Houston Firefighters Relief and Retirement Fund Message to Membership: Board Proposed Adjustments September 8, 2014 September 8, 2014 Dear Fund Members, The Houston Firefighters Relief and Retirement Fund (the Fund) is in talks with the City of Houston (the City) about a pension proposal initiated by the Board. As reported in the Mayors August 21, 2014 press release, the City is working on a new plan for incoming firefighters. The new plan would be wholly managed by the City in order to lower the long-term costs and expense of the existing firefighter pension plan. A savings of $110 million is estimated by the City over the next 20 years. The HFRRF does not support the Citys new plan. We assert that the Mayors proposed plan is unlawful and the current Fund plan is a sound and sustainable plan that does not require a complete transformation. Realizing that pensions represent a very small part of the Citys financial operations, we have proposed a Board supported plan of action that would necessitate adjustments to our exiting plan. These adjustments are projected to yield a cumulative savings to the City of $82 million in as little as 3 years. BOARDs PROPOSAL 1. The Board proposes actuarial changes in consultation with the Funds actuary that will reduce the Citys contribution rate to the Fund in fiscal year (FY) 2016 from 33.2% of payroll to 24 % of payroll. 2. Firefighters will increase their contribution by 3%. 3. The Citys contribution rate as a result of (1) and (2) will move from 33.2% of payroll to 24% of payroll. 4. This will generate savings of $26.5M in FY2016 and a total of $82M over the next 3 fiscal years. The listed adjustments, if adopted, require no benefit reductions for current and future firefighters, and are in the best interest of the plan membership. The proposal will avoid costly litigation, maintain morale, may positively impact future employee recruiting and retention, and will not impact our retirees. The Board believes these proposed adjustments demonstrate the firefighters willingness to help lessen the Citys dilemma of projected revenue shortfalls and provide a viable solution that was resolved at the local level. As illustrated in the charts following, the City will immediately realize an increase of 26.5M in savings to the General Fund (in FY16) with the contribution to the plan reduction from 33.2 % to 24 % of payroll. The Boards proposal gets the City 75% of Mayors proposed savings in 3 fiscal years rather than 20 years. The Citys unlawful plan yields $0 General Fund Revenue, both the City and the Fund incurs litigation costs, and the Citys new plan may impact future employee recruiting & retention. As I mentioned, the Board is in talks with the City of Houston. The Board supports the HFRRF Proposed Plan, but will always keep the members exclusive best interest at the forefront of all discussions. As promised, we will keep you informed of any new development as it relates to our proposal. We exist because of our members. My door is always open, Todd E. Clark Chair Houston Firefighters Relief and Retirement Fund Board of Trustees
Posted on: Mon, 08 Sep 2014 23:12:16 +0000
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