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Pension Statute




FUND HISTORY

The pension plan was established by an Act of the 45th Legislature of the State of Texas in 1937. The Austin Fire Fighters Pension Fund participated under state statute Article 6243e Vernon’ Texas Civil Statutes until 1975. This law covered approximately 38 paid and part paid fire departments around the state. When benefit enhancements were being considered, it was difficult to revise wording which would not disrupt the other pension funds operating under the same statute. In 1975 Article 6243e.1 was established which would only cover the Austin Fire Fighters Pension Fund. The pension plan currently provides retirement, disability, death, and survivor benefits to approximately 1,700 active and retired participants and their eligible beneficiaries.

In 1984 an actuarial study was conducted to adjust all the current retirees’ benefits based upon the effect of inflation from their original date of retirement. There were some annuitants on the rolls that retired at the original monthly pension of $100. Although these retirees had received cost-of-living increases through the years, they were still losing ground to inflation. After the actuarial changes were made, if a retiree’s adjusted monthly benefit came to less than $500, then a minimum monthly pension of $500 would take effect. This was approved by the pension board in December 1984 and went into effect March 31, 1985. A full inflation cost-of-living adjustment (COLA) has been approved by the pension boards in most years since 1985. Striving to provide COLAs, when affordable, remains a top priority of the pension board.

CHRONOLOGY OF PENSION PLAN CHANGES

Significant plan changes and benefit enhancements since 1975 are as follows:

1975

A 2.0% COLA approved.

The retirement calculations changed from using the highest 5 years’ average salary to using the highest 3 years’ average salary.

The minimum monthly disability benefit changed from $100 to $200.

State statute Article 6243e.1 is created pertaining only to the Austin Firefighters Pension Fund, allowing the plan to branch away from the former statewide system.

1976

A 2.0% COLA approved.

1977

A 2.0% COLA approved.

1978

A 2.0% COLA approved.

The retirement multiplier increased from 2.0% to 2.1%

1979

A 2.0% COLA approved.

The minimum monthly spousal benefit increased from $100 to $200.

The minimum children’s benefit increased from $50 to $100.

1980

A 2.0% COLA approved.

1981

A 2.0% COLA approved.

1982

A 2.0% COLA approved.

The retirement multiplier increased from 2.1% to 2.2%

1983

A 2.0% COLA approved.

1984

A 2.0% COLA approved.

The retirement multiplier increased from 2.2% to 2.3%.

An actuarial study is conducted to adjust all then current retirees’ benefits upward to offset the erosion of their benefits to inflation from their date of original retirement.

1985

A 4.0% COLA approved.

Early retirement eligibility set at age 50 and 25 years of service. (Normal retirement eligibility remained at age 55 or 35 years of service, regardless of age, which had been in effect for many years.)

Contribution rate by city increased from 14.0% to 14.05%.

The retirement multiplier increased from 2.3% to 2.5%

Employee contributions treated as employer contributions (pre-taxed) for federal income tax purposes. Contributions are paid pre-taxed creating more take home pay.

A special increase for all current retirees to “catch their benefits up” with inflation from the time of their original retirement. If the resulting monthly benefit was less than $500, then a $500 minimum monthly benefit was approved where applicable.

1986

A 3.0% COLA approved.

1987

A 1.5% COLA approved.

The retirement multiplier increased from 2.50% to 2.65%.

Normal retirement eligibility lowered from age 55 or 35 years of service, regardless of age to age 55 or 30 years of service, regardless of age.

1988

A 4.0% COLA approved.

The retirement multiplier increased from 2.65% to 2.90%.

1989

A 4.25% COLA approved.

The workers’ compensation offset for disability benefits was eliminated.

Actuarially, an assumption adopted that 12% of firefighters were assumed to be single at retirement.

1990

A 4.50% COLA approved.

1991

A 6.30% COLA approved.

The minimum monthly pension benefit increased from $500 to $850.

Normal retirement eligibility reduced from age 55 or 30 years of service, regardless of age to age 53 or 28 years of service, regardless of age.

Surviving children eligible for full spousal benefits in the event there is no surviving spouse.

Actuarially, across the board salary increases assumption was decreased from 6.50% to 5.50% annually.

1992

A 2.90% COLA approved.

The minimum monthly pension benefit increased from $850 to $1000.

Actuarially, a 5% anticipated COLA is extended through 1996.

1993

A 3.20% COLA is approved.

Normal retirement eligibility lowered from age 53 or 28 years of service, regardless of age to age 52 or 27 years of service, regardless of age.

Early retirement eligibility lowered from age 50 with 25 years of service to age 50 or 25 years of service, regardless of age.

The survivor (spousal) benefit is changed to a flat 75% of retiree’s benefit.

Contribution refunds are paid with 5% interest.

Actuarially, growth in payroll no longer assumes 1% growth in membership annually.

Actuarially, a 5% anticipated COLA is extended through 1998.

1994

A 2.80% COLA is approved.

The minimum monthly pension benefit for eligible retirees and beneficiaries is increased from $1,000 to $1,200.

City of Austin contributions increased from 14.05% to 16.05% of pay, while the contribution rate by the firefighters remains at 13.70%.

1995

A 2.60% COLA is approved.

Normal retirement eligibility reduced from age 52 to 50 (with at least 10 years of service) or with 25 years of service, regardless of age, down from 27 years of service.

Early retirement eligibility reduced from age 50 to age 48 (with at least 10 years of service) or with 23 years of service regardless of age, down from 25 years of service.

The retirement multiplier was increased from 2.90% to 3.0%.

A deferred retirement option plan (DROP) feature was added allowing up to 2 years of service designated for DROP participation.

City of Austin contributions increased from 16.05% to 18.05% of pay, while the contribution rate by the firefighters remains at 13.70%.

Actuarially, a 5% anticipated COLA is extended through 2002.

1996

A 2.90% COLA is approved.

1997

A 3.0% COLA is approved.

Early retirement eligibility (unreduced by the retirement multiplier) lowered from age 48 to age 45 (with at least 10 years of service), or with 20 years of service regardless of age, down from 23 years of service.

COLAs delayed until normal retirement eligibility is met.

The deferred retirement option plan (DROP) feature is extended from a maximum of 2 years to a maximum of 5 years of service designated for DROP participation.

Benefits made available to surviving spouses of retirees married after retirement.

Eliminate the requirement that a spouse’s benefit terminate after remarriage.

Firefighter contributions “bought down” by 2% to 11.70%, while the city contributions increase to 20.05% due to the “meet and confer” agreement. (Firefighters continue to get credit for 13.70% per statute requirements.)

Actuarially, a 5% anticipated COLA is extended through 2004.

1998

A 2.10% COLA is approved.

Actuarially, the retirement incident rate revised to 100% of the members to retire and elect a 5 year DROP one year following the age first eligible for a 5 year DROP.

1999

A 1.50% COLA is approved.

A 3.33% benefit increase is approved September 1, 1999 to all then current retirees at the time based on the percentage increase of the retirement multiplier from 3.0% to 3.10%.

The retirement multiplier increased from 3.0% to 3.10%, effective September 1, 1999.

All DROP calculations including “BACKDROPS” will use a 3.10% multiplier after September 1, 1999, regardless of the DROP date.

The deferred retirement option plan (DROP) benefits made available to eligible survivors of members who die before retirement but after becoming eligible for a DROP.

In November 1999, a new “meet and confer” agreement is set whereby firefighters are to receive a 3% salary increase in November 1999 and every six months going forward, beginning in March of 2000 through March 2002.

After 2004, annual COLAs of 0.5% are provided for retirees and beneficiaries going forward (should inflation be at least 0.5%). This does not limit the COLA to 0.5%, but sets the funding in advance. If the needed adjustment exceeds 0.5%, the Board and actuary must approve the portion above 0.5% based on the current financial status of the fund.

Actuarially, mortality tables for actives and non-disabled annuitants were updated to the 1994 Group Annuity Mortality tables, reflecting current industry standards.

Actuarially, a 3.50% anticipated COLA is approved through 2004 (lowered from a 5% anticipated COLA previously assumed, recognizing recent inflation trends.)

2000

A 2.60% COLA approved.

2001

A 3.40% COLA approved.

A 6.45% benefit increase is approved September 1, 2001 to all then current retirees at the time based on the percentage increase of the retirement multiplier from 3.10% to 3.30%.

The retirement multiplier increased from 3.10% to 3.30%.

All DROP calculations including “BACKDROPS” will use a 3.30% multiplier after September 1, 2001, regardless of the DROP date.

Effective September 1, 2001, the deferred retirement option plan (DROP) feature is extended from a maximum of 5 years to a maximum of 7 years of service designated for DROP participation.

A survivor benefit is made available for all unmarried retirees, and for unmarried firefighters who die after becoming eligible to retire, per statute provisions. The percentage will be an actuarial equivalent of 75% of the firefighter’s accrued benefit and will be tied to the age difference of the firefighter and the designated beneficiary.

2002

A 2.1% COLA approved.

2003

Effective June 1, 2003 the contribution rate by the firefighters increased from 13.70% to 15.70% of pay, while the contribution rate by the City of Austin remains at 18.05%.

2004

No changes

2005

$32.00 per month increase in benefits for all eligible retirees

2006

$100.00 per month increase in benefits for all eligible retirees

2007

No changes

2008

No changes

2009

No changes

2010

As a result of an agreement between the firefighters and the City of Austin, the City’s pension contributions will increase from 18.05% to 22.05% in a total of four 1% increments by the year 2013. The firefighters’ pension contributions will also increase from 15.70% to 18.70% in a total of six ½% increments by the year 2016.

2011

No changes

2012

No changes

The minimum monthly pension is increased to $2,000 for all current annuitants who were on the rolls in 1994 when the last adjustment of this type was made.

2013

$93.00 per month increase in benefits for all eligible retirees.

2014

$64.00 per month increase in benefits for all eligible retirees.

2015

A 1.3% COLA approved

2016

No changes

2017

1.5% COLA approved