JASPER, Tenn. – City leaders are in the final stages of moving Jasper employees' pension plans from Nationwide Insurance to the Tennessee Consolidated Retirement System.
In April, Paul Johnson, an auditor with Johnson, Murphey & Wright in Chattanooga, said Jasper has lost money because the pension costs came in "extremely high" and much higher than officials anticipated.
In June 2014, Jasper's pension liabilities were $735,000, and that steadily increased to $1.456 million in June 2016, which is the most recent calculation.
At the Jasper Board of Mayor and Aldermen's January meeting, City Attorney Mark Raines said officials held a meeting recently for employees about the planned switch.
The town hired Bill Robinson, an attorney in Chattanooga, who Raines said is an "expert in helping towns and governments and municipalities to work and make sure their retirement plans comply with state law."
Robinson also helps towns switch plans, if needed, and he reviewed Jasper's plan to get it into compliance with state and federal law.
Robinson crafted an amendment to the current plan that would allow city leaders to terminate it, pay the employees all the benefits due under that old plan and move forward with the switch to the TCRS.
The board voted unanimously to approve the amendment and to terminate the Nationwide plan effective April 1.
Raines said the amendment "defines what formula [an actuarial] would use to calculate each individual employee's retirement benefits and the amount of money they're due under the Nationwide plan."
City employees will have the option to take a lump sum or an "annuity payment," which is a certain amount of money each month.
"That's the employees' discretion," Raines said.
The lump sum could be rolled over into an individual retirement account or into the new TCRS plan.
"If they cash that out, there's a substantial penalty for doing that, but that will be that employee's decision," Raines said.
Mayor Paul Evans said the board's votes are "the last steps" in the process to rectify a growing problem for the city's finances.
He said current city retirees and their benefit payment statuses would be unaffected by the modifications to the plan, but current workers would have an important decision to make.
"We [the city] are not going to give any advice, financial advice, to do this," Evans said. "[Employees] need to talk to someone."
Raines agreed and said he recommends each employee consult his or her own financial advisor or get one if they don't have one.
The board put the TCRS's consideration for approval on the agenda for its next regular meeting on Feb. 11.
Ryan Lewis is based in Marion County. Contact him at firstname.lastname@example.org.