Firefighters contribute pension proposal

Imagine this:

You’re trapped on the ninth floor of a high-rise condominium that’s on fire.

Elevators aren’t working, but you know that a firefighter is climbing the stairs, ready to carry you to safety.

Now, imagine this:

That firefighter is 65 years old.

Currently, that’s unlikely to happen because firefighters usually retire in their 50s. But firefighters told town officials during Friday, June 22 contract negotiations that it could be a real consequence of freezing their pension plan and transitioning them to defined-contribution 401(a) plans, as proposed in May by Town Manager David Bullock.

They said that they would have to work longer in a high-risk job to get them to the age at which they could collect Social Security and Medicare benefits.

“Do you want firefighters out here at 65 years of age?” asked firefighter/paramedic Keith Tanner, who serves as the Longboat Key Fire Rescue District vice president.

Tanner told the town that firefighters aren’t willing to accept the proposal and are willing to go to impasse over the issue.

“We will not accept a 401(k) or a 401(a) or a 401 of any type,” Tanner said. “This is not a threat. But we simply cannot do that.”

Instead, firefighter/paramedic Jeff Bullock presented an alternative pension proposal to the town on behalf of firefighters. He asked that the town have both the 401(a) plan and their plan professionally evaluated to determine each proposal’s cost to taxpayers.

The firefighters’ proposal would reduce the current pension multiplier to 3% from the current 3.5% and cap the percentage of salary (currently calculated by averaging the five highest of the last 10 years’ of service) at 85%, a reduction from the 100% currently allowed.

Firefighters would agree that unused sick and vacation time would not be counted toward their average final compensation, which could also reduce benefits and to receive a 3% cost-of-living adjustment every seven years, instead of every five years.

Firefighters presented the town with a scenario in which a firefighter retired at 56 after 27 years of service with an average final salary of $72,000 and $18,000 in unused vacation and sick time. That firefighter could currently retire with 94.5% of his salary. That would drop to 81% under the multiplier reduction and elimination of comp time in final salary changes proposed by firefighters.

The firefighters’ proposal would reduce the number of years of service needed to receive full benefits from 25 to 20, which they said was key to the proposal. A firefighter who retired at 20 years with a 3% multiplier would receive a pension benefit of just 60% of his final salary.

After 20 years, a firefighter would have to decide whether he would enter the Deferred Retirement Options Program (DROP), in which employees are effectively retired and receive their pension benefits but have their current pension payments placed in a separate savings account.

The maximum allowable period for DROP would increase to seven years from the current three years, which firefighters say would allow them to earn approximately $302,400, based on 60% of a $72,000 salary for seven years, to make up the reduction in benefits, while also saving taxpayers money.
The firefighters also propose reducing their required contribution toward the plan from 10% to 7%.

Town Manager David Bullock said that the current pension plan is unsustainable when presenting his proposal to firefighters last month. In the 2012-13 fiscal year, the town’s required firefighter pension contribution will be 60.27% of payroll.

The town manager credited firefighters for the thought they put into the proposal and agreed to look at it. But he challenged some of the firefighters’ premises that relate to issues bigger than the numbers.

He said that at 57 — the age of the retiree presented in the firefighters’ scenario — an employee is still viable in the workforce even if he is no longer a firefighter.

Jeff Bullock, however, said that many of his firefighter friends are no longer healthy enough to work at 57.
“Firefighters who are retired are very viable employees,” David Bullock countered. “Most of them that I know have availed themselves into successful careers.”

David Bullock also addressed improvements, such as stringent codes, sprinkler requirements and better technologies that have lessened risks to firefighters.

“I’m not diminishing your role, but I’m trying to put it into perspective,” he said.

He also discussed a different kind of risk: that of the markets.

“We’re trying to manage the risk of the market and determine where that risk should be placed,” he said. “That’s a public policy question that the country is struggling with.”