USA > Massachusetts > Middlesex County > Wakefield > Town annual report of the officers of Wakefield Massachusetts : including the vital statistics for the year 1929 > Part 7
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16
.
95
REPORT OF COMMITTEE ON PENSIONS
nuities, Pensions and Insurance, which reported in 1910 (House Doc., No. 1400), the Commission on Pensions 1913-1914 (House Doc., No. 2450, 1914), the Legislative Joint Special Committee on Pensions of 1920-1921 (House Doc., No. 1203, 1921), and the Commission on Pensions 1923-1925 (Senate Doc., No. 340, 1925). All of these investigating bodies have re- ported in favor of the contributory basis.
In years past, but particularly before 1912, some legislation was enacted to permit cities and towns to pension certain special classes, such as police- men, firemen, laborers, etc., on the non-contributory basis, that is, no con- tributions by the employees to the funds from which retiring allowances are paid, the taxpayers paying all the cost.
These Commissions have found that there were serious objections to the non-contributory plan. While apparently very simple and easy to explain, the non-contributory plan has serious disadvantages. Under it, the costs are concealed, and a comparatively small first cost gradually mounts to alarming proportions, as more names are added each year to the pension roll.
The Commission on Pensions in 1914 mentioned as among its reasons for opposing non-contributory pensions for public employees that the non- contributory plan means a heavy continuing and increasing tax, that it makes inefficiency in the public service by making the dismissal of incom- petent employees more difficult, and that it is disadvantageous to the em- ployees themselves, because it influences their wages adversely.
Under the usual contributory plans, part of the retirement allowance is obtained by deductions from the salaries of employees. Each employee thus accumulates in the savings fund a sum which provides part of his re- tiring allowance. The remainder of the retiring allowance is provided by the employer, that is, the state or county or city or town. Retirement plans along such lines have been operative for state employees of Massachusetts since January 1, 1912; for teachers outside of Boston since July 1, 1914; for employees of Boston and of Suffolk County since February 1, 1923; for employees of the City of Worcester since August, 1924; and for employees of the City of Newton since 1928. Bills introduced at the Legislative Ses- sion of 1929 to apply to the Cities of Somerville, Fall River, New Bedford and Cambridge are on the contributory basis, being drafted similar to the legislation already enacted. Similar plans have been established for state employees in New York, New Jersey and Pennsylvania.
The general principle of these plans, according to the report of the State Commission on Pensions, 1925, is that one-half of the retirement allowance for superannuation shall be provided by the employees' contri- butions with the accumulated interest, and one-half by contributions by the employer. The employees's part of the retiring allowance is usually referred to as the annuity and the employer's part as the pension. Employers
96
TOWN OF WAKEFIELD
generally make provision, however, to cover the service of the employee before the system was established, so that in the cases of employees who retire during a period of years immediately following the establishment of the system, the part of the retiring allowance paid for by the employer is much higher than fifty per cent, and the employer accepts practically the entire cost of providing allowances for those who retire within a short time after the effective date of the system. Students of the problem are agreed in strongly recommending these contributory plans.
Such plans can be put on a sound actuarial basis so that the employee and the employer may know definitely how much should be set aside each year to provide the promised retirement benefits. Under the non-contribu- tory plan the cost to the employer increases with great rapidity from year to year after the inception of a system. Under the contributory system, the employer, if he so desires, may set aside a percentage of the pay roll of employees, which percentage will be fairly constant from year to year, so that a reserve fund may be accumulated, as in old line life insurance, out of which benefits can be paid when due. The tax payers each year in which an employee's service is rendered may be taxed for their part of his retirement benefits. A contributory system may be made more flexible than a non- contributory system. In computing the benefits at retirement, attention is given almost automatically to factors such as length of service and age at the time of retirement. The mathematical calculations provide that each employee shall receive a just equivalent for his contributions.
Socially, the result of a contributory system is better co-operation be- tween the members and their administrative superiors, and an enlarged community interest. Both the employer and the employee have more pre- cise knowledge of the plans, and benefits are provided which are more eq- uitable and advantageous from the viewpoint of both. The employee can accept his retirement allowance with better grace, and there will be far less criticism on the part of the public, when it is known that part of the retiring allowance was paid for by the employee's own contributions. The questions of charity and philanthropy hardly enter into contributory plans, while tax payers sometimes raise such questions with respect to non-contributory pensions.
While the contributory plans now in force in Massachusetts are not uniform in all respects, they are founded on the same general principles. An employee contributes four per cent or five per cent of his salary or wages according to the particular system in which he has membership, his contri- butions being deducted from his pay. These contributions are invested in sound securities, earning interest at the rate of at least four per cent com- pounded annually. Employees may retire voluntarily after attaining age sixty and must retire at age seventy. The employer has the right to retire an employee age sixty or over if the employee is incapable of rendering satis- factory service. The retiring allowance to an employee retiring after age sixty consists of an annuity derived from his own contributions and accumu-
97
REPORT OF COMMITTEE ON PENSIONS
lated interest, and a pension from the public treasury equal to the annuity. If the employee was in service before the retirement system was established, there is an added pension based upon the prior service. The laws usually specify a minimum retiring allowance of $400 ($480 in Boston) to employees having fifteen or more years of service. The maximum pension that the public treasury may be called upon to pay is limited, the greatest amount being in Boston, where the city's share of the retiring allowance may be as great as one-half pay.
Retirement for disability is provided after certain specified years of service, fifteen for example.
Under the contributory system the contributions of an employee who resigns or is discharged are returned to him with compound interest, usually at the rate of four per cent per annum. If an employee dies while in active service, his contributions with accumulated interest are refunded to his legal representatives.
Some contributory retirement systems, such as the Boston Retirement System, provide a benefit of one-half pay to the widow or children, if proof is shown that the employee was killed in or died as a result of an accident while in the performance and within the scope of his duty.
When a contributory retirement system is established, employees then in service may become members if they so elect. New employees have to become members as a condition of their employment.
The actuary was instructed to ascertain the cost to the Town of Wake- field of a retirement system on the contributory basis. The heaviest cost in a retirement system is to pay the benefits for service rendered before the system is created. Under the Boston Retirement Act and the State Em- ployees Retirement Act, the amount of this benefit for prior service is based on the annuity and pension that would have resulted if the retirement sys- tem had been in effect when the employee first entered the service and the employer had invested in a fund each year the amount each employee would have contributed plus the amount the employer would have contributed and these funds had accumulated at four per cent compound interest. If a retirement system were to be established in Wakefield with employees here- after paying five per cent of their salaries to a retirement fund, the accrued liability to the Town for service of employees before the system became es- tablished would be in the vicinity of $200,000* as of January 1, 1929. This is the lump sum the Town would need to have invested to meet its obliga- tions for pensions to all regular employees based on past service. Usually the legislature provides that this obligation be funded over a period of thirty years. According to the interest tables, four per cent interest, showing present values, approximately $12,000 per year should be appropriated
*In the computations the actuary made allowance for the probability that some employees will leave the service or die before reaching retirement age.
98
TOWN OF WAKEFIELD
each year for thirty years to pay the Town's share of retirement benefits, for the employees' service before January 1, 1929.
In addition, for service rendered after the system becomes established, the Town would have to appropriate an amount that would be equivalent at the time of retirement to the employees' contributions of five per cent of their salaries. This amount, as well as the contributions for prior service, would be definitely determined after a retirement system is established, and it is known how many present employees would become members of the retirement system. Assuming that all present regular employees would become members, the cost to the Town to pay its share of retiring allowances based on service after the system becomes effective would be approximately $9000* a year.
The total annual appropriation which the Town would have to make under a contributory system on a reserve basis would be approximately $21,000* annually for the next thirty years. By the end of that time the liability for service rendered before 1929 would be funded, and thereafter the cost would be smaller, except insofar as the growth of the Town means a growth of the number of new Town employees, for whom, according to the plan, the Town would have to set aside funds for future retirement purposes.
Under a contributory plan, as has been outlined, the voters may know with reasonable accuracy what the cost will be for a retirement plan if started in the near future. The cost of $21,000 per year would be a maxi- mum limit, except as necessarily increased by the cost of providing pensions based on increased future salaries and on increased number of employees as the Town grows. The actuary estimates that the cost to the Town for the next thirty years if the system starts in the near future would not ex- ceed eight per cent of the payroll of employees included as members of the retirement system. After the expiration of thirty years, the cost to the Town would probably lie between two and one-half to three and one-half per cent of the then annual payroll of regular employees. This takes into account the fact that some employees will resign or die before becoming eligible to retirement.
The actuary has pointed out to the Committee that deferring the es- tablishment of a retirement system will increase the cost if and when the system is created, for the employees are now rendering service for which credit would be given if and when a retirement system is organized, and no funds are now being set aside by the Town for this contingency.
An advantage of the contributory system is that future retirement allowances for current service would be funded as the service is rendered and that eventually the taxpayers each year would have to appropriate to the pension fund only such part of the cost of future pensions as is based on that year's service.
*See footnote on page 97.
99
REPORT OF COMMITTEE ON PENSIONS
The main reason, if not the only justification for the establishment of a retirement system is to improve the public service. A sound retirement system makes possible the improvement of the service by the retirement of old employees who have become incapacitated. Experience elsewhere shows that public officials will not dismiss incapable aged employees of long service if these have no resources to fall back upon. Furthermore, a sound retirement system would tend to retain the services of competent employees and prevent the wastes of rapid turn over. In other places a retirement system has been found to improve the morale of the service. The advan- tages of the establishment of a sound retirement system are many. Further- more, it has been pointed out that a retirement system would mean some saving, in that older employees could be retired and replaced by young active employees who could render more service at less salary cost.
Your Committee unanimously favors the contributory system when a pension system is established. Under a contributory system the costs would be definitely known, and hereafter each generation of taxpayers would pay its share of retiring allowances based on service rendered by Town employees to that generation.
The only pension legislation that has been accepted by the voters of Wakefield was Chapter 503, Acts of 1912, which was accepted in November of that year. This Act is now included in Chapter 327, General Laws, Section 77, first paragraph of which reads as follows:
Section 77. (a) Any laborer in the employ of a city or town, except Boston, which accepted chapter five hundred and three of the acts of nineteen hundred and twelve, who has reached the age of sixty and has been in such employ for not less than twenty-five years and has become physically or mentally incapacitated for labor, and any laborer in the employ of such city or town who has been in such employ for not less than fifteen years and has become physically or mentally incapacitated for labor by reason of any injury received in the performance of his duties for such city or town, may at his: request, in cities, with the approval of the mayor, or in towns, with the approval of the selectmen, be retired from service; and if so retired he shall receive from the city or town for the remainder of his life an annual pension equal to one-half of the annual com- pensation paid to him as a laborer at his retirement. Any laborer in the employ of such city or town who has reached the age of sixty-five and has been in such employ for not less than twenty-five years, including the time when incapacitated by reason of sickness, not exceeding two years in the aggregate, as certified by a physician in regular standing, shall be retired from service, and shall receive from the city or town an annual pension computed in the manner hereinbefore set forth.
An amendment passed by the Legislature (Page 179, Acts of 1920)
100
TOWN OF WAKEFIELD
broadening the definition of laborers to include foremen, mechanics, store- keepers, etc., has not been adopted in Wakefield.
No pensions, so far as the Committee can ascertain, have been granted to Wakefield Town laborers.
The only other Wakefield employees now covered by a pension law are the public school teachers (including the superintendent, principals, super- visors, etc.) who have been included as members of the State Teachers' Retirement System organized in 1914 on a contributory basis. Wakefield teachers in 1928 contributed $8,683.63 from their salaries to the State Teachers' Retirement Fund. On December 31, 1928, 109 Wakefield teachers were recorded as members of, this state system. Some former Wakefield teachers have been retired in accordance with the provisions of the Teachers' Retirement Law.
Your Committee was directed to investigate the advisability of the Town accepting the provisions of Section 85, Chapter 32, of the General Laws, which, if accepted, provides for pensions to members of the Police and Fire Departments. Section 85 provides:
The Selectmen of every town which accepts this section or has accepted corresponding provisions of earlier laws by a two-thirds vote at an annual town meeting shall retire from active service and place upon the pension roll any permanent member of the police de- partment and any permanent member of the fire department of such town found by them to be permanently incapacitated, mentally or physically, for useful service in the department to which he belongs, by injuries received through no fault of his own in the actual per- formance of his duty. They may also retire and place upon the pen- sion roll any permanent member of either of said departments who has performed faithful service in the department for not less than twenty-five years continuously, and is not less than sixty. Every person so retired shall annually receive from the town as a pension a sum equal to one-half of the annual compensation received by him at his retirement. The selectmen may in an emergency call upon any person so pensioned for such temporary service in the depart- ment from which he was retired as they may deem him fitted to per- form, and during such service he shall be entitled to full pay.
Chapter 402 of the Acts of 1928 liberalizes the payments which may be made to the dependents of police officers and firemen killed in the discharge of their duties. Section 89 of Chapter 32 of the General Laws is amended by said Chapter 402 to read as follows:
Chapter thirty-two of the General Laws, as amended in section eighty-nine by section three of chapter five hundred and four of the acts of nineteen hundred and twenty-four is hereby further amended
101
REPORT OF COMMITTEE ON PENSIONS
by striking out said section eighty-nine and inserting in place thereof the following: Section 89. If a member of the police or fire force of a city or town which accepts this section, or a member of the depart- ment of public safety doing police duty, is killed, or dies within six months from injuries received while in the performance of his duty as such member, and it shall be proved to the satisfaction of the mayor and city council or selectmen, or of the commissioner of public safety subject to the approval of the governor and council, as the case may be, that such death was the natural and proximate result of an accident occurring during the performance and within the scope of his duty as such member, and the attending physician or medical examiner shall certify to the city, town or state treasurer, as the case may be, that the death was the direct result of the said injury, there shall be paid except as hereinafter provided out of the city, town or state treasury, as the case may be, to the following dependents of such deceased person the following annuities: To the widow, so long as she remains unmarried, an annuity not ex- ceeding one thousand dollars a year, increased by not exceeding two hundred dollars for each child of such deceased person during such time as such child is under the age of eighteen or over said age and physically or mentally incapacitated from earning; and if there is no widow, or if the widow dies, such an annuity to or for the benefit of such surviving children in equal shares, as would have been payable to the widow had she lived. If the widow remarries, the aforesaid annuities to her shall terminate and there shall be paid an annuity not exceeding two hundred and sixty dollars a year to or for the benefit of each such child. The total amount of all such annui- ties shall not exceed two thirds of the annual rate of compensation received by such deceased person at the date of his death. The amount of any such annuity shall from time to time be determined within the limits aforesaid by the mayor and city council, the select- men, or the commissioner of public safety, subject to the approval of the governor and council, as the case may be.
If this section as amended, is accepted by the Town, due provision will be made for the dependents of any members of the Town fire and police departments who may be killed or die from injuries received in the per- formance of their duties.
Chapter 157, Acts of 1927, authorizes indemnity to policemen, firemen and members of fire departments for loss of pay due to absence from duty because of injuries suffered in the performance thereof, and reads as follows:
Chapter forty-one of the General Laws is hereby amended by striking out section one hundred and inserting in place thereof the following: Section 100. A city, town, fire or water district may indemnify a police officer, fireman or member of the fire department or a person required to assist a police officer in the discharge of his
102
TOWN OF WAKEFIELD
duties, to an amount not more than the amount recommended by the board or officer authorized to appoint police officers, firemen or mem- bers of the fire department of such city, town or district, for ex- penses or damages sustained by him while acting as a police officer, fireman or member of the fire department or as such assistant, or incurred by him in the defence or settlement of an action brought against him for acts done by him while so acting, and such damages may include loss of pay by reason of absence from duty on the part of such officer, fireman or member because of temporary incapacity caused by injury suffered through no fault of his own while in the actual performance of duty; and, if such officer, fireman, member or person be dead, such expenses or damages shall be payable to his widow, or, if he leaves no widow, then to his next of kin who, at the time of his death, were dependent upon his wages for support.
The members of the Committee recognize the value of the faithful . services which the members of the police and fire departments are rendering to the Town. The Committee also recognizes the value of the services being rendered by employees in other departments. These employees are sub- ject to hazards, although, doubtless different from those of the police and fire departments. Your Committee does not see how it can discriminate in the matter of pensions for long service between certain classes of Town employees when all classes are rendering valuable service and are meeting with the hazards of their respective occupations in the discharge of their duties.
Your Committee, therefore, feels obliged to recommend against the acceptance of Section 85 of Chapter 32 of the General Laws providing for pensions for policemen and firemen on the ground that the voters should not discriminate and give special advantages to persons employed in two departments, but the Committee believes that when a retirement system is established, it should be on a contributory basis, to include all regular Town employees including members of the police and fire departments.
To establish a retirement system for the Town employees would require a special act by the State Legislature. There is a General Law which any City or Town may accept, Chapter 619, Acts of 1910, now incorporated in Chapter 32 of the General Laws, Sections 26-31, but this legislation was passed before the great change in economic conditions. This law limits the salary basis of employees' contributions and provides that wages in excess of $30.00 a week shall be disregarded for assessments and in computing the amounts of retiring allowances. The minimum retiring allowance under this law is only $200. This law has not been brought up to date by the Legislature and is now considered obsolete. It does not fit modern condi- tions. We cannot find that any city or town has established a retirement system under this law, but where a retirement system has been established for all municipal employees as in Boston, Worcester and Newton, special acts have been passed by the Legislature.
103
REPORT OF COMMITTEE ON PENSIONS
In spite of the advantages that would be derived from the establishment of a sound contributory retirement system for all regular Town employees, your Committee does not feel warranted in urging its adoption this year when so many expensive proposals face the voters. Even if the cost of a retirement system were cut down by reducing the employees' and the Town's contributions thereby limiting the benefits under the system, a retirement system of any value would cost at least $16,000 annually or approximately eighty cents on the tax rate. In a few years the town's financial condition may improve enough to warrant this expenditure, and we believe that some- time in the future may find the Town in a better financial condition to inaugurate a retirement system.
The 1928 tax rate of Wakefield, $34.40, is considerably higher than the average rate for the state of approximately $29.65. Our valuations, from such information as we can obtain, are not low in comparison with those prevailing in most other communities. Only forty-six towns and cities of the 355 in the State have a higher tax rate, according to such in- formation as is available.
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.