Thursday, May 14, 2009

'Sobering' Pension Discussions Deserve a Second Look for Clarification

If you, like me, were intrigued by a few short lines within Wes Johnson's article in today's "Springfield News-Leader": "'Sobering' pension fund issues discussed," then, you, like me, want to know more about Mehlville, Missouri's Firefighter pension fund.

Johnson wrote:

"Task force chairman Jerry Fenstermaker asked Zwiener to explain how one community, the town of Melville, solved its firefighter pension fund shortfall.

Zwiener said the fire district's trustees looked at their funding shortfall and decided to simply stop paying future benefits.

"They switched to a defined contribution plan," similar to a 401(k) , and that switch was upheld in court, Zwiener said."

Well, with a little assistance from a reader of "JackeHammer," what I found out is that "Melville" is Mehlville and it is in Missouri. I read a few articles about the Mehlville suit and decision, and I sent off some questions to actuary Michael Zwiener, thinking there was more to the story than what I, and others, read in the News-Leader this morning.

"The pension fund is sponsored by the Mehlville, Missouri Fire Protection District. What that fund did was cease the future accrual of benefits," Zwiener wrote in an email response. "The benefits of retirees were not affected. The benefits of active members earned to date were not affected. What ceased was the accrual of additional benefits after the change date, which I believe was March 2006 (guessing). In lieu of post 2006 pension accruals, the District installed a defined contribution plan."

Zwiener said Aaron Hilmer was the key player in the changes to Mehlville's pension plan. Hilmer was elected to the Mehlville Fire District Board in 2005, along with Bonnie Stegman, to whom Hilmer gives partial credit for the changes.

In a "Budget & Tax News" article, published by the Heartland Institute in November, 2007, Hilmer wrote about the case.

"The August 27 ruling by St. Louis County Circuit Court Judge Thea A. Sherry struck down a lawsuit by the local firefighters union challenging the MFPD's decision to terminate its defined benefit plan and put every employee, current and future, in a defined contribution plan," Hilmer wrote.

He also stated the ruling set an important precedent, " for government bodies that hope to reduce pension costs and give employees more control over and flexibility in their retirement programs."

Hilmer wrote, after he and Stegman, of the Mehlville Fire District Board were elected, they began to work toward reforming the pension and disability plan.

"We hired a disability insurance provider to take over the disability portion, and after two years of union-filed lawsuits against that move, the change became final earlier this year when the Missouri Supreme Court declined to hear the case."

An email query to Assistant Fire Chief David Hall has not yet been answered. I will update should Hall respond to my request for a comment.



BBrown said...

very interesting.

Anonymous said...

Thanks for checking further into this story. I question if Springfield's charter would allow this to be done by a council vote or would it require a vote of the people.