Overview of the Plan
The South Walton Professional Fire Fighters have proposed one solution; improvements to their pension plan which they project will save the district $850,000 in 2012. This plan represents a collaborative effort between labor leadership and the pension board. It allows some of the fire district’s senior fire fighters to retire after 20 years of service versus 25 years, required in the current pension plan.
The proposal contains a stop/start provision. If this proposal is adopted, the fire district would not hire replacements for (6) vacated positions, at least temporarily. The current pension plan allows retirement after 25 years of service at 100% of annual base salary.
The proposed plan allows the option of retirement after 20 years at 80% of annual base salary.
The proposal also calls for an additional $600/month stipend upon retirement which is not in the current pension plan.
Pension plan improvements would allow the district to receive more money from a state fund which comes from property insurance premiums. This fund returns a small portion of a levied tax to local governments who have a “local law” pension plan for firefighters. The proposed plan with the stop/start option, or the stop/start option alone without early buyout, qualify as plan improvements.
The pension board has actuarial calculations showing cost savings to the district if this proposal is adopted. Further analyses of projected savings, short and long term, will require an independent actuary study from both a pension and payroll perspective. It is the goal of the district, fire fighters, and taxpayers to ensure the district is aware of all potential costs and that funding for the pension plan is sustainable for the long term.
Fire fighters contribute approximately 7% of salaries to their pension plan with the district (taxpayers) contributing between 23% to 28%. The impact of added years of retirement benefit that will result from a reduction of years of service for retirement should be carefully and thoughtfully analyzed.
The pension plan is reported to be funded at around 63% of the funds necessary to fulfill the plan benefits as currently defined.