Welcome to the Hotel California Pension plan
Editor & Publisher
The Town can check into the state retirement system, but it can never leave and that may ultimately be a good thing.
This Commission of seven — of which many columnists and I are often critical of — did something very brave and admirable for the community and our employees over the past week. They managed to negotiate what can only be called a defined benefit plan that will feel like a defined contribution plan for Longboat Key taxpayers.
The proposal puts firefighters into the FloridaRetirement System, which is a defined benefit plan with more than 100 municipalities and tens of thousands of members. The proposal does something that no other community I know of does and could make Longboat Key a pioneer if it is found acceptable by the state. The Town will pay up to 13% of employee payroll as a maximum capped cost. If the cost goes up, the employees will cover the cost.
And that is the feel-like defined contribution component. In essence, the firefighters have contractually agreed to bear all costs above the Town’s maximum 13% contribution. So the risk is on the employees, yet they will have a benefit that is predictable and quantifiable and there is no chance of a future firefighter retiring with nothing and becoming a social problem.
The Town deserves real credit in that they did not push Longboat out of the competitive pension market with a 401A plan.
Each side wanted more. Each side wanted the other to assume the risk. In this case, the grueling process yielded a result that if legally doable, just may set a precedent around the state.
Another benefit going forward is the Town will be out of the active pension business. No more actuaries; no more investment advisors skimming percentages even during the bad years. The FRS system is large and well funded. The town has its costs capped going forward and the firefighters are far more motivated than they were last week when the town was looking to pass a defined contribution plan.
In fact, the willingness of the firefighters to concede and negotiate and act professionally as their retirement plan hung on the balance showed the loyalty and respect they have for this community. Their benefits are being radically altered and their cost for retirement is going up. The fact that they are eager to move foreword tells me we have the kind of firefighters this town wants to see and the Commission was very wise to accommodate them. Job well done.
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