2001 LEGISLATIVE CHANGES
To: Firefighter Pension Plan Participants
From: Bill Stefka, Administrator
Date: June 20, 2001
Re: Passage Of Pension Bill SB790
Dear Plan Participants:
Our pension bill, SB790, was passed in the recent 2001 State Legislature.
The Governor signed the bill on June 11, 2001. The following
changes will become effective September 1, 2001:
- Increase the annual permanent COLA (cost-of-living adjustment) from ½% to 1%. (This is if inflation should be at least that amount. This does not limit it to 1%, but merely sets the funding in advance.)
- Increase the retirement multiplier from 3.1% to 3.3% (This represents a 6.45% increase in the amount of the multiplier.)
- A corresponding ad hoc increase of 6.45% in all current retirees' benefits beginning with the September 2001 benefit payments.
- Provide a 75% survivor benefit to all unmarried retirees.
- Extend the DROP from a maximum of 5 years to 7 years.
Section 9.10 has also been added to our statute which allows (not requires) the
pension board, in the future, the latitude to approve optional benefits
that are the actuarial equivalent of the standard benefits under Section
5.04. Many pension plans have several options designed around the
standard benefits, such as to take more benefit up front and leave
less to the spouse upon the retiree's death. Other options may allow
the opposite, whereby the retiree could take less benefit up front
and leave more to the surviving spouse; or to take a sum certain for
a set number of years and so on. Many plans have adopted "permissive
language" allowing the flexibility to adopt options (a menu plan,
for example) on an ongoing basis to enhance their benefit structure
for their membership, without going to their legislature each time.
The key is that any additional options would need to meet the actuarial
equivalency test and requires actuarial certification. Also, please
remember these options would be just that, additional choices which
the retiree could make at retirement, in conjunction with the standard
benefits provided under Section 5.04.
Congratulations on your new benefits package! If you have any questions, please call.
Sincerely,
William E. Stefka,
Administrator
|
