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Council agrees by consensus to $1,500 FY2026 retiree supplement; fuller COLA would raise long‑term actuarial cost
Summary
Council provided consensus to include a $1,500 one‑time supplement for legacy retirees in the FY2026 budget; staff and the city actuary said a 5% annual COLA would dramatically increase the plan’s actuarial contribution.
Portsmouth council members on April 22 gave consensus to include a one‑time retiree supplement of $1,500 per eligible legacy retiree in the FY2026 budget, after staff presented actuarial and budget impacts for that option and for an alternative 5% annual cost‑of‑living adjustment (COLA).
Finance staff said the recommended one‑time supplement (an increase from $1,250 to $1,500) would cost roughly $1.4 million in the next fiscal year. Staff also presented an analysis from the city’s actuary, John Hancock, showing that adopting a recurring 5% annual increase for legacy pension recipients would raise the annual actuarial determined contribution by approximately $12.8 million and materially increase the city’s unfunded actuarial liability because benefits would be grown while funding schedules remain unchanged.
City Attorney Lavonda Graham Williams advised that an across‑the‑board payment to all legacy retirees would not likely violate nondiscrimination rules; legal counsel also emphasized the difference between a one‑time stipend and a permanent benefit increase. Several council members said they want to address retiree pay within the annual budget process rather than commit the city to a permanent COLA that would increase long‑term obligations.
After discussion, councilmembers signaled consensus to include the $1,500 stipend in the FY2026 budget; the council did not adopt a permanent pension COLA at the work session. Staff said they will continue to provide actuarial data and will return with further detail during budget deliberations.
