Bristol’s Amazing Pension Story
Bloomberg Businessweek has a nice article about the city of Bristol and its amazingly healthy pension plan.
What’s amazing about it? Prudent investments, good timing and careful management over the last 34 years have helped the Mum City cultivate a retirement fund that’s about 200% of assets needed to meet its obligations.
It’s so healthy, in fact, that the city is now looking seriously into using some of its $556 million pension strength to boost economic development by investing a small amount of the funds in companies that move to Bristol.
Here’s the novel concept that’s turning heads, says T.J. Barnes, the city’s treasurer and chair of the retirement board: “We want to make investments as an investor rather than as a government entity giving money away.”
“This is the first time I’ve ever seen anything like this,” said Eric Friedman, public-finance analyst at Fitch Ratings.
The Bristol Chamber of Commerce likes the idea for both tangible and intangible reasons, says Chamber president and CEO Mike Nicastro:
“[What] tilts our support in favor of the proposal is the potential to invest in growth for the community. That growth potential can increase the Grand List creating longer-term value for all residents.”
It’s a little risky, Nicastro admits, but the upside is obvious: “Is there another ESPN out there” that could blossom in the Mum City?
Despite the potential limited risk, the good news is that Bristol municipal retirees’ future are secure, notes the Bristol Press.
And helping new businesses could also help reduce the city’s 9% unemployment rate.
It all makes sense, say city leaders. After all, “We’re only investing in our own future,” says council member Ken Cockayne.
“Bristol’s approach is something all Connecticut municipalities and the state should strive to emulate,” says CBIA Economist Pete Gioia.
The state of Connecticut (and many cities and towns) has state employee retirement funds that are under water. According to the Pew Center for the States, Connecticut’s funding shortfall was the worst in the nation in 2010.
However, since then, the Malloy administration has taken action to close the gap, increasing payments to the funds and gaining some concessions from state employee unions.
That’s a good step forward, and more needs to be done. Bristol’s example should be an encouragement to state and local policymakers.
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