HomeMy WebLinkAbout10C - Pension Increase for Prior Lake Fire Dept.
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
ISSUES:
CITY COUNCIL AGENDA REPORT
DECEMBER 3, 2007
10 C
Ralph Teschner, Finance Director
CONSIDER APPROVAL OF A RESOLUTION APPROVING A PENSION
INCREASE FOR THE PRIOR LAKE FIRE DEPARTMENT FIREFIGHTERS
RELIEF AND PENSION ASSOCIATION
Introduction
The Prior Lake Volunteer Fire Dept. and Relief Association requests that
pension benefits be increased as of January 1, 2008 from $5,900 to $6,500
per year of service.
Historv
Prior Lake is served by a paid on-call volunteer fire department of 39
members. Recruitment and retention occurs by providing a payment of
$11.00/hr. for fire call responses, an annual amount for officers and a lump
sum pension for firefighters who serve at least ten years on the department.
Current Circumstances
Over time, the hourly pay and pension level has been increased in response to
retaining comparability with other volunteer departments. The Prior Lake Fire
Department Fire Firefighters Relief and Pension Association is 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
$6,500 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 $130,000 rather than the existing $118,000. 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.
The current $5,900 per year pension benefit amount has been in effect for the
past year. The City's 2007 contribution to support the pension fund was
$20,000 and is proposed to remain the same for 2008. No tax increase is
required to support this level of pension benefits. The firefighters' pension plan
is primarily funded by the annual state aid received by the City, derived from
2% of the homeowners insurance premium, which is dedicated by law for
pension contribution purposes.
The pension amount requested is reasonable when compared to other
departments. Outlined in the table below are the surrounding volunteer fire
departments which have a defined payment pension plan and their
corresponding pension funding amounts for the year 2007.
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245
City
I I I I I
I I I I I
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! Northfield ! $7500 ! $150,000 ! $122,000 !
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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. Prior Lake's pension amount including the proposed increase is
generally lower than that of other fire departments with similar number of
volunteers.
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 $6,500 per year of service will not require
any increase in city contribution presently or in the future. The existing tax levy,
projected investment income and the 2% insurance money will fully fund their
pension program. For reference purposes the maximum allowable lump sum
pension payment per year of service credit under MN Statutes 424A.02 is
$7,500.
ALTERNATIVES:
The following alternatives are available to the City Council:
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 $6,500 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, 2008.
2. Take no action at this time and direct the staff to provide additional
information.
RECOMMENDED
MOTION:
Alternative #1. Staff would recommend approval of the proposed pension
benefit increase to $6,500 per month as requested and to incorporate this
amount into their disability and death benefits as well.
1. Resolution Approving A Pension Increase For The Prior Lake Fire
Department Firefighters Relief And Pension Association
ATTACH
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
RESOLUTION 07 -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 $5,900.00 in 2007 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
$6,500.00 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 herein.
2.) A $6,500.00 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, 2008.
PASSED AND ADOPTED THIS 3RD DAY OF DECEMBER, 2007.
YES
NO
Haugen
Erickson
Hedberg
LeMair
Millar
Haugen
Erickson
Hedberg
LeMair
Millar
Frank Boyles, City Manager
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245