Attorney pledges legal action to changes in South County Fire Alarm pension plan

By MIKE ANTHONY

An attorney representing Local 1889 of the International Association of Fire Fight-ers has pledged a legal challenge against recent actions to change the pension plan offered to South County Fire Alarm Asso-ciation employees.

Attorney John Goffstein recently told the three-member South County Fire Alarm Association Board of Directors that he will seek an injunction to halt the board’s ac-tion to change the primary pension plan for employees from a defined benefit plan to a defined contribution plan. Goffstein is the attorney for Local 1889, which represents South County Fire Alarm Association em-ployees.

The South County Fire Alarm Association is a non-profit corporation that provides dispatching services for the Mehlville Fire Protection District and other area fire departments. Two of its three board members are members of the Mehlville Fire Protection District Board of Directors — Aaron Hilmer and Bonnie Stegman. The SCFAA’s third board member is Chairman Larry Boyle, chief of the Fenton Fire Pro-tection District.

The SCFAA Board of Directors voted unanimously Jan. 28 to adopt two resolutions to change the primary pension plan — one freezing the existing plan effective Feb. 28 and the second starting a new plan effective March 1.

Under the new defined contribution plan, SCFAA will contribute 6 percent of an employee’s salary to a 401(a) plan on a monthly basis. Employees can make additional contributions to a supplemental 457 deferred compensation pension plan. Both pension plans will be administered by American United Life Insurance Co., or AUL. Monthly benefits provided to current retirees will not be affected by the changes.

The SCFAA Board of Directors is awaiting an actuarial study by Milliman USA, of the existing defined benefit plan, Hilmer told the Call, noting he believes the study will show the existing plan is underfunded.

“… Whatever the participants are owed as of that date (Feb. 28) under the old plan, we need to make that up to them regardless of whether it’s underfunded. So we’re going to have to borrow money. We’re going to have to dip into reserves. I don’t know how big the numbers are going to be,” Hilmer said. “We’re going to take care of the underfunding. I mean we’re going to have to buck it up and take care of it be-cause this is an ERISA (Employee Retire-ment Income Security Act) plan …”

During the SCFAA Board of Directors meeting, however, Goffstein told board members that what they were doing was unlawful and the pension plan was not an ERISA plan.

“… I’m here to tell you that what you’re doing is unlawful, OK, and there will be an injunction … Right now you’re in violation of the Missouri laws on public pension plans and the filing of actuarial data,” he said. “So you can’t really do it. So I guess we’re all going to have to go to court on it …,” he said.

Addressing Boyle, Goffstein said the re-tirement plan stipulates board members have a fiduciary obligation to the plan participants.

“Well, for one thing that means in your actions as a plan manager, if you will, you must act towards what the court in St. Louis County has called an eye exclusive towards the welfare of the participants of the plan. Freezing benefits doesn’t do that,” he said, urging board members to re-view state law, “which poses upon you all sorts of obligations in regard to actuarial filings before you make any substantial proposed changes to plans, before you adopt any such amendments like freezing people’s pensions or eliminating them or transferring (them). Part of your duties as a fiduciary involves the selection, if you will, of service providers.

“For all you know, you have selected service providers with arrest records. For all you know, you’ve selected service providers who are high school chums of Mr. Hilmer. You haven’t had a competitive bid process, OK? That is not acting as a fiduciary. You have a duty to file all sorts of documents with the state — actuarial and other data — before making changes. None of that’s been done,” Goffstein said.

“Your requirements under ERISA — at the last meeting you told us that this was an ERISA plan. In all due respect, I don’t even think you all know if you’re fish or fowl. It’s not an ERISA plan. It’s not covered by ERISA. You’re wrong on that,” he continued. “You don’t have a legal opinion to support one thing you’ve done. So, you know, please don’t go off half-cocked here. You have a duty to the public. You have a plan that’s working and you’re acting irresponsible, and I think you as chief, you’re listening to two people here who are right now under a court order of injunction and have been held preliminarily by the court to be in violation of their fiduciary obligations to the participants of the Mehlville Fire plan. And this is nothing more than a repeat of the same thing. So I tell you you’re — I would urge you to hold up on doing this until you can get better legal advice.”

Boyle thanked Goffstein for his comments and noted that he had been subpoenaed by the attorney for a Feb. 3 deposition.

After the board voted to adopt the two resolutions, Goffstein interjected, “… As long as you’re making motions, we’ve made motions to remove these individuals as directors of Mehlville and we will make the same motion to have them removed from South County Fire Alarm.”

Boyle said, “That’s your right, sir.”

Goffstein said, “Just putting you on no-tice.”

Asked about Goffstein’s comments, Hil-mer told the Call, “I wouldn’t want to waste much breath on Mr. Goffstein’s comments, but it’s clear he doesn’t believe in democracy.”

Goffstein is representing Local 1889 firefighters and paramedics in a lawsuit filed against the Mehlville Fire Protection District’s Board of Directors.

St. Louis County Circuit Judge Barbara Crancer granted a preliminary injunction in early August prohibiting enactment of proposed changes to the fire district’s disability plan. Crancer ruled that the Board of Directors did not follow the proper procedures to change retirement benefits un-der state law and ERISA. She also ruled that the Board of Directors did not violate the state’s Meet and Confer Law or the Open Meetings and Records Law, also called the Sunshine Law.

Local 1889 filed the lawsuit against the district’s three board members in late June, asking the court to prohibit the board from implementing a disability benefit contract with Standard Insurance and eliminating current disability benefits from the district’s existing pension plan.