Metro

Firefighters approve pension settlement with city

By
Senior Staff Writer
Thursday, November 15, 2012

After months of negotiations and legal challenges between public safety workers and city officials, both active and retired firefighters voted last week in favor of a tentative settlement to two lawsuits filed by firefighters unions. The cases addressed Medicare enrollment and cost-of-living adjustments, which were suspended by the state’s sweeping pension reform law of 2011.

City officials, leaders of public safety unions and professional negotiators came to the agreement last May. So far, all groups except for the police union have voted on and accepted their respective settlements.

But the union’s affirmative vote was not indicative of complete satisfaction with the terms of the agreement, according to Paul Doughty, president of Local 779 of the International Association of Firefighters. The arrangement was “by no means a victory” for his members, Doughty said. The active members approved the deal by 70 percent – 10 percent lower than the percentage of retirees who supported it in June.

State law mandates a suspension of cost-of-living adjustments for public employees until the pension system is at least 70 percent funded. But state employee pensions take into consideration payments into Social Security, while city firefighters rely solely on Medicare and pension payments when they retire.

The terms in the new agreement will suspend COLA payments for 10 years – from the first day of 2013 through the last day of 2022. At that time, a maximum 3 percent COLA will be reinstated and compounded annually, even if the pension system is underfunded at that time. But retirees with pensions exceeding 150 percent of the average state income or exceeding the salary of active employees in the same position and rank will not return to receiving COLA payments at this time.

Retirees with pensions under $100,000 will receive a guaranteed $1,500 stipend in 2017 and possibly another stipend in 2020, contingent on municipal savings through the implementation of a self-insured dental plan.

The language of the settlement cedes priority to the terms of existing and future collective bargaining agreements should they conflict, but it mandates that COLA payments must be equal to or less than 3 percent. 

Spouses or beneficiaries of officers killed in the line of duty are exempt from these suspensions, and they will continue to receive COLA payments at their current rate.

The average pension for retired firefighters in Providence is $48,142 per year, over $10,000 more than the average police officer and $30,000 more than the average municipal employee, according to city public records from 2011. Part of that gap is due to higher COLA payments for firefighters at 6 percent annually, which the new settlement bans.

The agreement will save the city approximately $18.5 million next fiscal year and reduce the unfunded liability of the city’s pension system by up to $170 million, according to a press release from Providence Mayor Angel Taveras’ office. The Medicare provisions that require retirees to enroll in the program at age 65 are projected to save an additional $40 million over the next 10 years.

“I am hopeful that our police will act quickly and join our firefighters, retirees and municipal employees, so we can move Providence forward and focus on the important work of creating jobs, expanding educational opportunities and improving public safety,” Taveras said in a press release.