The town of Branford, Conn., police department is switching back to its $24 million defined benefit plan from a defined contribution plan following a vote at a town meeting Tuesday, town Finance Department Director James Finch said.
The town of Branford and United Public Service Employees Union agreed to have the Branford Police Department switch to a DC plan in 2011, said a memorandum given to Pensions & Investments by Mr. Finch. The switch was made after the 2008 global financial crisis and also because the town wanted to mitigate investment risks.
Although the DC plan initially appeared to meet the town and its officers' needs, participants became concerned that the plan wouldn't provide sufficient benefits if they became disabled. Plus, the police union was the town's only bargaining unit not covered by a DB plan. These factors contributed to higher turnover rates within the police department.
Participants will not stay in the DC plan as the revised pension agreement mandates they move into the DB plan, Mr. Finch in an email. The DC assets will be transferred into the DB plan as they will be used to offset the liability. Further, DC participants will receive credit in the DB plan from their dates of hire.