Pensions pumped: County primes fund with $1M

HOUGHTON – The pension fund for Houghton County employees was replenished on Tuesday.

The County Board approved an additional $1 million in payments to reduce the unfunded liabilities in the retirement plan.

The county was already paying $800,000 to the Municipal Employees Retirement System for its unfunded liabilities, which stand at about $11 million.

Commissioner Scott Ala, who cast the sole vote against the expenditure, said the county needs to go back to its employees and ask them to pay more into the system.

“I absolutely would go in to every single one for an opener right now, and say the account is that critical, and it is,” he said. “I think that they have to see the importance of this.”

Ala said MERS’ Upper Peninsula manager had recommended going to the employees and told him Houghton County employees were paying less into the system than the average U.P. system.

Ala proposed postponing any payment to MERS until employees agreed to higher contribution levels. He said MERS was willing to give a presentation on the liability to county employees.

Other board members and Administrator Eric Forsberg expressed skepticism that employee unions would agree to reopen the issue of retirement benefits.

“We’ve been able to keep our wage increases low because of this liability,” Forsberg said, noting the sheriff’s department’s wage increase over the past three years of 1 percent, 0 percent and 0 percent.

“Is it better to have it sitting here for (Treasurer) Kathy (Beattie) to reinvest at 2 percent or for MERS at 7.5 percent?” Forsberg said. “The excess cash that we have now could earn more money.”

Forsberg said the MERS fund had lost money two years in his tenure with the county, including last year. Last year was the first the unfunded liability increased according to unsmoothed numbers. Because MERS applies a smoothing system, Commissioner Tim Palosaari said, the losses from 2008 have been factored into subsequent years, making the unfunded liabilities higher than real figures would indicate.

Recent county hires have put their retirement contributions not in MERS, but in a 401k-like system. Because of that, things will get worse before they get better, Palosaari said.

“I said the first thing on the board, we should have been putting $500,000 a year extra into that, but we didn’t have the money,” he said. “Now that we do have it, I think it’s our responsibility.”


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