When Gov. Dannel P. Malloy took office back in 2011 he swore he wouldn’t offer any early retirement deal to state employees to encourage them to leave state service. But in between the two votes on the state employee concession agreement, he did offer to let 40 union employees with 25 years of state service leave under terms of the previous contract.
The State Employees Bargaining Agent Coalition challenged the Malloy administration on that decision and filed a “failure to bargain” complaint with the Board of Labor Relations in October 2011.
Late last week, the two sides reached an agreement that could see anywhere from 10 to 100 employees retire early.
The new agreement, which was posted on state employee union websites Tuesday, gives 1,100 to 1,200 state employees under the age of 55 and who have 25 years of state service the opportunity to retire early under the terms of the current 2011 agreement.
That agreement says that if an individual chooses to retire, their pension benefit will be reduced by 4.5 percent per year for each year they have not reached the age of 55 if they were a Tier I member and 4.5 percent for each year they had not reached the age of 60 if they were a Tier II member. They may also choose a cost-of-living increase as if they had retired prior to Oct. 1, 2011.
Sal Luciano, executive director of AFSCME Council 4, said it may provide some ability to retire to certain employees, but he doesn’t anticipate it will be a huge amount.
“You have to meet the requirements to accept it,” Luciano said. “I’d be surprised if a couple of hundred people take the offer.”
He said the deal isn’t as good as it would have been if these employees retired before the 2011 agreement was inked, but even that deal didn’t offer employees additional benefits for retiring early. Luciano described the earlier offer as a “fair retirement,” but not an “early retirement.”
The 2011 agreement motivated about 2,628 state employees to retire under the decreased 3 percent pension benefit penalty.
Linda Yelmini, director of the Office of Labor Relations, said she doesn’t expect a mass exodus of state employees because they must meet the criteria and there’s really no incentive to take the offer in a down economy.
If a Tier I employee is 47 years old and opts to take advantage of the offer, their pension will be reduced 4.5 percent for eight years, which means their total pension benefit would be reduced by about 35 percent, Yelmini said.
“People aren’t going to want to choose this option,” Yelmini said.
Those who retired before the 2011 agreement was signed only saw their pension reduced 3 percent per year and were entitled to a 2.5 percent cost-of-living increase once they reached retirement age.
State employees who qualified for the negotiated offer needed to guarantee that the state agency they work for won’t replace them. They will need to make a decision before May 1.
“We didn’t give anything extra,” Yelmini said.
She said they made the offer to a small group of state employees in 2011 as a cost-saving measure. At the time, layoffs were on the horizon and state agencies were asked to tighten their belts to help erase a $3.6 billion deficit. State employees who qualified for the offer needed to guarantee that the state agency that employed them wouldn’t replace them.
Luciano said the union coalition agreed to settle the matter with the state instead of going through prolonged litigation that wouldn’t benefit those seeking to retire early.
The state’s hiring freeze enacted on Jan. 22 likely will guarantee that if these employees leave, they won’t be replaced.