HomeMy WebLinkAbout10C - P.L. Firefighters Pension
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
STAFF AGENDA REPORT
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DECEMBER 6, 2004
10C
RALPH TESCHNER, FINANCE DIRECTOR
CONSIDER APPROVAL OF A RESOLUTION APPROVING A
PENSION INCREASE FOR THE PRIOR LAKE FIRE
DEPARTMENT FIREFIGHTERS RELIEF AND PENSION
ASSOCIATION
DISCUSSION:
History:
The City Council approved Resolution 04-130 on August 16, 2004
which increased the Prior Lake Volunteer Fire Dept. and Relief
Association pension benefit level by $200 from $3800 to $4000 per
year of service. This was to become effective as of January 1, 2005.
Current Circumstances:
Since then, the state fire aid (insurance premium tax) payment was
received which was more than $43,000 higher than last year that will
become the base for future payments. As a result of this significant
increase the Prior Lake Volunteer Fire Department has requested
that the pension benefit level be further increased to $4400 per year
of service. At this new amended amount the Relief Association
pension fund would still be in a surplus position and no additional
municipal contribution would be necessary.
Therefore they are asking the City Council to authorize an
amendment to the Association Bylaws which provides that a
firefighter who has served in the Prior Lake Fire Department for 20
years or more prior to resignation and has reached the age of 50
years old or more and been a member of the Association for at least
10 years shall receive $4,400 for each year of active service on the
department. This means that a volunteer retiring with twenty years
of service would receive a lump sum pension of $88,000 compared
with the existing pension level of $80,000. All fire department
members serving between 10 and nineteen years receive service
credit at 60% and graduate upwards in 4% increments until
becoming fully vested after twenty years of service.
Issues:
The new $4400 per year pension benefit amount would become
effective for any volunteer fire department member that would
choose to retire in 2005. The City's 2004 contribution to support the
pension fund is $20,000 and will remain the same for 2005. No tax
increase is required to support this level of pension benefits. The
firefighters' pension plan is primarily funded by the annual state aid
H:\FIRE\Pension agenda (a).doc
www.cityofpriorlake.com
Phone 952.447.4230 / Fax 952.447.4245
ALTERNATIVES:
RECOMMENDED
MOTION:
REVIEWED BY:
H:\FIRE\Pension agenda (a).doc
received by the City, derived from 2% of the homeowners insurance
premium, which is dedicated by law for pension contribution
purposes and the city's contribution.
Prior Lake's pension amount including the proposed increase is
generally lower than that of other fire departments with similar
number of volunteers. Also, for reference purposes the maximum
allowable lump sum pension payment per year of service credit
under MN Statutes 424A.02 is $7,500. In the future the Fire
Department Relief Association will defer any pension benefit
increases until the state aid amount has been determined and
received.
Financial Impact:
Based upon actuarial projections and current investment
assumptions, certified by the relief association officers as required
by Minn. Statute 69.771. subd. 3, the new pension benefit amount of
$4,400 per year of service will not require any increase in city
contribution presently or in the future. The existing tax levy and the
2% insurance money will fully fund their pension program.
Conclusion:
Staff would recommend approval of the proposed pension benefit
increase to $4,400 per month as requested and to incorporate this
amount into their disability and death benefits as well. The pension
amount requested is reasonable when compared to other
departments. From the City's perspective it is important that the
pension remain competitive in order for the City to continue to
recruit and retain qualified volunteer firefighters.
1. A motion and second to adopt a Resolution Approving A
Pension Increase For The Prior Lake Fire Department Firefighters
Relief And Pension Association that provides for a $4,400 per year
of service credit for pension, disability and death benefit purposes
within the Bylaws of the Prior Lake Fire Department Firefighters
Relief and Pension Association effective January 1,2005.
2. Take no action at this time and direct the staff to provide
additional information.
Alternative #1. Adopt a Resolution Approving A Pension Increase
For The Prior Lake Fire Department Firefighters Relief And Pension
Association that provides for a $4,400 per year of service credit for
pension, disability and . th benefit purposes within the Bylaws of
the Prior Lake Fire artment Firefighters Relief and Pension
AssMec . e J uary 1, 2005.
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
RESOLUTION 04-XX
RESOLUTION APPROVING A PENSION INCREASE FOR
THE PRIOR LAKE FIRE DEPARTMENT FIREFIGHTERS RELIEF
AND PENSION ASSOCIATION
MOTION BY: SECOND BY:
WHEREAS, The bylaws of the Prior Lake Volunteer Firefighters relief and Pension Association
provides for a defined contribution benefit; and
WHEREAS, The present annual benefit level in effect is $3,800.00 in 2004 for volunteer fire
fighters that are eligible under the existing vesting schedule; and
WHEREAS, The City Council understands that the insurance premium tax payment increase
received from the State of Minnesota is sufficient to fund a benefit increase to
$4400 per year of service now and in the future without the need for additional city
contribution; and
WHEREAS, It is in the best interest of the City of Prior Lake to provide a pension level that is
comparable with other volunteer fire departments in order for the City to continue to
recruit and retain qualified volunteer firefighters.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, that
1.) The recitals set forth above are incorporated herin..
2.) Resolution 04-130 is hereby rescinded
3.) A $4,400 per year of service credit for pension, disability and death benefit purposes within
the Bylaws of the Prior Lake Fire Department Firefighters Relief and Pension Association is
hereby approved effective January 1,2005.
Passed and adopted this 6th day of December 2004.
YES
NO
Haugen
Blomberg
LeMair
Petersen
Zieska
Haugen
Blomberg
LeMair
Petersen
Zieska
{Seal}
City Manager
City of Prior Lake
www.cityofpriorlake.com
H:\FIRE\Pension resolution. doc
Phone 952.447.4230 / Fax 952.447.4245