Bill that fixes pension error passes Senate panel
CHARLESTON -- Correcting a miscalculation which led to the underpayment or overpayment into several municipal police and fire retirement plans is part of a bill that passed the Senate Finance Committee on Thursday.
Huntington officials are closely watching House Bill 2837, which was approved by the House last week and now moves to the full Senate. The city's already delicate pension funds could be exposed to greater financial trouble if the legislation were to falter, they say.
Between 1982 and 2012, the state Treasurer's Office used the wrong formula to allocate a portion of the 1 percent surcharge on fire and casualty premiums to the state's municipal police and fire pension funds. The error, which was discovered in an audit conducted last year, resulted in 39 pension funds being underpaid in the amount of $3.631 million.
Huntington's police and fire pension funds were among the 16 retirement plans that were overpaid to the tune of $2.944 million. Huntington's fire pension fund was overpaid $963,719, while its police pension fund received $422,007 more than it should have -- a total of nearly $1.4 million.
The Treasurer's Office was a fiduciary agent for the municipal retirement plans until it handed that responsibility over to the newly created Municipal Pension Oversight Board in 2010. The board was tasked with assisting local pension boards on investments and making sure the local boards used the same actuary so fund projections were uniform.
The Treasurer's Office audited the municipal pension funds after it had transferred the fiduciary responsibility to the Oversight Board. The Board has since started using the correct formula to allocate the fire and casualty insurance premiums to the pension funds.
The Treasurer's Office is trying to make good on the error by bringing forth the legislation. The proposed pension fix is just one part of the bill, which also makes several changes in the Treasurer's Office including investment adjustments, altering conflict of interest policies and shifting to electronic records.
The pension fix proposes to settle up with the underpaid pension funds by pulling money from the state's unclaimed properties fund. The fund contains unclaimed bank accounts, matured insurance policies, and stocks and bonds, among other things. The bill also does not require cities that were overpaid to return any of the funding.
Using those funds to fix the miscalculations was the focus of questions raised by senators in the committee meeting Thursday. Diana Stout, general counsel for the Treasurer's Office, said the fund currently has a balance of approximately $23 million. Moving $3.6 million from the fund to resolve the pension problem will not affect the annual return of money to citizens, she said. The Treasurer's Office pays out $12-$15 million in claims but collects about $15-$17 million in unclaimed property every year, she said.
"At some point, that will drop off dramatically, because there are only so many dollars out there," Stout said.
The bill was forwarded to the full Senate on a unanimous voice vote.
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