DEMOREST, Ga. — The Demorest City Council discussed possible changes to the city’s employee pension plan Tuesday night but ultimately tabled the issue while officials seek more information about how the changes could affect Social Security benefits.
The discussion centered on a proposal from the Georgia Municipal Association’s retirement program that could increase pension benefits for current and future city employees.
Council members did not vote on any changes and instead agreed to revisit the issue at a future meeting.
Three options outlined
Josh Colley, a field representative for the Georgia Municipal Association retirement program, told the council the city asked last fall about ways to strengthen its pension plan.
Demorest currently provides a pension based on a 1.5% benefit multiplier, meaning employees receive 1.5% of their final average earnings for every year of service when they retire.
For example, an employee with 10 years of service would receive a pension equal to 15% of their final average earnings once they reach the normal retirement age of 65.
Colley presented three possible changes the city could consider:
• Increasing the benefit multiplier from 1.5% to 2%
• Adopting a “Rule of 75” that allows employees to retire with full benefits when their age and years of service equal 75, with a minimum retirement age of 55
• Combining both changes
The Rule of 75 option is designed to allow long-serving employees to retire earlier without taking a reduced benefit.
Potential costs
Colley said the city currently contributes about $117,724 annually to its pension plan.
Depending on the option chosen, the annual cost could increase by:
• $33,385 to adopt the Rule of 75
• $71,933 to raise the multiplier to 2%
• $116,577 to implement both changes
City Manager Mark Musselwhite told council members the city currently contributes about 5.88% of payroll, or roughly $10,000 per month, to the pension plan.
He said the higher costs would not affect the current budget.
“This would be budgeted into our 2027 [budget], nothing to do with this year’s budget,” Musselwhite said.
Musselwhite also noted the city already provides additional benefits, including covering the full cost of employee health insurance, which averages about $860 per employee each month.
Example of retirement impact
Colley also showed how the proposed changes could affect an employee’s retirement benefit.
Using a hypothetical employee who began working at age 30 and earned a final average salary of $50,000, Colley said the employee could receive about $781 per month if retiring at age 55 under the current plan because of an early retirement reduction.
With the Rule of 75, that same employee could receive the full $1,562 monthly benefit at age 55 instead of waiting until age 65.
If the multiplier were increased to 2%, the monthly benefit could rise to about $2,083, Colley said.
Legal questions prompt delay
City Attorney Thomas Mitchell advised the council not to take action yet because of a potential interaction with Social Security benefits.
Mitchell said he has contacted attorneys who specialize in pension and Social Security law but has not yet received guidance on whether the proposed changes could affect employees’ ability to collect Social Security.
“Until I have a clear picture of how this impacts Social Security … it’s my advice that you all not act on this tonight,” Mitchell said.
He added that pension changes can be difficult to reverse once adopted.
Police chief urges consideration
Demorest Police Chief Casey Chastain spoke in favor of improving retirement benefits, saying the changes could help the city retain employees.
Chastain said former Demorest police chief and current Habersham County Sheriff Robin Krockum had advocated for similar changes years ago and believed stronger retirement benefits could have kept him with the department.
Chastain also pointed to the demanding nature of public safety and other city jobs, arguing that employees need to see a clear retirement path.
“You’ve got a bunch of young guys here,” Chastain said. “They’ve got to be able to see something in their future to stay here.”
Council to revisit issue
Mayor Jerry Harkness thanked Chastain for his comments and said the council would continue discussing the proposal.
“You know, the reason we’re talking about this is we do appreciate everybody and appreciate everybody’s hard work,” Harkness said. “So we’re going to continue to talk about it and figure out a solution.”
