Copyright 2006 Denver Publishing Company
Plan would change rules for fire retirement program
By DAVID MILSTEAD
Rocky Mountain News (Denver, CO)
An attempt to end fighting over retirement plans for Colorado’s police and fire departments may have opened new wounds.
The Senate Finance Committee tabled a bill Tuesday that would have fundamentally changed the way local governments can affiliate with the Fire & Police Pension Association of Colorado, removing the ability of many firefighters and police officers to vote on the change.
The state formed FPPA in 1978 to help bail out a number of underfunded local police and fire pensions. For a window of several years, local plans could opt out with a 65 percent vote of the plan’s members.
Many did, including Littleton, city of Boulder police and the West Metro fire department. Today, they have “money purchase” plans where participants put money in but get no specified benefit at retirement.
FPPA is a defined-benefit plan, where the retirement benefits are promised. And that appeals to some police and firefighters.
“I can’t see the light at the end of the tunnel to retire because I’m in a money-purchase plan,” said Ray Rahne, 57, a 33-year member of the Littleton Fire Department.
Two years ago, a law allowed local plans to affiliate with FPPA as long as 65 percent or more of the members voted yes. While 10 have joined, other departments, such as West Metro, Littleton and the Poudre Valley Fire Department in Fort Collins, have had bruising votes that rejected FPPA membership.
“It pitted the old vs. the young, the left vs. the right,” said Ron Simms, a Poudre Valley firefighter.
Dissatisfied Poudre Valley firefighters went to Rep. Bob McCluskey, R-Larimer County, to find a way to allow some department members to join FPPA without a vote.
The legislation that emerged, after negotiations with FPPA, would take away choice for some in order to give it to others.
The bill would allow a government employer of police and fire personnel to join FPPA without a member vote. FPPA’s current employer contribution rate of 8 percent of salary is below most money-purchase plan rates, giving the local governments an incentive to join.
If a local government joined -FPPA, its existing fire and police members could choose between -FPPA and their old plan. All new hires would be mandated to join -FPPA. An employer’s decision to join FPPA would be irrevocable - they could never leave.
Local pension trustees, attorneys and vendors were caught off guard by the bill, introduced Monday. They attended Tuesday’s hearing, providing nine opposing witnesses.
Surprised committee members didn’t expect such contention.
“This will spell the demise of these money-purchase plans,” said Rich Denig, president of the Boulder Police Officers Association. “They’ll get smaller and smaller until it’s the last man standing.”
By putting all new hires in FPPA, there will be fewer plan participants to share the costs of the old plans, Denig said.
The permanence of FPPA membership was another issue.
“I’m all about options, and irrevocability doesn’t sound like a very good option to me,” said Todd Mowbray, a trustee of the Aurora Fire New Hire Pension Plan.
Eliminating the member vote requirement to align with FPPA walks away from more than 20 years of Colorado pension law and violates nine collective bargaining agreements with Colorado municipal police, opponents said.
Kevin Lindahl, FPPA’s general counsel, said “the intent of this bill was not to force anybody into FPPA or for FPPA to grab new members.”
It was FPPA that insisted all new hires from the participating departments go into its plan. The reason, Lindahl said, is cost: If new hires are given a choice, only the ones who benefit most from a defined-benefit plan will elect it, hurting FPPA’s finances.
By the end of the hearing, the bill’s sponsor, Sen. Lois Tochtrop, D-Adams County, said she was troubled to see police and firefighters, often from the same department, testifying on opposite sides of her bill.
“These folks have to work together,” she said as she pulled her bill for more negotiations.