Hamden’s neglected public employee pension fund is at about 14 percent of where it should be.
So tonight, there will be a public meeting at the Miller Library to discuss using pension obligation bonds, to take out high interest loans, to plug shortfalls in their employee pension funds. However, this method does not always work out.
If the pension funds make smart investments with the borrowed money, the returns can help pay the interest due to borrowers and sometimes even spin off some extra cash to pay pension costs.
If they don’t, the bonds can create additional costs for taxpayers, put the retirement funds in jeopardy, and even force municipalities into bankruptcy,
Market Watch columnist Robert Powell writes that municipal workers and retirees in the motor city, which has an underfunded pension liability of some $3.5 billion, face the possibility that their pensions could be reduced drastically, perhaps even by 50 percent or more.
Hamden’s Mayor Scott Jackson says the town’s plan includes a pension obligation fund infusion of about $125 million.
If approved by Hamden’s legislative council on July 29, Hamden’s taxpayers would be on the hook for a tax hike of roughly $150 per year for six years.
According to a Pew Center report, Connecticut is among the worst offenders of underfunding, with public pensions funded at under 55 percent in 2010.