Fernandina Beach Pension Plan - Part 4 moving forward

Submitted by Dave Lott

May 1, 2014 7:55 a.m.

In Parts 1 and 2 of this four-part series, the fundamental aspects of the City’s pension plans, its financial performance and the structure of the current City pension plans were reviewed. Part 3 reviewed the various pension plan options that could be considered by the Pension Boards and the City as the discussions of pension reform for the City’s programs evolves.

In this final part of the series, I will suggest the questions that must be addressed to objectively determine a course of action that is reasonable and fair to the existing and future employees covered by the Plans, as well as to the City and its taxpayers.

Fundamental Pension Program Questions:

• What is the overall responsibility of the City in assisting an employee provide for their retirement?

• What is an appropriate level of risk and reward between the City and the employee?

• What are the key factors that impact the financial sustainability of the current plans?

• What is the appropriate level of funding the City should be required to guarantee?

• Is there the political will to make changes to the plans? To what degree?

• What is the City’s plan to correct the severe underfunding level that exists today?

Legal/Actuary Questions

• What elements, if any, in the current plans can be changed at will by the City? What elements can be changed only after acceptance by other involved parties? Define the parties that must concur with each element change and the process.

• What is the impact of these changes on the plan participants as well as the City?

Participation Questions:

• Should all employees be required to participate?

• Should current employees be treated the same as future employees or should some level of grandfathering be permitted?

• Should the Police/Fire plan have benefits that are enhanced when compared to the General Employees plan?

• Should Pension Board members be required to be certified within a specified time of assuming their position?

Education Questions:

• How well does the City provide initial and continuing education to employees about retirement planning and the role of the pension plan?

• Does the Commission and the public understand the City’s pension plans, particularly the costs of all the parties involved?

• Does the City require the Pension Boards to make a presentation to the Commission at least on an annual basis to provide a review of the fiscal state of their plan?

I hope that these articles have been helpful to the reader. As the City begins to hold their workshops and public hearings on the pension plans in the future, I hope that there will be strong citizen participation.

Editor’s Note: Dave Lott has been a management consultant specializing in consumer banking and payment systems for 30+ years. As a former 11 year resident of the City, Dave has served on numerous City advisory committees. Dave served as Interim City Manager. He currently resides in Atlanta, Georgia.