Lawmakers to mull fix for Anniston police and firefighter pension fund
by Brian Anderson
Apr 10, 2012 | 3476 views |  0 comments | 9 9 recommendations | email to a friend | print
An attempt to shore up money for the rapidly depleting retirement fund for police officers and firefighters in Anniston could move forward this week, with local delegates moving the bill through the Alabama Legislature.

A bill amending an act that regulates the city’s Police and Fire Department Retirement Fund is ready to move forward legislators said. Rep. Randy Wood, R-Anniston, said he plans to push the measure immediately in the House, with Sen. Del Marsh, R-Anniston, putting the bill into Senate committee. Wood said he suspects there won’t be any hangups in getting the changes passed.

The changes to the retirement fund, approved earlier this year by the Anniston City Council, would add $1.7 million each year to the retirement fund from a variety of sources, including the recently passed 1-cent sales tax, as well as an increase the contribution from police and firefighters. Employees in the system now contribute 10 percent of their pay toward the retirement fund. If the bill passes, they would pay 14 percent.

Benefits of retirees will also be hit. Currently members can earn a maximum benefit of 90 percent of the average of their last three years’ salary. The changes would drop that to 75 percent.

It’s not a perfect system, but Anniston Fire Chief Bill Fincher said it was one that desperately needed compromise.

“There’s a lot of sacrifice on both sides,” Fincher said. “But considering the options available, it’s a good plan, relatively speaking.”

The proposed changes would also affect the board overseeing the retirement fund. It is urrently a three-person board made up of a member of the police department, a member of the fire department and a retiree , but the new law would add two members –- a City Council representative and the city’s finance director.

“Years ago it was a police, fire and council representative, but they pulled out of that for some reason,” said Anniston Police Chief Layton McGrady. “I think it’ll actually work out better, things will go a lot quicker not waiting around to talk to the council if we have a representative on the board.”

“It’s city money and police money and fire money,” Fincher said. “Everyone should have a seat at the table.”

McGrady said problems with the fund were noticed about five years ago, and the board estimated it would be completely depleted by 2025.

Because the retirement fund was established by a state law passed in the 1950s, changes to it must go through the Legislature. That meant, Fincher said, that time was of the essence.

“It’s not really frustrating, it’s just timely,” Fincher said. “Unless you have a special session, you’re looking at bringing this up once a year.”

It’s not an issue most local police departments deal with, because most departments opt to use the Retirement Systems of Alabama.

“The biggest advantage is you have more people contributing,” said Tommy Thompson, Jacksonville’s chief of police. “It’s a smaller percentage you’re paying to a bigger pot.”

Bill Kelley, the director of benefits for the Retirement Systems of Alabama, said outside of the bigger municipalities in Alabama, including Birmingham, Montgomery, Mobile and Tuscaloosa, most police departments use the system. Besides cost, the biggest advantage to using the system, he said, is the consistency across agencies.

“Say you got a fireman working at Anniston, and then he decides to go to Huntsville, who have a retirement system with us,” Kelley said. “There might be some problems with transferring credit that they could have used if Anniston was with us.”

But switching to RSA suddenly could pose as many problems as solutions.

“Some of them have just been in their own system for so long,” said Bill Paul, the assistant director of benefits for RSA. And if a city is using the state retirement system for its employees, but not its police and fire departments, adding them in can raise the cost across the board for all the municipality’s employees.

There’s also the problem of decreased benefits when a city moves from one system to another.

“If your retirement plan allows you to retire after 20 years, and you switch to us, we have it as 25,” Kelley said. “You’re telling a guy with 18 years he has to work five more years. There’s some problems there, and possible litigation as well.”

While the advantages of uniformity and lower costs can be appealing, McGrady said the RSA isn’t as simple as a quick fix.

“Every private retirement fund is having the same problem,” McGrady said.

Working with the RSA was an early option for the board, McGrady said, but stability problems with the local fund, including the rising costs, “scared them off.” In the end, McGrady said, the board chose a better option in shoring up its own funds.

“We’re doing better than most,” McGrady said. “If everything holds up we’ll be in as good or better shape than what the RSA has to offer.”

Staff writer Brian Anderson: 256-235-3546. On Twitter @BAnderson_Star.

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