Fiscally Responsible Pension Agreement

February 2, 2017

Fulfilling our pension obligations looms as the most important and urgent issue Connecticut faces for long-term economic viability. We needed a comprehensive agreement that presents solutions and not just temporary fixes.

That is why I am pleased to report that we voted on an agreement between the executive branch and state employee bargaining units (SEBAC) that will help stabilize the state’s long term pension payment obligations.

The agreement has received support by a variety of organizations such as the Connecticut Business & Industry Association and the Pew Charitable Trust, as well as the S&P and Moody’s credit rating services.

This agreement addresses unfunded pension liabilities that are largely the result of:

  • Being a “pay as you go” system until 1971- meaning we were not pre-funding pensions that were promised.
  • Using a funding formula for pensions that was not adequate – and allowed liabilities to continue to grow.
  • Early retirement incentive programs that were not worked into the actuarial formula.

If we did nothing, pension contributions from the general fund would increasingly crowd out other expenses in the budget as we look to “catch up” on the failures of prior administrations to do the right thing.

Read more about the pension issue HERE.