BRIDGEPORT — Concerned and confused after receiving letters of resignation this week from both the chairman and treasurer of the pension plan’s board of trustees, participants on the Fire Department’s plan are gearing up for a potential fight to protect their lifetime benefits.
The nearly 80 pensioners received separate but similar resignation letters from Stuart Rosenberg, chairman of the city Fire Commission and the Pension Plan B board, and James Morley, board treasurer, on Monday.
In those letters, the men informed the Plan B participants that they were “forced” to resign because city officials were proposing to cut back the amount of funds left in the plan after active members of the city Fire Department were moved into the Connecticut Municipal Employee Retirement System last year.
“If these changes go through, our pension plan will no longer be financially sound,” Morley wrote.
But city Finance Director Anne Kelly-Lenz on Wednesday said the city is just trying to correct the trustees’ mistake.
Their decision to leave $50.9 million, or 68 percent of the total funds in the plan, was too high and ignored the recommendations in an actuarial report completed by the state — and also showed an unfair preference for retirees over active employees, she said.
The Fire Pension Plan B was funded at or around 100 percent for most of the last decade because it had few retirees collecting pensions and hundreds of current employees contributing to it annually.
But with no new money coming in now, retirees said they’re afraid the plan will run out of funds.
The same month the Plan B trustees received their actuarial report, Pew Charitable Trusts released a report naming Connecticut among the states with the worst pension funding levels. According to the report, there was a $1.38 trillion gap between state’s assets and the retirement obligations for its employees in fiscal year 2010.
“We just want to make sure we have enough funds to support us,” said Rey Rodriguez, who served nearly 21 years in the department before becoming disabled and retiring in 2009.
Fire Pension Plan B was created in the mid-1980s to replace the now severely underfunded fire and police pension Plan A.
Plan B, though, was closed to new and present employees last year, in accordance with a contractual agreement signed in 2011 between the city and its fire union for the new employees to move into the state Municipal Employee Retirement System.
To prepare for the split, the board of trustees hired an independent actuary, Hooker & Holcombe Inc., of West Hartford, to determine how much of the roughly $74 million in the plan would be sent to MERS and how much would be retained to pay the benefits of the Plan B members left behind, Rosenberg said in an interview this week.
Based on that report, dated June 2012, the board voted last summer to leave $50.9 million in the fund, the lowest recommended amount based on a 4.25 percent return rate. To fund the plan at 100 percent would have required an additional $10 million.
“We thought with time and with the way the market is, we’d be able to meet the demand,” Rosenberg said. “We have a responsibility to the plan participants to take care of that money better than if it were our own.”
Now, nearly a year after the board’s vote, the city is asking the board to amend its previous vote and send additional funds to the state pension fund.
“I did not want to resign,” Rosenberg said, “but we do have a fiduciary responsibility and it was the right, the legal, the moral thing to do.”
David Dobbs, vice president of the fire union, said he thought it made sense for the city to revisit the way the funds were split to ensure both retirees and active employees received their fair share.
“We would never advocate anything that would harm the retirees,” he said.
Kelly-Lenz said the trustees failed in that duty because they skewed the numbers to favor the retirees and did not take into account the active fire employees who contribute 6 percent of their base pay into Plan B.
“What they’re doing is giving themselves preferential treatment by being 100 percent funded, to the detriment of the active members,” she said of the trustees.
Based on the state’s recommendation, Kelly-Lenz said, the trustees should have transferred $45 million into MERS for the 266 active employees, not just over $22 million, and retained $29 million for the 79 retirees at the time the report was done.
Based on the small number of retirees in the plan — with an average age of 59 to 60 years — the $29 million would have been enough to keep the plan funded at its current level of 80 percent, she said.
But a small group of the Plan B retirees, concerned about the vast difference between the trustees’ and city numbers, have been reaching out to others to garner support to hire a lawyer. The group is also planning to send a letter arguing against the city’s stance to the state attorney general and the U.S. Attorney’s Office.
All retirees contacted were concerned that decisions were being made without their input.
“I hope before they make a decision, they reach out to us,” Rodriguez said. “Let us sit in a meeting and hear what’s going on. It’s a brotherhood job, and I just hope they make the right decision.”
From The Connecticut Post