Pension plan boost for police and firefighters gets wary reception

Pension plan boost for police and firefighters gets wary reception

BY PRU SOWERS

KONK LIFE STAFF WRITER

 

Claiming that some retired Key West police officers and firefighters are living below the poverty level, union pension officials have asked city commissioners to add a “13^th check” to the monthly pension benefits paid to the uniformed retirees.

 

 

The minimum check would be $2,000 and rise from there, depending on a retiree’s benefits plan. The annual cost of adding a supplemental monthly check to the 107 current police and fire retirees would be $42,000, according to Omar Garcia, a trustee with the Key West Police and Fire Pension Plan Board.

 

 

“They are struggling on a fixed income and most have no health care,” Garcia said about the 107 retirees. “We cannot ignore their call for relief.”

 

 

But some commissioners were wary of the idea of boosting the pension payouts. Although retirement benefits for all city employees are paid out of a municipal pension account – the police and firefighters have a separate pension account from the city’s general employee retirement fund – money to pay the monthly benefits is dependent in part on the investment return the pension account generates each year. Currently, the police/fire pension account totals approximately $83 million and generated a gross investment return of 12.9 percent in fiscal 2014.

 

 

That would likely be enough to pay for the requested “13^th check.” But investment returns change from year to year. And when the Key West municipal retirement accounts have a bad year, the city – meaning its taxpayers – has to increase its contribution to make up the difference. Currently the city contributes approximately 30 percent of non-retired police and firefighters’ salaries annually into their pension account. The city’s contribution towards the general employees’ pension account is approximately nine percent a year.

 

 

City Manager Jim Scholl said that he needed more actuarial information before he could recommend to commissioners that a 13^th check plan be approved.

 

 

“It may be [financially sound]. But right now I don’t know because I don’t have the type of actuarial information that I need to say this pension is currently healthy enough and will remain healthy enough to sustain additional benefits at this time,” Scholl told commissioners.

 

 

Commissioner Mark Rossi was also leery of approving an increase in benefits, although he agreed “100 percent” that police and firefighters should receive a pension boost if their pension account could afford it. But he pointed to 2007 and 2008 when the city had to increase its contribution to the police/fire pension fund because investment returns declined during the economic recession that blanketed the county.

 

 

“The city has had to fund this before when your pension plan was not performing this good. And the only reason it is performing this good [now] is because the stock market is at 18,000,” Rossi said.

 

 

“I think we need to know whether, in the lean years, that taxpayers have to put in money. Because that’s a tax increase,” said Mayor Craig Cates, adding, “Everything is good now and everybody is doing well. But we just came off that recession and who know what could happen?”

 

 

Garcia said the police and fire pension plan board has agreed to tie payment of a 13^th check to the benefit plan’s annual investment return. The supplemental check will only be paid if the pension plan generates a net investment gain of at least nine percent in the previous fiscal year ended Sept. 30.

 

 

Commissioners voted 6-0 to postpone voting on the request until the pension plan board produces an actuarial impact statement showing the financial impact of a 13^th check.

 

 

“The 13^th check is based on performance,” said City Commissioner Tony Yaniz. “If it doesn’t perform, you don’t pay it out. I implore this commission to let this move forward and do the right thing. These are people who have toiled for our city and put their lives on the line.”

 

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