not put in any more than it currently is. Employees would have to put in ... We're trying to do something good for the employees, but we will not be using any extra money," Heisten said.
However, commissioners were hesitant to approve the new plan without more answers about the county's liability.
"It concerns me that we are being asked to approve a program that I saw at 7 o'clock that puts the county at risk to a degree that I do not know," District 1 Commissioner Mort Ewing said at the board's Dec. 16 meeting.
Nedom A. Haley, with Baker, Donelson, Bearman, Caldwell and Berkowitz P.C. in Atlanta, an outside law firm retained to assess the new retirement plan, could not tell commissioners what it would take to fully fund the plan.
Superior Court Clerk Linda Hays, who served on the retirement committee, recommended the board approve the recommendation, noting that the committee has been looking at plans for a year.
Hays said Newton County is "one of the few counties that does not have a defined retirement plan."
But District 3 Commissioner Ester Fleming said more information and a work session is needed before the plan is approved.
"The buck stops here with this board ... I think we've got a lot of questions and, respectfully, you can't answer them all," he said.
Commissioners agreed to delay action and allow the incoming board to take up the matter.
Heisten said the actuary will take another look at the plan and assess the county's risk.
"We're trying to reassure the employees that we're trying to do something for them as quickly as we can, but reassure the citizens we're doing something that won't bankrupt the county," she said.
Crystal Tatum can be reached at firstname.lastname@example.org.