AMBRIDGE — Some borough employees have a different option for their retirement now, with no increased costs to taxpayers.
This month, Ambridge Council approved creating a 401K-style plan for the borough's administrative staff. Previously, employees who worked in the front office could participate in the defined-benefit pension program. But that was discontinued in 2014, borough Manager Joe Kauer said.
Council approved an ordinance Tuesday that creates a defined-contribution plan where employees can contribute 1 percent of their salary, which will be matched by the borough.
"This allows the administraitve employees to participate so there was a retirement savings for them," Kauer said. "It's a unique plan that doesn't make a hit on our budget."
Kauer said that in 2019, state aid contributions for pension assistance will help fund the new program. In many communities, pensions aren't fully funded, he said. But a lot of those are defined benefit programs. Since the borough is using a defined contribution program, taxpayers won't carry the burden of an unfunded pension requirement, he said.
"This 401K-style plan is a plan that has the best interest of the taxpayer at mind," Kauer said. "If the markets take a hit, it's not up to the taxpayer to pay more."
There are also changes to the police pension coming this year. In its last bargaining agreement, the department agreed to a Deferred Retirement Option Plan, or DROP pension. The plan gives an officer who is eligible to retire the ability to stay in his job for another three years.
The pension payments the officer would have received during that time are deferred into a "special savings account," Kauer said.
"At the end of the years, he takes that lump sum and goes," Kauer said. "It's an extension of life, if you will."
The bargaining agreement, which was signed in 2013 and expired in 2017, called for the DROP pension to be offered in the 2018 agreement.