Police ponder 401(a) retirement option

 

Police ponder 401(a) retirement option

 

Date: April 10, 2013
by: Kurt Schultheis | Managing Editor

 
 

 

 

Town Manager Dave Bullock is offering the Longboat Key Police Department Union a pension with the Florida Retirement System (FRS), but that’s not necessarily what police officers want.

At a contract negotiation session Thursday, April 4, at the police station, Police Benevolent Association attorney Diane Bailey Morton asked if Bullock’s offer to provide a 401(a) retirement plan still exists. Bullock’s union negotiation team offered a similar proposal to the firefighters, who voted to accept a contract that allows them to shift to the FRS pension plan, instead.

Said Bullock: “Yes, of course.”

Town labor attorney Reynolds Allen outlined the 401(a) plan to the union in a letter dated April 5, noting that police officers who take the plan would not only receive a 3% wage increase, but another 7% increase in take-home pay.

That’s because police officers currently invest 10% of their pay in an underfunded pension plan the town wants to freeze as soon as possible.

“The employee who elects to make a voluntary 3% contribution, which the town will match, will still have 7% more take-home money that the employee can utilize for other purposes, including additional voluntary contributions to the defined contribution plan,” Allen wrote.

As part of the proposal, the town will make a 10% contribution for employees. If an employee invests a 3% contribution, the town will match that 3%, giving an employee a combined 16% total contribution to the plan.

“It is also interesting to note that if the employee elected to make a 3% contribution for the town to match and utilized the additional 7% for an additional unmatched contribution to the plan, that the total percentage toward retirement, including Social Security, would be 35.4%,” Allen wrote.

Police officers also submitted a written proposal at the negotiation session that calls for 3% cost-of-living increases for all three years of the contract, modifying pay-wage step increases, changing the holiday pay benefit from eight hours to 12 hours (officers work 12- hour shifts and only get holiday pay for eight hours) and altering vacation accrual rates, among other requests.

The town did not offer wage increases to the firefighters above the 3% increase, and the police union wage-increase requests aren’t expected to be considered.

The town chose not to respond to that proposal and reiterated it wants to work on freezing the pension plan and agreeing on a different alternative.

Bullock emphasized that plan again Monday, April 8, at Town Hall.

“We’re focusing on the pension issue and a plan moving forward,” Bullock said. “I’m looking to reach common ground on that issue as soon as possible.”

Bullock wants to reach a solution on that issue soon, because, if police officers choose the FRS pension plan option, he wants staff to convert them to the new plan before the Florida Legislature makes changes to the state-run plan.

The town and firefighters agreed to split required FRS contributions 50/50, with the town’s maximum contribution capped at 13%. The contract also gave firefighters a 3% wage increase.

The town offered that same proposal, with the 13% cap, to police officers last month.

 

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