Ruling sets up dual pension system for younger, older firefighters
St. Louis – While St. Louis fire fighters lost most of Round 3 last week in their legal fight with the City over their pension plan, both Fire Fighters Local 73 and the Firemen’s Retirement System (FRS) pension board approved filing an appeal. So Round 4 is about to begin.
“We were sorely disappointed by Judge Dierker’s ruling, but we are believe that decision will be reversed on appeal,” said Dan Tobben, FRS attorney with Danna McKitrick.
The same sentiment was echoed by Demetris “Al” Alfred, Local 73’s president, who pointed out a little realized fact: a proposal by Local 73 to modify the fire fighters pension plan would have saved the city anywhere from $3 to $6 million a year. When they took this modification to Jefferson City for authorization legislation, the City’s lobbyists fought it and it never saw the light of day.
According to information in Missouri Lawyer Weekly, the mayor’s office says the new pension plan will save the city $5 million the first year and $50 million over the next 30 years.
The fire fighters proposal would have potentially saved the City $90 to $180 million over the same 30 years. The fire fighters’ proposed annual savings were confirmed last year by an independent audit commissioned by the FRS board.
And this was not the first pension change offer by Local 73. It was actually the second time. About a year prior, the local proposed disability pension changes that would have saved the city almost $2 million a year. They successfully lobbied those changes through Jefferson City to get enabling legislation but the City of St. Louis refused to pass implementation legislation. That bill is still lingering in an aldermanic committee.
“The City could have been saving millions of dollars these past two years, and avoided all their legal fees by outside counsel had they agreed with our two proposals and worked with the union to get the second set of changes through the Missouri Legislature as required by state law and then implemented them both,” Alfred stressed.
Alfred pointed out that what has happened is clear proof that the issue of saving money was secondary to the City. “The City’s primary goal was always about gaining control over our pension fund, and they have now, we believe temporarily, achieved that.”
CITY GAINS CONTROL
What the City views as a major victory is control of a new fire fighters’ pension plan as a result of the ruling last week by Circuit Judge Robert Dierker, Jr.
Highlights of Judge Dierker’s ruling:
• Confirms the City’s creation of a new pension system – the Firemen’s Retirement Plan (FRP) — retroactive to Feb. 1, 2013, which will have lower benefits. This plan will not require authorizing legislation from Jefferson City before the City could implement any changes, as is the case with the current plan.
• Establishes a dual pension system.
For current retirees and beneficiaries under the old FRS plan, their pension benefits will be determined by the original plan, in other words, stay the same.
For active fire fighters with more than 20 years of service, their retirement benefits will be determined under the original plan up to Feb. 1, 2013. After that date, the new plan will govern the balance of their pension from Feb.1 forward until they retire.
• Hires after Feb. 1, for fire fighters with less than 20 years of services and new hires, will not be eligible for a return of all their contributions paid into the pension plan, which they were entitled to under the old plan. Fire fighters with at least 20 years service as of Feb. 1 will still see the return of their contributions upon retirement.
Local 73 has made the point several times that over the years fire fighters accepted lower pay in order to see that lump sum return of contributions upon retirement. Facts bear them out: the starting pay for a St. Louis firefighter is $37,514 while the average pay of 30 other comparable cities is $45,516.
Fire fighters are not eligible for Social Security and have no health care in retirement so their pensions are all they have to live on.
• Contributions by fire fighters with less than 20 years of service will increase from eight to nine percent. For these younger fighters, this technically means a nine percent cut in pay because under the old system, they would see a return of all contributions paid into the plan upon retirement. For veteran fire fighters with more than 20 years of service, will still have contributions paid into the pension plan returned in a lump sum upon retirement.
Tobben noted that the unilateral decision to make fire fighters contribute more violates their contractual rights. He told Missouri Lawyers Weekly, “The issue hasn’t been decided in Missouri, but there’s a pretty big basis of decisional law on the federal constitution that says that if you force people to pay more for the same benefits it’s an impairment of contract.”
• The old FRS will cease to exist when all benefits due beneficiaries earned from FRS are fully paid. That could be 50 to 60 years from now.
• The FRS trustees have the right to sue the City if it believes the City is making illegal decisions regarding the pension fund. The City tried to make this effort illegal.
• Changed disability pension requirements, which were being abused by some. Those who are injured and cannot work will get full disability pensions. Those ruled eligible by a doctor for some work, but not as a fire fighter, would get a reduced disability pension.
Local 73 had twice agreed to similar changes and took them to the state legislature for authorization. However, the City refused to implement the first changes and fought the second set of changes to prevent them from going anywhere in Jefferson City.
• Fire fighters retiring before 55 will receive reduced pensions. Under the previous plan, normal retirement at any age paid a full pension.
STILL IN CONTENTION
Tobben told the Labor Tribune that there is still a major issue of contention: can the City establish this new plan without approval of state lawmakers?
He notes that Judge Dierker’s ruling says the old FRS has been terminated but in so doing, it changes the FRS plan, and to change the old plan requires state approval, which has not been granted. “The act of terminating one plan and replacing it with another going forward is actually amending the original plan,” he pointed out.
As for the judge’s agreement on establishing a dual retirement system: “We represent ALL fire fighters, those with 20 years vesting and those who aren’t yet vested, and we’re going to fight for ALL of them,” Alfred stressed.
Originally the City’s first efforts at passing a new pension ordinance called for lower benefits for all fire fighters, regardless of their years of service. That was challenged and the City lost.
The City also attempted to make the FRS trustees personally liable for the cost of lawsuits. They lost that round as well.