NAHANT — The Board of Selectmen voted unanimously to approve Essex Regional Retirement System’s 2% cost-of-living adjustment (COLA) for eligible retirees Wednesday evening.
If approved by at least two-thirds (13) of ERRS’ 19 municipalities by June 30, the rate increase would supplement last year’s 3% adjustment. It would be applied to the first $16,000 of retirees’ base retirement benefit for fiscal year 2024 starting July 1.
Including Nahant, seven ERRS municipalities have already voted to approve the 5% total COLA and six have rejected it, meaning at least five additional municipalities would have to approve it before June 30 for it to go into effect.
The additional 2% COLA would distribute roughly $6.5 million to more than 2,000 retirees throughout ERRS’ communities. Nahant, Vice Chairman Joshua Antrim said, would fund the approximate $12,000 annual cost through real-estate taxes — which works out to roughly an additional $10 per year for each Nahant household.
Antrim said he was hesitant to vote on the increase at last week’s Board of Selectmen meeting, as he did not want to spend the town’s money without a thorough understanding of where it would go, and how much the town would be responsible for paying.
“I’m not prepared to vote in favor of this until I have a better understanding of what’s needed and what’s typical for cost-of-living increases at its most fundamental level,” Antrim said June 21.
At Wednesday night’s meeting, Antrim said the relatively-low estimated tax burden, and its limitation at the first $16,000 of a retiree’s pension, makes the increase seem reasonable to him.
“This 5% is only on the first $16,000 of a pension, so 5% of $16,000 is $800 a year,” Antrim said. “If a person has, as an example, an $80,000-a-year pension, $800 is a 1% increase. If they have a lower pension such as $40,000, that’s a 2% increase. That goes a long way for me in terms of fairness to our current employees.”
Former Gov. Charlie Baker approved the 5% COLA option for local retirement boards last fall. Antrim said the town is required by state law to fully fund its retirement system by 2035, and currently funds only 60% of it. The COLA increase, Antrim said, would put Nahant on track to meet the Commonwealth’s funding requirement over the course of 12 years.
Town Administrator Tony Barletta said that the COLA’s approximate $12,000 annual cost to the town could potentially change should the Commonwealth extend that deadline in the next 12 years.
“We’re pretty confident that we’re looking at about $12,000 a year. As of right now, that’s calculated based on the fact that the system has to be funded by 2035 — that’s what the current law requires — but certainly, the Legislature could, in the next 11 years, extend that out, in which case our cost per year would decrease,” Barletta said. “It’s really hard to say definitively … but it’s a solid number to make your decision upon.”
