Connecticut’s anticipated retirement tsunami may be coming true, as figures from the Office of the State Comptroller show that nearly 7,000 state employees have either applied to retire or have filed an “Intent to Retire” with the state.
According to the Comptroller’s Office, the office has received 4,073 Intents to Retire and 2,895 retirement applications since January 2022. However, the Office warns that the numbers for June and July remain fluid.
The majority of those filings have come since April, with 3,217 state employees filing Intents to Retire since then and 1,943 applying for retirement. Those figures include employees from all branches of government and higher education.
A Notice of Intent to Retire is the form an employee files in order to start processing retirement forms for their intended date of retirement.
The total number of retirement applications and intents to retire amount to more than half of the 13,066 state employees eligible to retire this year, according to a report by the Office of Legislative Research.
That same report estimated roughly 2,700 state employee retirements in 2022 if the state continued to see 21 percent of eligible employees retire, the average rate since 2011.
A surge of 7,000 retirements, should they come to fruition, would dwarf past retirement figures, according to an analysis by CT Insider, which found the previous high for state employee retirements was 2,714 in 2011.
In 2020, Gov. Ned Lamont commissioned Boston Consulting Group (BCG) to study the anticipated retirement surge, brought on by the 2017 SEBAC Concessions Agreement negotiated under Gov. Dannel Malloy’s administration. Under the terms of the contract, state employees who retire after July 1, 2022 will see reduced cost of living adjustments for their pension plans.
BCG’s report – dubbed The Creates Report – estimated that more than 8,000 of state employees in the executive branch alone would be eligible for retirement and analyzed ways for Connecticut’s government to streamline to save money.
But, as the report notes, there were numerous impediments to streamlining services and the Lamont administration has moved to offer incentives for state employees eligible to retire to stay on past the July cutoff.
This past session, the Lamont administration negotiated new wage agreements for the state’s unionized workforce, including two bonuses totaling $3,500 — $2,500 paid out in May and the remaining $1,000 would be paid in July, provided the employee remains on the workforce to receive the extra thousand.
The wage agreements were passed by the General Assembly, largely along party lines with Democrats arguing the pay raises and bonuses were necessary to keep more people in state employment and Republicans arguing that the $1.9 billion price tag was too high and the extra $1,000 bonus would do little to curb retirements.
Eligible employees who retire before July, will have a minimum 2 percent guaranteed annual cost of living adjustment (COLA) for their pension plan, with a maximum of either 6 percent or 7.5 percent depending on their retirement tier.
Following July 2022, the COLA will be adjusted, mandating a maximum 2 percent COLA for years in which inflation is less than 2 percent or less. For years when inflation is over that amount, the retiree will receive a percentage based on inflation. The change also says COLAs will not be paid out for 30 months following retirement.
With inflation topping 8 percent this past year, the country’s economic conditions could be adding fuel to the retirement fire, although, it should be noted that 8 percent inflation would mean employees retiring after July 2022 would see a 6 percent COLA, in line with the maximum amount given to some who retire prior to July.
“With more than 8,000 executive branch employees eligible for retirement in the next year, the state faces significant risk in our continuity of operations, but also a unique opportunity to reinvent and modernize how we provide services to Connecticut residents,” former Department of Administrative Services Commissioner Josh Geballe said in a press release for BCG’s report.
However, if the numbers provided by the Comptroller’s Office are any indication, Connecticut may have a difficult time streamlining enough to make up the difference. State employee unions have urged the state to hire more state employees to replace the outgoing retirees.