Posted by: jgomori Posted date: November 17, 2021
By Jennifer Gomori, POJ Editor
The POLC helped Kingsford Public Safety accomplish something few Michigan public safety groups have been able to for the last decade – making pension plans equally beneficial for all employees.
“We’re one of the few (POLC Labor Rep.) Hal (Telling) has ever seen in the state. Even talking to other municipalities around us, they’re all strictly 401ks now,” said Kingsford Public Safety Local Union President Tim Olsen.
Following pension reforms under former Gov. Rick Snyder that were made in an effort to put an end to unfunded pension liabilities, unions have fought an uphill battle with new employees being stuck with lesser pension plans than higher seniority coworkers.
“Basically we wiped away the pension reform that our last governor put through in 2000 when Snyder threatened to take away revenue sharing if we didn’t drop everyone’s pensions,” Olsen said.
Telling led the charge to get all Kingsford Public Safety Employees on the same pension plan. Previously, Employees hired after June 30, 2011 received a 2.25 pension multiplier for each year of service with no Sick Time roll in for Final Average Compensation (FAC). Under their new contract, effective July 1, 2021, the multiplier increased to 2.6 with Sick Time rolled into the FAC.
“Instead of having a two-tier, we requested for our City to go to a one-tier,” Olsen said. “We pay 6 percent of our wage into the Police and Fireman’s Pension and when we retire we get a 2.6 multiplier for every year we worked.”
The cost difference for pensions was some $20,000 to $30,000 less for Employees hired after June 2011, Olsen said. “They would have had to work almost 7 years longer to get the same pension and it wasn’t even guaranteed.”
Olsen said having reduced pension benefits led to difficulties retaining newer Employees. “In the contract before they wouldn’t budge. We had another city manager at that time,” Olsen said. “This is my third contract and all we’ve fought for is equal retirement. It’s been a 9-year battle.”
POLC helped Kingsford Public Safety Employees negotiate the pension improvement based on agreeing to a top out of 70 percent FAC instead of the former 80 percent plan. Only a few Employees reached 80 percent over the years, Olsen said.
“Before, guys could stay 34-plus years to reach 80 percent – the Union did not want that,” he said. “We want fresh bodies in … the department. The majority of people were leaving at 26.9 years, which gets you 70 percent. When they did the actuarial, that’s what made it work. It wasn’t an upgrade in cost for the City. Now you never have to worry about somebody staying to 80 percent and it’s still making money hand over fist in this economy.”
Another difference that made the pension enhancement possible is Kingsford Police and Firefighters are funded by a local millage.
“The way it is with the police and fire millage, for our municipality, it seems to work. We’re not tied into MERS,” Olsen said.
It helps that the millage is one of the lowest it’s been in 20 years as well, he said, adding the pension enhancement doesn’t increase the costs to taxpayers.
“The people that are managing our pensions, what they’ve been doing to invest, it’s been amazing,” he said. “When I started (in 2002) there was $8 million in the account now were well above $25 million.”
Olsen believes other POLC/GELC units could reach similar agreements if they are funded by a millage and pension enhancements would greatly aid Employee retention.
“It puts everybody that’s doing the same job on the same playing field,” he said. “Whether I sit down with an Officer who’s been here for 20 years, or two years, at the end of the day we’re equal. We’re one Union and we have everything together to benefit everybody.”