Fire, police pension losses raise concern

By Monica Potts
Staff Writer
Article Launched: 11/17/2008 02:40:32 AM EST

STAMFORD - Pension funds for the fire and police departments were top performers before taking big hits when the stock market began dropping in September, officials who manage the funds told the Board of Finance last week.

Board members wanted to know whether taxpayers will have to kick in to cover shortfalls.

The answer is that no one knows yet.

"This time right now is unprecedented," said Robert Berlingo, pension chairman for Stamford Fire & Rescue. "And it happened very, very rapidly."

Berlingo and Thomas Deegan, a trustee for the police department's fund, said the funds were very healthy for the 10 fiscal years before this one.

Before the national economic downturn this year, the fire department's fund had a surplus of about 12 percent, Berlingo said. Its performance was in the top 1 percent of such funds, he said.

The police department's fund also carried a surplus into this fiscal year and is now about 95 percent funded, Deegan said.

The funds are likely to remain well-funded through this fiscal year because of "smoothing" techniques that mitigate the effects of bad times with the bonuses from good ones, they said.

Surpluses in the last decade reduced the city's expected contributions, sometimes to zero, they said. But the city should assume the surpluses may not continue in the next few years.

Peter Brown, an assistant fire chief and pension trustee, got into a heated exchange with finance board member Joseph Tarzia after Tarzia said he was concerned that the fund could not meet its liabilities.

Tarzia pointed to an 11 percent drop, from $154 million to $137 million, for the firefighters' fund and a 9 percent drop, from $180 million to $165 million, for the police department's fund.

Brown said Tarzia could not look at a snapshot of one moment in time to determine the health of the funds.

"I know how they work," Tarzia shot back.

He pointed to funding and liability levels to show what he believed was a deficit.

"If you know so much, you wouldn't make that statement," Brown said.

Representatives from both funds said it is too soon to tell how badly the funds might be affected by the national economic downturn, but they recovered from similar losses after the "dot com" bust in the early part of the decade.

More numbers will be available in coming months, Berlingo and Deegan said. They told the board they will update them regularly.

Police Lt. Frank Cronin said the department's fund could pay its obligations for five years if the market completely tanked tomorrow. The police force is young, and though there are about 50 officers who are eligible to retire, they do not expect to soon, he said.

"Nobody's making a move right now in this economy," Cronin said.