Home Pension Issues Pension plan may drain safety forces

Pension plan may drain safety forces

SHARE

A lucrative pension benefit is drawing some of the area’s most experienced police and firefighters into retirement. The irony is the Deferred Retirement Option Plan (DROP) was designed to retain veteran personnel — but that was eight years ago.

Fire and police chiefs in Akron, Kent, Richfield Village, and Bath and Jackson townships have already retired or are planning to leave soon. Some say the DROP program is a major reason; others say it’s just time to go.

Chiefs in other communities are weighing retirement, but are not ready to announce their plans.

Statewide, up to 601 veteran police and firefighters are facing a milestone that could cost their communities thousands of years of experience.

“It’s going to be a major transition, particularly in police and fire chiefs in the coming year,” said Richfield Village police Chief Dale Canter, who will retire in about a year.

Budgeting unknowns

Administrators do not know which of their veterans are participating in the program or when they will retire, making budget and staff planning difficult at a time when most communities are looking at significant cuts.

“It makes it somewhat difficult to know how many vacancies you are going to have,” said Robert Ross, Akron’s interim fire chief.

He replaced Larry Bunner, one of the first to participate in the DROP program. Bunner retired last month as fire chief at age 62.

The pension plan is not just for chiefs. In Akron, 12 firefighters and 12 police officers will finish their eighth year — a key milestone — since entering DROP. Some of those officers might have retired years ago, but city officials can’t know for sure because of privacy considerations.

Here’s how DROP works:

–A police or firefighter with a minimum age of 48 and at least 25 years of experience joins the program, which was established in 2003. They make that choice instead of retiring, extending their service to the community.

–During the next three to eight years, money they otherwise would have received from their pension is placed in a DROP fund, where it can draw interest. The fund grows with their own contributions and those from their employers.

–The worker can retire no sooner than three years into the program and must retire after eight years. That’s the milestone many are facing this year after joining the program in 2003.

–Upon retirement, the balance of the accrued fund can be received in monthly or annual payments or rolled into another retirement fund, such as an Investment Retirement Account (IRA) like those available to the general public.

Financial rewards

Because the DROP funds are drawing interest tax-free for up to eight years, the financial rewards can be significant. A firefighter who was earning $70,000 and entered the program in 2003 would have a $503,661 nest egg upon retirement this year, according to a calculator on the Ohio Police & Fire Pension Fund website.

Statewide, about 3,800 of the pension fund’s 28,000 members are in the DROP program, with the average retirement age between 52 and 53.

The program is achieving its primary goal: The statewide average age of police and firefighters in December 2002 was 38.8 years. Now it is 42.2 years, but that might change as the retirements kick in and younger employees replace the retirees.

The average age of Akron’s 344 firefighters is 43.

“Experience is a huge factor that we don’t want to get rid of all the older folks,” Ross said. “There is some common sense that comes with older folks that I wouldn’t want to lose.”

Goal is no extra costs

When it was instituted in 2003, state officials hoped DROP would be “revenue neutral,” meaning it wouldn’t cost any more than if it had not been started. David Graham, a spokesman for the fund, said a state study last year found that goal of no extra cost was being met.

The effect on city budgets for things like the higher salaries, medical costs and disability costs associated with older workers has not been studied.

“The cities didn’t get to vote on this,” Ross pointed out. However, he said, Akron has not seen a spike in disability or health costs that might be expected with an older work force.

The uncertainty DROP creates also troubles Ross, who must anticipate the difficulties brought on by retirement.

Some firefighters give months of notice; many use the required minimum of two weeks.

“There’s always rumors. There’s always firehouse talk,” he said.

It can take weeks, or even months, to prepare firefighters, so Ross already has a class of eight young firefighters ready to go in February and more training at the University of Akron.

The average age could fall even further: The minimum age for new firefighters has been reduced from 21 to 18.

If you have any problems viewing this article, please report it here.

LEAVE A REPLY

Please enter your comment!
Please enter your name here