Water Board talks employee retirement benefits

A means of enhancing retirement benefits for employees was discussed at the Enterprise Water Works Board meeting March 11.

City of Enterprise Human Resources Director Christina Meissner outlined provisions of an offer made by the Retirement Systems of Alabama that will allow municipalities participating in the Employees’ Retirement System to provide Tier I retirement benefits to their Tier II employees.

Meissner said that under the provisions of Alabama Legislative Act 2019-132 municipalities have until May 8 to adopt a resolution and submit that decision to RSA which is set to go into effect at the beginning of the next fiscal year in October.

Meissner said that an RSA decision in 2012 created a Tier II classification. Employees falling under the new classification would have to work for 10 years before becoming eligible for RSA retirement and would not be able to retire before the age 62.

Tier I employees were able—and are still able—to retire after 25 years, regardless of their age.

Because RSA was getting feedback from municipalities that they were having a hard time recruiting and retaining employees under the parameters of the Tier II benefits, a change was made in 2019.

In 2019 RSA provided the option to municipalities to give Tier I benefits to Tier II employees. Municipalities had until May 8 of this year to accept the option for their Tier II employees.

Currently the Tier I employee’s retirement factor is calculated on their last three years of service and a Tier II employee’s retirement is calculated over their last five years of service.

Meissner said that currently 28 water board employees are Tier I and eight are Tier II.

Under the resolution, if the water board opts in to the RSA offer, Tier II employees will pay member contribution rates of 7.5 percent and the water board will pay an increased employer contribution rate, as calculated by RSA’s actuaries.

Meissner told the water board members that she had made a similar informational presentation at the March 2 Enterprise City Council meeting and that the council decided to hold a special work session Thursday, March 18, to discuss the employee retirement option in depth before making a decision.

The water board members opted to take Enterprise Water Works Board President John L. Mitchell’s recommendation that the water board wait to see the decision of the city council before voting on the issue.

The next meeting of the Enterprise Water Board is Wednesday, April 14, at noon. The meeting is open to the public.

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