Wednesday, February 09, 2000
Ludlow retirement plans in a muddle
Deductions not forwarded
BY JANE PRENDERGAST
The Cincinnati Enquirer
LUDLOW — New money managers in this financially troubled city now must figure out whether accurate payments were made to employees' pension and 401(k) plans.
For at least several months late last year, the amounts deducted regularly from employees' checks were not sent to the state pension system nor to the workers' personal retirement accounts. Employees were not told of the problem and learned of it only after Police Chief Tom Collins happened to get notification from the state in December that one of his accounts was $400 in arrears.
State officials could not confirm immediately Tuesday that the investments have been brought up to date. Mayor Tom Stacy thinks they have, but the payments will be among the things under scrutiny by the new temporary ac counting help expected to arrive at City Hall today.
“I don't think it's a matter of consciously not paying it,” the mayor said.
He said he hopes new employees hired to replace City Clerk Richard Abney and Deputy Clerk Angie Foulks can come up with ways to make sure the problem doesn't happen again. Ms. Foulks quit last Friday, and Mr. Abney's resignation is effective this Friday.He could not be reached for explanation on the lack of payments.
The lapse will not affect employees' ultimate pension payouts, said Bill Hanes, general counsel for retirement benefits for the Kentucky Retirement Systems in Frankfort. Those payout amounts are guaranteed per employee because the pension system is a defined benefit plan, he said. The city would, however, be assessed fines, he said, to make up for interest the state lost on the money the city did not send.
How 401(k) plans might be affected was not known. Randall Chalk, police grants writer, said he thinks his weekly deductions have been brought up to date. But he doesn't know how much money he might have lost during the weeks his money wasn't invested.
He learned of the problem when a representative of his 401(k) plan called his house to ask whether he was still employed by the city. Because no payments had been received, plan administrators thought maybe he had quit his job.
Assistant Police Chief Benny Johnson said he wasn't sure how his pension had been affected. The mayor wasn't sure how many of the city's employees were affected.
Kentucky Retirement Systems manages payments for county and state pension plans from more than 1,200 governmental agencies across the commonwealth. Of those agencies, only about six to eight are usually delinquent, Mr. Hanes said. State law allows the pension system to fine delinquent entities as a way to make sure the payments are made.
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