Police ponder pension alternative

 

Police ponder pension alternative

 

Date: June 26, 2013
by: Kurt Schultheis | Managing Editor

 
 

 

Town Manager Dave Bullock is giving the 11 members of the Longboat Key Police Department Union until June 28, to decide upon one of three retirement options.

Whatever the union chooses will be a drastic change from its current retirement option, in which officers put 10% of their paychecks into a pension plan the town is determined to close before Oct. 1.

Bullock is offering the union two different pension options with the Florida Retirement System (FRS).

The first is similar to the FRS option Longboat Key firefighter/paramedics took earlier this year, when they agreed to split required FRS contributions 50/50, with the town’s maximum contribution capped at 13%, according to their agreement. The contract also gave firefighters a 3% wage increase.

But with FRS pension costs rising, police officers are leery about taking an FRS option that could take more money out of their paychecks after the town reaches its cap.

That leaves another option that might be more appealing to officers.

Since the start of negotiations in March, Bullock has offered a 401(a) retirement plan that includes a 3% pay increase and gives officers another 7% increase in take-home pay.

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.

As part of the proposal, the town will make a 10% contribution for employees even if they choose to put aside none of their salary to the plan. If an employee, though, invests a 3% employee contribution, the town will match that 3%, giving an employee a combined 16% total contribution to the plan.

And, if the employee elected to make a 3% contribution to receive a town match and utilized the additional 7% for an additional unmatched contribution to the plan, then the total percentage toward retirement, including Social Security, would be 35.4%.

The offer also comes with 2% wage increases in years two and three of the contract.

When police officer and union representative Chris Skinner debated the two FRS options at a June 20 negotiation session at Town Hall, he noted costs in the FRS plan are rising and asked the town to consider an additional 2% a year in pay increases for employees to offset FRS costs.

Bullock said additional pay increases wouldn’t be considered. He replied to Skinner’s request by saying, “Then don’t pick that option. It’s a simple solution.”

At the session, Bullock and town labor attorney Reynolds Allen urged the officers to think about the 401(a) option.

“That option makes more sense to me, and I hope your men consider it,” Allen said.

After the meeting, Skinner told the Longboat Observer why the 401(a) option is both appealing and unappealing.

“Historically, a defined-benefit plan is what government employees have gotten in the past because it’s usually much more predictable,” Skinner said. “It’s viewed as a better option because costs are guaranteed.”

Skinner, though, said that because rising costs in the FRS plan will fall on officers, the 401(a) option is worth another look.

“It can do very well, and there is consideration being taken for it,” Skinner said. “But if the market crashes again, what do we have for our families?”

Officers are also debating whether the alternative would be attractive for officers seeking employment.
Many of the town’s police officers, when hired, already are collecting an FRS pension.

“Whether an experienced officer who already has a pension would like to further enhance his or her FRS plan or have an alternative plan is the question,” Skinner said. “Many officers still believe a pension plan is the better option.”

Skinner said the union “is fragmented right now on what to do because officers are in different points in their career.”

Skinner said he worries that if a 401(a) plan is selected and it’s a deterrent for new applicants, the town will have trouble finding experienced officers.

Bullock, though, said he doesn’t believe the town will have that problem, no matter what option the officers choose.

“Municipalities have always offered their emergency responders pension plans in the past with a handshake and a promise that they will be taken care of no matter what,” Bullock told the Longboat Observer. “But times are changing, and these plans have simply become unaffordable for us to offer in the future unless we can cap our responsibilities.”

Bullock’s patience for a decision, meanwhile, is running thin. With the Longboat Key Town Commission’s direction, Bullock intends to finalize a contract and freeze the police pension plan by Oct. 1, with the town’s other two pension plans.

If the union doesn’t accept an offer by the June 28 deadline, the town is prepared to declare an impasse on the negotiations and offer officers only a one-year contract with only a 401(a) option for a retirement plan.
“The leisurely pace this negotiation process has taken with scheduling meetings isn’t acceptable,” Bullock said at last week’s meeting. “We just have to bring it to an end, and that’s what’s driving us for an answer.”
 


Key Police Department Union 401(a) offer
Town contribution — 10%
Employee voluntary contribution — 3%
Town match of employee voluntary contribution — 3%
Additional voluntary employee contribution — 7%
Total employee contribution — 23% of base wage*
* If the employee decides to make no voluntary contribution, the town will still make the 10% contribution and the employee will have 10% more gross pay to take home, plus the wage increases offered as part of the three-year contract.

Contact Kurt Schultheis at kschultheis@yourobserver.com.

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