Maine news, sports, weather | Kennebec Journal, Augusta, Maine

Extending payments is sensible for retiree costs

We need complete and accurate data about public employee retirement and retiree health care. Tony Payne's column (July 11) about these topics did not increase the public's understanding.

That was probably not the purpose.

Prior to 1994, the retirement unfunded liability resulted from a number of factors, some going back to 1970. Article IX, Sections 18-A and 18-B of the Maine Constitution passed in 1995 brought greater fiscal discipline to the funding of the retirement system, resulting in a substantial improvement in the funding of the retirement system, unlike many other public pension systems across the country. Current public employees and those who have retired in the past 15 years have not added to the unfunded liability, nor have they received the types of benefit enhancements seen elsewhere. They certainly did not cause the recent investment losses.

The most sensible approach for managing the increased requirement of the retirement system caused by investment losses would be to increase the term over which the unfunded liabilities resulting from experience losses must be retired and to extend the term over which the unfunded liabilities that existed on June 30, 1996, must be amortized.

Retiree health care benefits had been funded for many years on the same pay-as-you-go basis as state government programs. In fiscal year 2008, the state completed a transition to an actuarial method of accounting for retiree health care benefits that included the recognition of the estimated future value of these benefits for current and future retirees in compliance with a change in accounting practice. This change was not in response to any adverse change in retiree health care.

John Nicholas

Winthrop