Some current and retired fire and police personnel were critical of a final report from the Fire and Police Pension Task Force that was presented Wednesday night at the Public Library.
But others were supportive, including Police Sgt. Craig Joel who said the changes were necessary "so the pension will be there for my family when I retire."
Tim Tomisek, a police representative on the panel, said, "We're trying to preserve our pensions. If we go down the road we're going now, we're not going to have a pension."
One man, who said he had suffered four heart attacks, said he has been retired for 19 years on a $27,000 pension. He said, "I depend on my three percent annual cost of living increases."
Retiree Kirk Salter said one group hopes to stop the plan with a court injunction. He said the plan is modeled on a similar one at Lexington, Ky. He said the Lexington plan is being disputed in federal court. Kurt Faires, an attorney on the panel, said Lexington was discussed early, but the task force decided to stop talking about it and deal with the local situation.
One change in the new plan that will go to the City Council is that the COLA will drop to between 1-2 percent, or an average 1.5 percent.
It was stressed to those attending that no retirees would see reductions in their current benefits.
The bulk of the reductions will affect new hires after the new system is in place.
Currently, personnel can retire after 25 years of service. For those currently not vested, it will go to age 50 if there is 25 years of service or to 28 years of service at any age. For new hires, it will go to age 55 plus 25 years of service or 30 years at any age.
Officials said there are some improvements in the plan including paying 100 percent of salary instead of 60 percent of salary to families of those killed in the line of duty. There are enhancements for certain categories of widows.
The DROP Plan will stay in place. Currently, it must be taken after working 30 years. Under the new plan, it can be taken up to 33 years.
Travis McDonough, the mayor's chief of staff who fielded a number of questions involving a number of tense exchanges, said the process "has been stressful, but we were able to reach a consensus solution."
Officials said, "Based on prior analysis and analysis conducted through this process, it became evident that the current level of benefits was unsustainable for the Chattanooga Fire and Police Pension Fund in the long term. On a market basis, the Fund’s funded status dropped from 109.9% in 1999 to 51.8% in 2013 despite the city making its full annual required contribution (ARC).
"The Fund has the second worst funded status of all the non-TCRS plans noted by the Tennessee Treasury Department."
They said the 19 representatives on the panel "sought to minimize the impact on retirees and employees while ensuring that the fund remains sustainable for the long term and affordable for current and future taxpayers. These changes in no way decrease any vested financial benefits accrued by any participant or beneficiary of the fund. No retiree or beneficiary will see his or her current pension check reduced."
They said, "A recent report to the State’s Legislative Council on Pensions and Insurance found Chattanooga’s Fire and Police Pension Fund among the lowest funding ratios among defined benefit pension plans in the state (external to the Tennessee Consolidated Retirement System). The city’s recommended contribution rate as a percentage of payroll has more than tripled, increasing from 10.8 percent per the 7/1/1997 actuarial valuation to 35.9 percent per the 1/1/2013 actuarial valuation. On a dollar basis, the City’s recommended contribution over this time period has increased from $2.6 million as of 7/1/1997 to $13.3 million as of 1/1/2013, an increase of more than 400 percent. City will contribute $14.4 million in FY14.
Consultant VJ Kapur said the changes bring $227 million in taxpayer savings through 2038.