by Liz Daube
Staff Writer
Retired policemen and firefighters may be pleasantly surprised in January. Pending City Council approval Tuesday, the Police and Fire Pension Fund will move its annual cost of living increase up three months from April to the beginning of the new year.
The earlier payout increase – an additional 3 percent is added each year – will help reduce the financial strain seniors often face at the beginning of the new year, according to Pension Fund Executive Director John Keane.
“It’s going to help our retirees out there when the insurance premiums increase and they’re facing new deductibles,” he said.
There was some debate over the payout date adjustment in the Council’s Finance Committee, where the ordinance to make the switch passed Monday. Council Auditor Kirk Sherman estimated the cost of the earlier payout will be more than $220,000 each year.
“You’ll be paying out a 3 percent increase three months earlier every year,” said Sherman to the committee. “That’s a .75 percent cost increase for ever and ever.”
Sherman alerted Council members that the earlier increase counts as an enhancement to the pension plan – a change they voted to stop allowing more than a year ago. City Council put a hold on all enhancements to the pension plan until the fund is 90 percent funded, or unless the change is sponsored by the mayor and passes Council by a vote of two-thirds or more. Sherman estimated the fund is no more than 75 percent funded right now.
“Pension plans all over the place are a little bit short right now,” said Sherman. “But it is a good fiscal policy that if you’re going to give out more costs, you need to have the funds.”
Keane said the pension fund has steadily increased over the years, mostly due to increased investment in real estate rather than typical stocks and bonds.