South County Fire Alarm board sweetens employee pension plan

By BURKE WASSON

While a proposed pension-plan change has sparked litigation in the Mehlville Fire Protection District, a similar pension plan has successfully been installed for South County Fire Alarm Association employees.

Earlier this month, the pension plan was made potentially sweeter for South County Fire Alarm Association employees to save money toward retirement.

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 serves as chairman and is Jack Bettag, chairman of the Lemay Fire Protection District Board of Directors.

The SCFAA Board of Directors unanimously decided June 15 to enhance employees’ supplemental 457 deferred-compensation pension plan. An amendment adopted by the board calls for the SCFAA to match contributions equal to half an employee’s elective deferrals for up to 4 percent of that employee’s compensation.

Simply put, employees will now have the opportunity to be compensated an extra 2 percent in their pension plan on top of the 6 percent that they already enjoy.

The SCFAA currently contributes 6 percent of an employee’s salary to a 401(a) plan on a monthly basis. Employees can make additional contributions to the supplemental 457 deferred-compensation pension plan. Both pension plans are administered by American United Life Insurance Co (AUL).

“They’ll still get the 6 percent, which every employee gets,” Hilmer said. “So in effect, we’re giving them the opportunity to get 8 percent. When the employee who is not participating in this … when they take that pre-tax money out of their (pension plan), it’s more than that 2 percent. And then we’re giving them free money on top of it.”

The SCFAA board voted in January to change the association’s primary pension plan for employees from a defined-benefit plan to a defined-contribution plan. Month-ly benefits provided to current retirees were not affected by the changes.

Hilmer and Stegman also have tried to adopt a similar pension plan for the MFPD as board members, but St. Louis County Circuit Court Judge Thea A. Sherry recently granted a preliminary injunction prohibiting the board from making any changes to the district’s pension plan.

Attorney John Goffstein is representing firefighters and paramedics belonging to Local 1889 of the International Associa-tion of Fire Fighters who are challenging the proposed changes to the MFPD’s pension plan. SCFAA dispatchers are members of Local 1889 and Goffstein in January pledged to legally challenge the implementation of the defined-contribution pension plan for SCFAA employees in place of the former defined-benefit plan.

The SCFAA board approved the plan Jan. 28 and enacted it March 1. Goffstein has yet to follow through on the legal challenge for the SCFAA, but is still working toward stopping the new pension plan for MFPD employees.

With the new amendment in place for SCFAA employees, Hilmer said he believes the board has given dispatchers another chance to save toward their futures while also keeping expenses in line.

“If every employee takes advantage of (the pension plan), we will still be only roughly at half of what we budgeted for our pension this year, allowing us to continue to make catch-up contributions to the old defined-benefit plan to bring it up to full funding,” Hilmer said.

He also noted that SCFAA’s professional fees have not exceeded budget projections despite changing the pension plan from a defined-benefit plan to defined-contribution plan.

As part of a way to reward those employees for jumping on board with the change in the pension plan in March, Hilmer said the new matching pension plan offers even more potential savings to SCFAA workers.

“It’s no secret that at the beginning of the year, a new board came in here,” Hilmer said. “We had a lot of changes we made here at Fire Alarm. We were facing two of the biggest hurdles that employers around the United States face — namely health insurance and pension. We made some hard decisions on the board. We reformed the medical plan. We changed the pension from a defined benefit to a defined-contribution plan.

“I think it ensured the viability of Fire Alarm and also for the employees and their pension. I don’t want to take all the credit and I don’t want the board to take all the credit for it. I think the employees also deserve just as much as the board for cooperating along with it and being cognizant of the problem.”

Through work with SCFAA Manager Amy Haag, Hilmer said he and the board realized that even though some employees had not taken part in the association’s 457 compensation plan, the new plan gives them even more of a reason to do so.

“Amy and I went over a list of what people were utilizing their 457, which is a tax-deferred method for people to save money for retirement,” Hilmer said. “We had a handful of employees that weren’t even using it. So I think seeing how smoothly this process went and also the positive impact it had on Fire Alarm’s bottom line, I think the responsible thing for the employees and for Fire Alarm to do is offer this match. It would cost the board up to $12,000 a year. And I would hope that every employee would take care of it. A lot of people don’t think about putting money away for their future. And this is a way that I think we could encourage them to look at it.”