Waynesboro Borough will be shopping to see if another company can give better services for their pension plans

February 22 — Two of the pensions for retired employees in the Waynesboro Borough equal about $12 million, combined, and borough staff are wondering if it might be time to look at other companies that offer pension plans. 

At last night’s Waynesboro Council meeting, Borough Manager Jason Stains explained, “The finance committee has been reviewing the statements through our current pension providers over the last several years. Currently it’s with Truest managed by Sterling Financial out of North Carolina. We just received notification that Sterling Financial has now been bought up and the finance committee has been weighing pros and cons about going out for an RFP. We’ve been talking with Jared as chair of finance, we thought that this might be the appropriate time to issue an RFP to see if we’re truly getting the best services for our pension plan.”

Borough council agreed to let the finance committee look around for other plans. 

Pat Ryan of NewsTalk 103.7FM pointed out, “I kind of find it interesting. So we’ve got a North Carolina group and through a pretty big monstrous bank out there and all the things that are at people’s disposal here in Pennsylvania. It caught me off guard but here’s an opportunity for Pennsylvania to step up here.”

Attorney Clint Barkdoll said, “Most municipalities including Waynesboro, there’s a uniform pension plan, meaning like police officers, union employees, and then a non uniform plan.”

Going back in time with the companies, Truest would have been started with the old Susquehanna Bank, which was a Pennsylvania-based bank. They were bought out by BB&T and then BB&T merged with Truest. 

Barkdoll said, “A lot of times these plans just sit on cruise control for a long time and before you know it, you’ve got somebody a million miles away, managing the plan. So it’s probably healthy every five or 10 years to put out an RFP, to see Is there anyone more locally that can manage these plans and might you be able to get better terms, better rates on the management fees. I think it’s healthy that they do it. There’s no harm. Worst case, they just leave the plans sitting where they are. Best case they might move it somewhere that has more PA ties and maybe for a lower fee.” 

Michele Jansen of NewsTalk 103.7FM asked, “Are these defined benefits plans? That’s the word I keep seeing when I look at the municipal Retirement System in Pennsylvania. They really describe it as a defined benefit and those are harder to manage.”

Barkdoll confirmed, “They are because, again, those are guaranteed retirements where they get a certain percentage of their income for life for each year of service. Those are much more difficult to manage. That’s also how the old Pennsylvania pension plans operate. Now that’s been done away with but there’s still a lot of people grandfathered into that old plan. Of course, the problem with those plans, even if the market is performing very poorly, the government body is still on the hook to provide those defined benefits. Essentially, the taxpayers are having to subsidize those plans when the market is underperforming.” 

Ryan added, “Didn’t we go through the hoops of activism getting in the way of what is best for the performance of the pensions here? West Virginia put the brakes on all of these green initiatives here to make sure that we have a fiduciary duty to make the dough.”

In Pennsylvania, State Representative Paul Schemel has been quite vocal about the PA pensions. 

Jansen said, “He’s on the board for the pensions. We have to meet our fiduciary duty first, and not social justice initiatives. Right now the stock market’s doing good. So you probably are hearing less about that right now. I always worry, many people worry. The stock market seems to be running counter to what we’re seeing in terms of inflation and all kinds of things going on. We know there’s different ways that that’s done. But the problem is there’s also the fear that we’re heading for, depending upon world events, depending upon other things that happen, a not so great stock market in the future, which could come crashing down and really disrupt all of this.”

Barkdoll said, “I often say it’s the tale of two economies, because we know the inflationary pressures and the interest rate pressures, all those other issues, but the stock market seems like month after month is hitting record highs, really going back to last fall. So these pension plans that are heavily invested into broad indexes or even your personal 401K, you’re doing really, really well. But if you have that exposure as soon as there’s a downturn that can also go in reverse very quickly.”