Board of Finance discusses investment options

By Susan MacEachron

The Board of Finance (BoF), at its meeting on July 9, approved investing most of the approximately $1.2 million which reverted to the town from the terminated defined benefit pension plan (DB), in a one-year Treasury Bill (T-bill), and a small amount in a five-month Certificate of Deposit (CD). 

The town froze its pension obligations under the DB plan in 2012 and created a defined contribution plan (DC) for town employees.  For many years the town continued to make annual contributions to the DB plan in addition to the newly created DC plan.  In 2016, and again in 2021, the town offered all DB plan beneficiaries the option to receive a lump sum payout in lieu of their current monthly pension payment or the benefits promised upon retirement.  A significant number of plan members decided to take the lump sum offer.

In January 2024, the Board of Selectmen voted to terminate the DB plan and purchase an annuity contract to satisfy the town’s obligation to the six beneficiaries receiving a monthly payment and to cover the promised payment to the two active employees upon retirement.  The decision to terminate the plan was based upon two factors: to free up excess funds that had accumulated in the plan and to remove the risk and responsibility of managing the assets.  The annuity contract purchased from Mutual of Omaha provides the same monthly payment to each participant in the DB plan as they were receiving or entitled to receive upon retirement.

Susan MacEachron, Retirement Committee chair, described the options for investing the excess funds that reverted to the town after the purchase of the annuity contract. She noted that the BoF had previously approved using approximately $400,000 of the $1.2 million to satisfy the remaining payments on the long-term debt for the ambulance building and the Botelle School windows and doors. The loan has three years remaining and will be fully paid off in November of 2026.  To cover the payment due in November 2024, $135,000 was invested in a five-month National Iron Bank CD, earning 5.125 percent.

The remaining funds, approximately $1.1 million, are being held in a custody account at Union Savings Bank. Michael Sconyers, BoF chair, had asked BoF members Susan Anderson and Myron Kwast to work with MacEachron to review options for a relatively short-term investment.  All agreed that, based upon anticipated expenses for various town projects, a one-year T-bill would be advisable.  The BoF unanimously approved. A one-year T-bill with a yield of 4.88 percent was purchased.