Barron: The expensive “bitter pill” that will save firefighters’ pension funds | columns

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CHEYENNE – The Story of a Government Retirement Fund called “Fire A” offers a lesson on how not to manage a retirement plan.

The first mistake is to use state law to dictate how the fund should be managed by setting the amount of the annual cost of living adjustment and benefits.

A report from the Wyoming Retirement System on Fire A states that the details of the plan are “locked into” state law.

This means that any changes will require more legislative action, which can often be a difficult undertaking.

Fire A is a closed retirement plan for paid firefighters who were hired prior to July 1, 1981. Firefighters hired after this date are covered by the Fire B plan, which is less generous in benefits than Fire A.

The plan cost the state from the start. To offset Fire A’s underfunding between 1981 and 1996, lawmakers allocated $ 46.8 million.

Everything was fine at Fire A as long as the stock market behaved. The investment income enabled increased benefits, including increasing the surviving spouse amount up to 100 percent of a firefighter’s pension check.

When the fund was more than fully funded in 1997, lawmakers put all employee and employer contributions into the plan, according to the Wyoming Retirement System report.

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Overfunding continued, however, and several benefit increases were decided, including a 3% “escalator” or annual increase in the cost of living.

Starting after the 2001 recession, like Nationwide Pension Funds, Fire A ran into problems. With the 2008 crash, the problems only got worse.

Today the fund is using up its investment company and will be broke in about five years.

A bill to fix the problem did not get through in 2014. It would have provided one-time money from the state, reduced the escalator and resumed contributions.

The Fire A problem doesn’t affect many people.

January 2021, the fund paid benefits to 266 retirees and surviving spouses.

Their average lifetime benefit is $ 60,764 per year. according to the message.

Although critics say this is an unusually high pension, firefighters are not eligible for social security benefits.

Today it would cost $ 148 million to make the system solvent from contributions alone.

A bill to pump about $ 75 million into the plan was tabled in the recent special legislative session on vaccine mandates, but was never considered by the entire legislature.

It would have put $ 55 million in the plan plus $ 20 million in loans for the five cities that employed Fire A’s fire departments. It would also have blocked the automatic increase in the cost of living.

The bill sponsors can try again at the budget meeting in February.

Pat Crank, a Cheyenne attorney and former attorney general who represents retirees, recently told a legislative committee that it was “morally and legally wrong to cut benefits.”

That way, he told the Joint Advisory Committee, a successful lawsuit could be filed. He blamed previous lawmakers and “terrible mismanagement” of the fund for the situation.

Crank and others said the chaos could have been avoided in 2014 if lawmakers had passed a bill back then to solve the problem, but it didn’t get through because key lawmakers thought the stock market would solve the plan’s problems.

The pension system recently switched the investment strategy for Fire A to more conservative pension funds.

Guy Cameron, a former Cheyenne firefighter for more than 32 years, said that unlike other professions, fighting fires is high risk.

You had good faith support for the original retirement plan, he said.

Several beneficiaries of the plan, all widows of firefighters, testified during the meeting about the need for the money.

Legislators usually responded with some displeasure at being stuck with a problem they hadn’t created and resigned that they were obliged to save the plan.

They warned the retirees at the hearing that they must work to get the bailout through or it will fail.

Senate Vice President Larry Hicks, R-Baggs, said the bailout should be a one-time expense.

“It’s a bitter pill that we have to swallow,” he said.

Joan Barron is a former reporter for the Capitol Bureau. Contact them at 307-632-2534 or [email protected]


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