Police pension reform is necessary in the face of declining city revenues and skyrocketing pension costs. Police and firefighters should have a pension board to handle discussions concerning their pension plans.
In adopting of pension reform schemes, there are two important things to be considered: The sustainability of the pension fund for its members, and also the economic sustainability for a city or a country to be able to fund the pension fund. The most important aspect of any proposal to pension reform plans is that it does not affect current employees, only future employees. This is because it is not easy to convince them to adopt a new scheme which would alter their plans and preparations for the future. Also many individuals choose to adopt a pension plan that has been proved and tested for the worth of considering their retirement in future. Therefore pension plans should be concrete enough and have attractive plan needs to stay competitive in the market and recruit the people needed for the jobs
Pension Reform Plans
Pension plans should be designed in such a way that trustees have to buy into it. some of the changes for police and fire employees may include of the following: policemen should work for more years than the number in the already existing pension plans, Employees contributing more than the original sum to the pension plan, the cost of living increases to be deferred for retirees for the first few months after retirement and the final average pay on which benefits are to be established should be determined by the last years of service.
The following are some of the reforms that can affect the pensions of police officers and firefighters: the employees must be 60 years to receive full benefits and the final average pay of the pension scheme is based on the highest five years of service, up from the highest three years. Many government leaders in the world continues to struggle with balancing the need to meet rising employee and pension costs at the face of the declining revenue and increasing service demands this is because the key to managing of finances in the long term is through pension reforms. Police and Fire Pension Fund Special Committee on Pension Reforms should be formed to discuss on contract issues with the police unions as reforms in the pension plans are meant to save a country from financial losses in the long term.
There arise public pension reforms debates when inflation affects investment collection by a given reasonable percentage and the degree of pension deficits is increased to a point that attract attention to individuals and trustees. Some of the losses may be covered by the market stock but in cases where the accountability of the pension scheme is high; there occurs shortfalls in the funding of public pension. The funding reforms should be put in place to reduce such liabilities through state legislation. Reforms should consider both the new hires as well as the ongoing.
What is a good pension reform plan?
A good pension reform plans should show that the local government leaders can work together to solve tough fiscal and monetary problems while not breaking faith with public employees, who have risked their lives and provided years of service to a country. This means that there should be a common ground pension plan that moves a country closer to adopting reforms that is a win-win for our taxpayers, employees and the overall financial health of a country. A nation should embrace a pension reform plan that will unlock its untapped potential.
The reforms should be such that the current employees in the traditional pension plan would contribute an extra percentage of their compensation to keep their existing benefits with no other changes. The scheme should consider new sworn police and fire personnel as well as those below a certain payroll grade to be placed into a hybrid composed of a reduced traditional pension. The retirement age for new employees should be increased by a few years according to the provision of the reforms.
Pension Review Panel
A Pension Review Panel should be put in place to study a nation’s pension fund and make recommendations on how to address the problem. The first step toward pension reform should be by proposing legislation to reduce the multiplier for new employees. The multiplier should consider both the sworn fire fighters and the policemen by reducing their due. It should also show their retirement ages. In the state of California, where statewide pension reform is still elusive due to the legislature failing to address it in its new FY2012 budget, workers in many of the unions have agreed to pay more to preserve future benefits.
The outgoing Governor Schwarzenegger negotiated up to half-dozen such increases in his final year in office, and also Los Angeles has set a new law with an agreement for employees to contribute up to 4 % of pay into their retiree health care plan. Some police unions, have played it hard with their elected officials and have bet their jobs and sometimes lost that the city councils will blink and cut off other departments rather than lay off or retire cops. This strategy works in many municipalities although some mayors, city managers and city councils stare them down and cut off the workforce after trying without much success to negotiate for pension reductions and fair-share employee contributions. This is because there may be no other choice.
The retirement benefits should be bargained on an employer-by-employer basis and there is no need for the legislature to get involved. The main problem with this is that the resulting collection of benefits formulas, contribution rates and funding schemes will result in to disparities in police and fire fighters compensation and taxpayer impact. Most municipalities are therefore left with a poor labor market the economy draws back. The unions will focus on restoring their shrunken benefits through labor arbitration. This is the reason as to why some pension reformers would advocate for a level playing ground with common limits on how rich a retirement benefit can be.
Police and fire pension reforms are needed now to achieve fair and affordable pension systems in many nations of the world. The government needs to intervene through legislation to achieve affordable pension schemes which would win the faith of trustees.