This week, the City Council voted to give City retirees an increase in their pension benefits, while maintaining a fully-funded pension system.
Retirees typically get an annual cost of living adjustment (COLA) of 3 percent a year, said City Manager George Proakis, but that increase only applies to the first $14,000. On May 13, the Council voted to increase the amount that the COLA is applied to by $1,000. The pension number is fixed based upon an employee’s years of service and their age when they retired, Proakis said.
The increase came at the request of the Watertown Retirement Board, said City Council President Mark Sideris.
“The manager and I attended two retirement board meetings and they had the actuary come in, and the (City) Auditor (Megan Langan), who is also on the Retirement Board, was there,” Sideris said. “We went over the actuary’s numbers.”
Proakis said his first concern was whether making the change would impact the City’s fully funded Retirement System.
“I wanted to ensure a 100 percent fully-funded Pension System, which is something that my predecessor (Michael Driscoll) and this Council worked hard to do and I want to make sure we continue to do,” he said.
The City also is implementing the recommendations of the Classification and Compensation Study, Proakis said.
“The biggest part of calculation is the Class. and Comp. study that raised salaries. The second biggest, much less but still an impact, is we added more positions into the City, and the third is that we are filling and holding more of those positions for a longer period of time,” Proakis said “The impact on cost of living is wrapped into the Fiscal Year ’26 number, but in order to maintain and fully fund with all of those issues we have to bump up (the City’s contribution) for two years in a row.”
To maintain the 100 percent funding of the pension, Proakis said the amount the City puts into the system have to be increased for a couple years.
“We are one of five systems in Massachusetts to be fully funded. We put $1.15 million into pensions every year in addition to the contributions that every employee makes,” said Proakis, who added that City employees contribute about 11 percent of their salary to pension, and do not pay into Social Security.
To maintain the full funding, the actuary recommended increasing the City’s contribution to $3.93 million in Fiscal Year 2026 and $4.04 million in Fiscal Year 2027, and returning to the $1.15 million in following years.
The retirement benefits include both the pension, and the Other Post Employment Benefits (OPEB), such as health care. Watertown has a plan to fully fund OPEB by Fiscal Year 2031. Proakis said the City will still be able to stay on course to meet that goal.
Langan said the increase will help retirees, who won’t benefit from the changes recommended in the Classification and Compensation Study.
“We appreciate (the Council) considering this,” she said. “The Class. and Comp. study did a lot for the active employees, this is giving back a little bit to help the retired employees who built the system for all of the now active employees, who are now contributing to it.”
The Council voted unanimously to approve the increase in the amount that Watertown Retiree’s cost of living adjustment is applied to from $14,000 to $15,000.
Was an entire article required for what looks like according to my math an additional $30 annual cost of living increase?