Changed Final Salary Calculation

Tennessee (Dyersburg) – Increased Retirement Age, Reduced COLAs, Plan Conversion, Changed Final Salary Calculation

Posted by StuartBuck in Changed Final Salary Calculation on June 13, 2016 with Comments Off on Tennessee (Dyersburg) – Increased Retirement Age, Reduced COLAs, Plan Conversion, Changed Final Salary Calculation

Type of reform:

In December 2015, Mayor John Holden and the board of alderman of the city of Dyersburg enacted several changes to the public retirement plan.  The changes we made in order to implement the reforms mandated by Tennessee’s Public Employee Defined Benefit Financial Security Act of 2014. The board of alderman unanimously approved the changes and stated that the intent was to improve the financial stability of the retirement plan and its members.

The changes to the plan include:

  • A transition of nonvested members and new entrants to a 401(k)-style defined contribution plan.
  • Elimination of the annual cost-of-living-adjustment (COLA), which was formerly 2 percent, for all retirees under the age of 70, and a reduction in the COLA to 1 percent for all retirees between the age of 70 and 74. Retirees over the age of 75 will continue to receive a 2 percent COLA.
  • Change in the eligibility for and calculation of lump sum benefits.
  • Increase in the years of service required to be eligible for unreduced benefits.

Case: 

Aaron Cryer, Brian Peckenpaugh, Jason Alexander v. Mayor John Holden, Board of Alderman of Dyersburg, et. al, No. _______ (Circuit Court for the 29th District of Tennessee, Circuit Judge Russell Lee Moore, Jr.) (June 2016).

Status of litigation: 

The plaintiffs, supported by the unions Dyersburg Fire Fighters Association, IAFF Local 2269, and the Southern States Police Benevolent Association, brought a class action lawsuit, asserting that the new reforms unlawfully deprive retirees of vested benefits and interfere with the right of city employees to retire early with full benefits. They request a full repeal of the reforms, punitive damages, and attorney fees.

In October 2016, Judge Moore denied the plaintiffs’ assertion of a class action.

On October 2, 2017, Judge Lee Moore held a hearing in the case. Both sides argued their positions, and Judge Moore stated he would issue a memorandum opinion.

Texas (Fort Worth) (2014 Ordinance) – Reduced COLAs, Changed Final Salary Calculation, Eliminated Spiking

Posted by StuartBuck in - -View All States - - on March 13, 2015 with Comments Off on Texas (Fort Worth) (2014 Ordinance) – Reduced COLAs, Changed Final Salary Calculation, Eliminated Spiking

Law: Ordinance 21510-10-2014 (October 2014)

Type of Reform:

The ordinance reduces the multiplier used to calculate pension benefits for firefighters by one-half percent (from 3 percent to 2.5 percent); determines retirement pay by using the highest five years instead of the highest three years; and eliminates overtime from pension calculations.

Read more…

California (San Diego)—Increased Employee Contribution, Changed Final Salary Calculation

Posted by StuartBuck in - -View All States - - on February 3, 2015 with Comments Off on California (San Diego)—Increased Employee Contribution, Changed Final Salary Calculation

Law:

California Public Employees’ Pension Reform Act of 2013 (PEPRA) (January 2013)

Type of reform:

The legislation reduced employer contributions, increased employee contributions, and reduced benefits from 3 percent of pensionable compensation to be paid at age 55 to 2.7 percent of pensionable compensation to be paid at age 57. Read more…

California—Increased Employee Contribution, Changed Final Salary Calculation, Eliminated Spiking

Posted by StuartBuck in - -View All States - - on January 6, 2015 with Comments Off on California—Increased Employee Contribution, Changed Final Salary Calculation, Eliminated Spiking

Law:

AB 340 and trailer AB 197 enacting California Public Employees’ Pension Reform Act (PEPRA) (January 2013)

Type of reform:

The legislation reduced employer contributions, increased employee contributions, and restricted final pay to wages, excluding in-kind payments, unused accrued vacation, and overtime.

Read more…

Florida (Jacksonville) — Reduced COLAs, Increased Contributions, Reduced Benefits

Posted by StuartBuck in All on October 15, 2014 with No Comments

Legal action:

The city of Jacksonville has sought to renegotiate a labor contract regarding pension benefits and has proposed legislation that would enact reform.

Type of reform:

Jacksonville’s proposals in labor negotiations have included increasing the number of years of service, changing final average salary calculations, increasing employee contributions from 7 to 14 percent, and reducing the city’s contribution for new hires.

Read more…

Arizona (Phoenix) — Eliminated Spiking

Posted by Leila Walsh in - -View All States - - on July 18, 2014 with No Comments

Law:

Phoenix City Council Pension Fairness and Spiking Elimination Subcommittee Recommendations  (July 2014)

Type of reform:

The adopted recommendations eliminated the inclusion of unused vacation and leave time in the calculation of pension benefits. Read more…

California — Increased Employee Contribution, Changed Final Salary Calculation, Eliminated Spiking

Posted by Leila Walsh in - -View All States - - on May 22, 2014 with No Comments

Law:

AB 340 and trailer AB 197 enacting California Public Employees’ Pension Reform Act of 2013 (PEPRA) (January 2013)

Type of reform: 

PEPRA amended Government Code section 31461, a provision of the County Employees Retirement Law to fundamentally change the manner in which public pensions are calculated. PEPRA reduced employer contributions, increased employee contributions, and restricted final pay to wages—excluding in-kind payments, accrued unused vacation, and overtime. Specifically, the legislation prohibited the use of standby pay, administrative response pay, callback pay, cash payments for waiving health insurance, vacation, and other pay items from the calculation of members’ final compensation for the purposes of calculating pensions.
Read more…

California (San Diego) — Changed Final Salary Calculation, Increased Employee Contribution, Plan Conversion

Posted by Leila Walsh in - -View All States - - on May 22, 2014 with No Comments

Ballot initiative:

Proposition B (June 2012)

Type of reform:

The law froze pay levels used to determine final average pay, required a defined contribution plan for most new employees, and required substantially equal contributions from employees and employers. Read more…

Illinois — Changed Final Salary Calculation

Posted by Leila Walsh in - -View All States - - on May 9, 2014 with No Comments

Law:

HB 3813  Public Act 97-0651 (January 2012)

Type of reform

The bill limited state employees’ ability to take a leave of absence to work for a labor union in order to receive a higher pension based on their union salaries rather than their previous public employment salaries. Read more…

Massachusetts — Changed Final Salary Calculation

Posted by Leila Walsh in - -View All States - - on May 5, 2014 with No Comments

Law:

SB 2079 (June 2009)

Type of reform:  

The bill redefined compensation and wages to include only those wages actually earned by the employee and established that, in the event of pension benefits granted for an injury, the compensation used to calculate such benefits should be based on the average annual rate of the individual’s regular compensation during the 12 months prior to the sustained injury. Read more…

Michigan — Increased Employee Contribution, Plan Conversion, Changed Final Salary Calculation

Posted by Leila Walsh in - -View All States - - on May 2, 2014 with No Comments

Law:

HB 4701, Public Act 264 (December 2011)

Type of reform:  

The bill offered employees the option of raising their contribution for the defined benefit plan or converting to a defined contribution plan; moved new or non-vested employees to a defined contribution plan; replaced retiree health insurance for new employees with a 401(k)-style plan; and excluded overtime pay in calculating benefits. Read more…

New Hampshire — Increased Employee Contribution, Increased Retirement Age, Changed Final Salary Calculation, Reduced Benefits

Posted by Leila Walsh in - -View All States - - on April 24, 2014 with No Comments

Law:

HB 2 (2011)

Type of reform:

HB 2 increased the employee contribution; limited earnable compensation by excluding vacation and sick pay; increased the final average salary calculation period to five years, lowering the maximum benefit;  increased the age requirement; reduced the multiplier from 2.5 percent to 2.1 percent; and repealed an accidental disability exception. Read more…

New Hampshire — Reduced Benefits

Posted by Leila Walsh in - -View All States - - on April 23, 2014 with No Comments

Law:

HB 671 (2003)

Type of reform: 

HB 671 limited benefits to 75 percent of compensation at the time of retirement. Previously, benefits were 75 percent of the currently effective salary of the office from which the judge retired, and, therefore, included any post-retirement adjustments, such as discretionary salary increases for the position and cost-of-living adjustments (COLAs). Read more…

New Hampshire — Changed Final Salary Calculation, Increased Retirement Age, Reduced COLAs

Posted by Leila Walsh in - -View All States - - on April 23, 2014 with No Comments

Laws:

HB 653 (2007) and HB 1645 (2008)

Type of reform: 

The laws recalculated cost-of-living adjustments (COLAs) and redefined compensation.  In addition:  Read more…

Rhode Island (2010 case) — Increased Retirement Age, Reduced COLAs, Changed Final Salary Calculation

Posted by Leila Walsh in - -View All States - - on April 18, 2014 with No Comments

Laws: 

HB 5983 (2009) and HB 7397 (2010)  

Type of reform:  

The laws increased the retirement age and years of service necessary for retirement, adjusted final average salary, and reduced cost-of-living adjustments (COLAs).

Case:

Rhode Island Council 94 v. Chafee, No. PC 10-2859 (Rhode Island Superior Court, Judge Sarah Taft-Carter) (filed May 12, 2010) Read more…

Rhode Island — Increased Employee Contribution, Plan Conversion, Suspended COLAs

Posted by Leila Walsh in - -View All States - - on April 18, 2014 with No Comments

Law:

Rhode Island Retirement Security Act of 2011 (November 2011)

Type of reform:

The law suspended cost-of-living adjustments (COLAs), increased the retirement age, and moved current employees to a hybrid plan. Read more…

Texas (Fort Worth) (2012 Ordinance) — Reduced COLAs, Changed Final Salary Calculation, Eliminated Spiking

Posted by StuartBuck in - -View All States - - on April 16, 2014 with No Comments

Law:

Ordinance 20471-10-2012 (October 2012)

Type of reform: 

The ordinance reduced the multiplier for future years, changed the cost-of-living adjustment (COLA) calculation for future years, raised the number of years used for final average salary, and, to prevent spiking, eliminated the use of overtime for final average salary. Read more…

Texas (Fort Worth) — Changed Final Salary Calculation, Reduced Benefits

Posted by StuartBuck in - -View All States - - on April 16, 2014 with No Comments

Law:

According to local news coverage, the city of Fort Worth proposed in late 2013, during labor negotiations with city firefighters, to limit the pension multiplier and to change the calculation of final average salary by increasing the number of years used and removing overtime pay.

Case: 

Fort Worth Professional Firefighters Association v. City of Fort Worth, No. 048-270181-14 (District Court of Tarrant County, 48th Judicial District) (filed Jan. 22, 2014)

Read more…

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