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City council votes to approve pension solution

Posted Dec. 12, 2018

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The city council voted to approve the pension plan proposed at last night’s meeting.

Council members voted to approve the plan as follows:

  • For: Mayor Betsy Price, Councilmembers Carlos Flores, Brian Byrd, Cary Moon, Gyna Bivens, Jungus Jordan, Dennis Shingleton and Ann Zadeh
  • Against: None
  • Present but abstained from voting: Kelly Allen Gray
  • Absent: None

The final plan that was accepted by the city council includes increasing contributions from the city and employees, eliminating service credit for future accruals of sick leave and major medical leave, and making changes to Cost of Living Adjustments (COLAs). (More detailed information on each element, and a list of frequently asked questions are being prepared for future distribution.)

Key elements of the proposed pension plan are:

Benefit changes

  • The current COLA has been entirely preserved for the following:
    • Current retirees
    • Any active employees with Blue Service who retire early with a penalty or enter DROP by Jan. 1, 2021
    These members will receive either a simple 2% COLA for their years of Blue Service, or an ad hoc COLA depending on their previous individual selection.
  • COLAs have been eliminated for future service for all employees, starting July 20, 2019. This means that employees with Blue Service will not receive a COLA for their future service after this cut-off.
  • For employees with Blue Service, who do not retire or enter DROP, the COLA for service earned prior to July 20, 2019, will now be variable based on the health of the pension fund for those employees with service earned prior to July 20, 2019, who do not retire or enter DROP. (This variable COLA is highly unlikely to be triggered in the foreseeable future.) Employees with only Orange Service continue to have no COLA.
  • The maximum DROP period will increase from five to six years, effective July 20, 2019, (and contingent on a successful employee contribution increase vote).
  • Note: The minimum retirement age of 55 for future service of blue service General Employees and for all Fire Fighters is no longer included in the proposal.

Contribution changes (Contingent upon a successful employee vote)

  • City will increase contributions by 4.5%
  • Plan members will increase their contributions as follows:
    • General employees: 1.1% + 0.7% (Blue Service)
    • Police/Fire employees: 3.8%
    • Police 25 & out: 0.6%
  • Employee contributions to the pension will be restored for all overtime hours, contingent on a successful vote.
  • The city council adopted a risk sharing mechanism in the event that health of the pension fund is not restored by the actions listed above. City management anticipates that this mechanism will kick in during 2022 if the city/employee/fund's combined contribution is less than what is required to meet the guidelines set for the 30-year amortization period. At that time, both city contributions and employee contributions would increase a maximum of 2% per year for no more than two years, and would be split 60/40 between the city and employees.
  • Below is the anticipated schedule to phase in the changes and the likely timing of the risk-sharing triggers.
Current contributions Contributions as of July 20, 2019* 2020 2021 Risk Trigger: 2022 Risk Trigger: 2023
General employee contributions 8.25% 9.35% (Increase by 1.1% for Orange Service) 10.15% (Increase by 0.8% for Orange Service) 10.95% (Increase by 0.8% for Orange Service)
10.05% (Increase by 1.1% + 0.7% for for Blue Service) 10.85% (Increase by 0.8% for for Blue Service) 11.65% (Increase by 0.8% for for Blue Service)
Police contributions 8.73% 10.53% (Increase by 1.8%) 12.53% (Increase by 2%) 13.13% (Increase by 0.6%) 13.93% (Increase by 0.8%) 14.73% (Increase by 0.8%)
Fire contributions 8.25% 10.05% (Increase by 1.8%) 12.05% (Increase by 2%) 12.85% (Increase by 0.8%) 13.65% (Increase by 0.8%)
City contributions 19.74% (Increase by 4.5% for General & Fire) 24.24% (Increase by 1.2% for General & Fire) 25.44% (Increase by 1.2% for General & Fire) 26.64% (Increase by 1.2% for General & Fire)
20.46% (Increase by 4.5% for Police) 24.96% (Increase by 1.2% for Police) 26.16% (Increase by 1.2% for Police) 27.36% (Increase by 1.2% for Police)
  • Retroactive to PP1 of city’s 2019 calendar year. Please note: Each percentage is active the first pay period (PP1) of the calendar year

The pension solution accepted by city council keeps contributions from the city and its employees as low as possible, protects retirees, keeps the risk sharing mechanism, meets the guidelines for the 30-year amortization period, and keeps discussions about the future of Fort Worth’s pension in Fort Worth, instead of at the state Legislature.

Next steps

Now that council has approved the plan, it will move to an employee vote in February. The date of the vote has been pushed back a month to allow for a robust employee communication and education campaign, which will take place throughout January.

A majority of all employees – 50 percent plus one of all employees, not just those employees who vote – must agree to the proposed employee contribution portion of the plan for the plan to succeed. If the proposed plan does not get a majority of employee votes, it will go to the state Legislature for a final decision.

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