City Councilor Ken Cockayne sent this along:
These are very trying economic times for all and as a councilman and taxpayer I feel we should be looking for ways to save the taxpayers money and control the city budget from growing and putting more strain on all of our pocket books. As the mayor and the council look for ways to save money and control spending I believe we also have an obligation to plan to pay for some of the benefits that we have promised to our fine city work force. One such benefit is retiree healthcare which we have promised to provide for 10 years after retirement at no cost to the retiree. We all know that healthcare costs continue to climb at an annual rate of 10 percent and the city’s healthcare plan is no different. While these costs inflate due to causes that are beyond our control at the local level, we can begin to plan on how we are going to meet and fund this liability in the future.
One such option is currently being explored by a committee right now called the GASB 45 Committee. They are looking at moving some of the over funding in our city pensions to a trust established to pay for healthcare costs in the future. Currently we pay as we go to fund this liability at 2.7 million per year for retiree’s health benefits; in addition we have an actuarial liability of 4.4 million dollars per year for a total liability of 7.1 million dollars per year to taxpayers. This is built into the City budget and it will continue to grow as we have more retirees and costs continue to rise for healthcare. By developing a fund that is pre funded with these extra funds from the city pension we could begin to build a fund, similar to our pension funds, to pay for this liability. This would reduce the current item from the budget and potentially save the city millions of dollars in the future.
There is resistance to doing this from some of our city unions as they feel they should be able to negotiate this move and get something in return. However, if we move the money 2 things happen that benefit the union. First, all current employees become vested in their pensions at the moment the money is moved and secondly the city could not change the healthcare plans' costs or benefit level for 5 years after the transfer. These are the conditions set by the IRS to allow this to happen and they both benefit the city workers.
This committee is having a public hearing on Tuesday February 3rd at 5:00pm in the city council chambers to hear concerns and comments from the tax paying public. I ask that you make every effort to attend and let your voice be heard as Bristol as a real opportunity to save all of us some money and begin to look towards the future. This committee will be voting to either recommend this move or not and the public should have their say because either way the taxpayer is on the hook for these liabilities regardless if the pension and healthcare trust are funded or not.
*******
Copyright 2009. All rights reserved.
Contact Steve Collins at scollins@bristolpress.com
36 comments:
What a great statement. Ken Cockayne is an asset to the hard-working taxpayers and he is an asset to our community in general. Ken Cockayne clearly deserves the support of all.
Cockayne, don't get hooked up with the other Ken, and you'll alright come November.
He will be an albatross around your neck.
used to be ken & barbie, a pair of beautiful dolls - bristol has ken & ken, a real pair of absolute beauties.
Sounds like Ken is right on with this one. I hope this gets supported. It is hue savings for everyone and is safe to do, despite the misinformation being spread by the folks against it.
8:47
We are now in an age where mixed marriages are common and acceptable.
Steve:
I read commenst about "Ken and Barbie" and "mixed marriages" etc. and I wonder how in in the world you can have the audacity to attack (in your case) anything at all I have posted here. I have never posted anything nearly as dumb as the stuff some of these obvious stupid people write.
Waterbury tapped into "excess" pension funds for years because it was politically easier than doing the responsible thing. Now that City is bankrupt.
The State Teacher's Pension Fund is $300 million dollars underfunded because the state legislators didn't do the responsible thing.
This will simply put Bristol on that same slippery slope.
Bristol just ended the fiscal year with a SURPLUS, has a $17 million dollar rainy day fund and just got a bond rating upgrade. All of this makes it unnecessary, unwise and irresponsible to put the pension funds at risk.
9:42 - that is the reason that it is open to opinion - stupid.
respectively submitted 8:47.
I don't know about Steve Concerned, but I'd rather read some of the other bloggers' dumb stuff than your egotistical rants, although sometimes your obnoxious, holier than thou attitude does make me laugh. ;0)
Bristol hasn't ended this year witha surplus: that is just a projection by Kloko.
Probably for the benefit of the rating people.
2:13
Part of the rainy day fund will come from borrwed money.
Shoot, we can double it if we borrow more!
A Kloko sleight of hand.
Here is one for you - why would the city pay for health insurance if both the husband and wife work for the city? Why not pay for one while the other is carried on the insurance? Seems like a waste of money to pay for 2 employees health insurance - don't you think?
Wild Child:
I'm not "holier that thou", but I sure am smarter than thou (you especially).
Pretty soon the whole truth will come out about the health care funding. There has been incomplete inaccurate and down right false information written by Steve Collins. He prints what people tell him without doing any research. The IRS will NOT allow a 401h account to be created in a collectively bargained pension fund unless the contract language is changed to include a 401 h sub account. Pension and health benefits are mandatory subjects of collective bargaining and cannot be changed by city council decree or ordinance creation. Look up the Pension Protection act of 2006 title 8 part D. It could not be clearer. Also go to the IRS website and find forms 13069 and 13070. These are the forms the city MUST fill out before they can make a move. A 401 h account cannot be created out of thin air, it MUST be negotiated.
Concerned Conservative (a.k.a. holier than thou, smarter than thou, more egotistical than thou...):
You just proved my point. Thanks!
2/1 5:59
So are you accusing Klocko of lying about this?
Lying by omission absolutely. Not only him, but Barth and Lemanski also.
You must be a union guy spreading your own misinformation. What a joke! The city wants to take your money to pay for your benefits from your overfunded penions funds that were started with money from the taxpayers. Boo hoo, gimme more! We deserve more! Waaah waah! You guys are all crooks! You act as if you guys deserve the world and that everything we have is a credit to you. Bull@#$t!
I'm so sick of hearing that if you don't like it, tough, you can go get a job with the city... blah blah blah. City jobs are only available to people connected to the unions. Hell, union jobs are only available for people connected to the unions. Nepotism is at its worst with the unions. I don't know how many complete losers I have crossed paths with growing up, who screwed up royally and were complete jerks who did nothing in school except drink and smoke and cut class. They couldn't get out of remedial math, not b/c they were dumb, but b/c they were lazy. Guess where they are all working now at union jobs as a carpenters or with the city, thanks to their father or their uncle or whoever. What a joke it is when you guys take this high road and act all apalled when you guys are called out.
8:49 Poster,
Sounds like you know many of our great city's workforce personally!
You can say want you want! Ward has them all protected!!
"There is resistance to doing this from some of our city unions as they feel they should be able to negotiate this move and get something in return. However, if we move the money 2 things happen that benefit the union. First, all current employees become vested in their pensions at the moment the money is moved and secondly the city could not change the health care plans' costs or benefit level for 5 years after the transfer. These are the conditions set by the IRS to allow this to happen and they both benefit the city workers."
Feelings have nothing to do with it. It is IRS law. The only type of transfer that can be used is a "collectively bargained transfer". Not my words, but the federal governments'. The law recognizes pensions that are part of bargaining agreements with specific rules. The first of which is that pension language must be changed to create a 401 h account and to allow for fund transfer to the account. This cannot be done without collective bargaining. The second error Cockayne makes is about vesting. The vesting for collectively bargained transfers is determined by the language of the contract, which in Bristol is ten years of benefits. The law is part of the Pension Protection act of 2006 title 8 part d. You can find it online. The other misrepresentation Cockayne makes is when he says retirement health care is free to the retiree. This is false. Employees earn those benefits as part of their salary. The cost of benefits promised is what GASB45 is all about. Ask any teacher in Bristol about retiree health care. They don't receive it because they bargained for wages and other benefits years ago instead of health care. The reason they did that is because most teachers had spouses in the private sector and those employers provided their families' health care. The members of the citys'other unions bargained for retiree health in lieu of higher wages. these benefits were promised, earned and now owed. They are not given away for free.
How dare you level such insults at the great working men of Bristol! It is because of them that we have anything. We should not only leave the pension alone, but we should give them more. In fact increase their insurance coverage to lifetime benefits, for them and all of their children and grandchildren. Maybe we can stop having them contribute anymore and the taxpayers can foot all the bills. How about we provide them city housing and cars too. They keep us safe and clean and they teach our children. What don't they do? We would be no where without them. Crap I think I'm just going to direct deposit my check to the tax collector right now. Give them all a raise and screw the rest of us!
"in fact increase their insurance coverage to lifetime benefits,"
This is the biggest lie of all, on two fronts. One, there have been no discussions between the unions and the city on this. Two, the city would never have to provide full lifetime benefits under any circumstances. Once a retiree reaches age 65, medicare becomes the primary insurance. If you look at it that way, everyone over 65 gets lifetime medical coverage. Even assuming the best case scenario of the city picking up supplemental social security benefits and prescription coverage, there would be little effect on the budget. Actually for prescriptions, because Bristol provides creditable coverage, the fed reimburses Bristol 28% of the costs of providing prescriptions to retirees over 65 years of age. Ask Klocko about that one. Please, make an effort to become informed instead of making yourself look foolish with your shrill ramblings.
Steve, please follow up on the information I am providing here. Klocko is either not very bright or he is deliberately misleading you. Have you mentioned any of this to him? If so, what does he have to say about it? I know he has your ear, you practically sat next to him at the last GASB meeting.
Poboy --
Here's that pension law section you refer to:
Subtitle D: Health and Medical Benefits - (Sec. 841) Permits an employer maintaining a defined benefit plan to transfer excess pension assets to cover current retirees future health liabilities.
(Sec. 842) Removes the exclusion that prevents multiemployer pension plans from transferring excess pension assets to health benefits accounts for retirees.
(Sec. 843) Allows qualified asset accounts to include a reserve for medical benefits provided through bona fide association health plans.
(Sec. 844) Excludes from gross income any charge against the cash value of an annuity contract or the cash surrender value of a life insurance contract made as payment for coverage under a qualified long-term care insurance contract which is part of or a rider on such annuity or life insurance contract if the investment in the contract is reduced (but not below zero). Requires an individual excluding such charges from gross income to file a return with the Secretary of the Treasury.
(Sec. 845) Excludes from gross income direct distributions from governmental retirement plans to pay for health and long-term care insurance premiums for retired public safety officers.
Forgive me if I'm missing something, but where does it say any change has to be negotiated? I don't see it.
No that is not it. This is it.
H. R. 4—226
Subtitle D—Health and Medical Benefits
SEC. 841. USE OF EXCESS PENSION ASSETS FOR FUTURE RETIREE
HEALTH BENEFITS AND COLLECTIVELY BARGAINED
RETIREE HEALTH BENEFITS.
(a) IN GENERAL.—Section 420 of the Internal Revenue Code
of 1986 (relating to transfers of excess pension assets to retiree
health accounts) is amended by adding at the end the following
new subsection:
‘‘(f) QUALIFIED TRANSFERS TO COVER FUTURE RETIREE HEALTH
COSTS AND COLLECTIVELY BARGAINED RETIREE HEALTH BENEFITS.—
‘‘(1) IN GENERAL.—An employer maintaining a defined benefit
plan (other than a multiemployer plan) may, in lieu of
a qualified transfer, elect for any taxable year to have the
plan make—
‘‘(A) a qualified future transfer, or
‘‘(B) a collectively bargained transfer.
Except as provided in this subsection, a qualified future transfer
and a collectively bargained transfer shall be treated for purposes
of this title and the Employee Retirement Income Security
Act of 1974 as if it were a qualified transfer.
‘‘(2) QUALIFIED FUTURE AND COLLECTIVELY BARGAINED
TRANSFERS.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The terms ‘qualified future transfer’
and ‘collectively bargained transfer’ mean a transfer which
meets all of the requirements for a qualified transfer,
except that—
‘‘(i) the determination of excess pension assets
shall be made under subparagraph (B),
‘‘(ii) the limitation on the amount transferred shall
be determined under subparagraph (C),
‘‘(iii) the minimum cost requirements of subsection
(c)(3) shall be modified as provided under subparagraph
(D), and
‘‘(iv) in the case of a collectively bargained transfer,
the requirements of subparagraph (E) shall be met
with respect to the transfer.
‘‘(B) EXCESS PENSION ASSETS.—
‘‘(i) IN GENERAL.—In determining excess pension
assets for purposes of this subsection, subsection (e)(2)
shall be applied by substituting ‘120 percent’ for ‘125
percent’.
‘‘(ii) REQUIREMENT TO MAINTAIN FUNDED STATUS.—
If, as of any valuation date of any plan year in the
transfer period, the amount determined under subsection
(e)(2)(B) (after application of clause (i)) exceeds
the amount determined under subsection (e)(2)(A),
either—
‘‘(I) the employer maintaining the plan shall
make contributions to the plan in an amount not
less than the amount required to reduce such
excess to zero as of such date, or
‘‘(II) there is transferred from the health benefits
account to the plan an amount not less than
the amount required to reduce such excess to zero
as of such date.
H. R. 4—227
‘‘(C) LIMITATION ON AMOUNT TRANSFERRED.—Notwithstanding
subsection (b)(3), the amount of the excess pension
assets which may be transferred—
‘‘(i) in the case of a qualified future transfer shall
be equal to the sum of—
‘‘(I) if the transfer period includes the taxable
year of the transfer, the amount determined under
subsection (b)(3) for such taxable year, plus
‘‘(II) in the case of all other taxable years
in the transfer period, the sum of the qualified
current retiree health liabilities which the plan
reasonably estimates, in accordance with guidance
issued by the Secretary, will be incurred for each
of such years, and
‘‘(ii) in the case of a collectively bargained transfer,
shall not exceed the amount which is reasonably estimated,
in accordance with the provisions of the collective
bargaining agreement and generally accepted
accounting principles, to be the amount the employer
maintaining the plan will pay (whether directly or
through reimbursement) out of such account during
the collectively bargained cost maintenance period for
collectively bargained retiree health liabilities.
‘‘(D) MINIMUM COST REQUIREMENTS.—
‘‘(i) IN GENERAL.—The requirements of subsection
(c)(3) shall be treated as met if—
‘‘(I) in the case of a qualified future transfer,
each group health plan or arrangement under
which applicable health benefits are provided provides
applicable health benefits during the period
beginning with the first year of the transfer period
and ending with the last day of the 4th year following
the transfer period such that the annual
average amount of such the applicable employer
cost during such period is not less than the
applicable employer cost determined under subsection
(c)(3)(A) with respect to the transfer, and
‘‘(II) in the case of a collectively bargained
transfer, each collectively bargained group health
plan under which collectively bargained health
benefits are provided provides that the collectively
bargained employer cost for each taxable year
during the collectively bargained cost maintenance
period shall not be less than the amount specified
by the collective bargaining agreement.
‘‘(ii) ELECTION TO MAINTAIN BENEFITS FOR FUTURE
TRANSFERS.—An employer may elect, in lieu of the
requirements of clause (i)(I), to meet the requirements
of subsection (c)(3) by meeting the requirements of
such subsection (as in effect before the amendments
made by section 535 of the Tax Relief Extension Act
of 1999) for each of the years described in the period
under clause (i)(I).
‘‘(iii) COLLECTIVELY BARGAINED EMPLOYER COST.—
For purposes of this subparagraph, the term ‘collectively
bargained employer cost’ means the average cost
H. R. 4—228
per covered individual of providing collectively bargained
retiree health benefits as determined in accordance
with the applicable collective bargaining agreement.
Such agreement may provide for an appropriate
reduction in the collectively bargained employer cost
to take into account any portion of the collectively
bargained retiree health benefits that is provided or
financed by a government program or other source.
‘‘(E) SPECIAL RULES FOR COLLECTIVELY BARGAINED
TRANSFERS.—
‘‘(i) IN GENERAL.—A collectively bargained transfer
shall only include a transfer which—
‘‘(I) is made in accordance with a collective
bargaining agreement,
‘‘(II) before the transfer, the employer designates,
in a written notice delivered to each
employee organization that is a party to the collective
bargaining agreement, as a collectively bargained
transfer in accordance with this section,
and
‘‘(III) involves a plan maintained by an
employer which, in its taxable year ending in 2005,
provided health benefits or coverage to retirees
and their spouses and dependents under all of
the benefit plans maintained by the employer, but
only if the aggregate cost (including administrative
expenses) of such benefits or coverage which would
have been allowable as a deduction to the employer
(if such benefits or coverage had been provided
directly by the employer and the employer used
the cash receipts and disbursements method of
accounting) is at least 5 percent of the gross
receipts of the employer (determined in accordance
with the last sentence of subsection (c)(2)(E)(ii)(II))
for such taxable year, or a plan maintained by
a successor to such employer.
‘‘(ii) USE OF ASSETS.—Any assets transferred to
a health benefits account in a collectively bargained
transfer (and any income allocable thereto) shall be
used only to pay collectively bargained retiree health
liabilities (other than liabilities of key employees not
taken into account under paragraph (6)(B)(iii)) for the
taxable year of the transfer or for any subsequent
taxable year during the collectively bargained cost
maintenance period (whether directly or through
reimbursement).
‘‘(3) COORDINATION WITH OTHER TRANSFERS.—In applying
subsection (b)(3) to any subsequent transfer during a taxable
year in a transfer period or collectively bargained cost maintenance
period, qualified current retiree health liabilities shall
be reduced by any such liabilities taken into account with
respect to the qualified future transfer or collectively bargained
transfer to which such period relates.
‘‘(4) SPECIAL DEDUCTION RULES FOR COLLECTIVELY BARGAINED
TRANSFERS.—In the case of a collectively bargained
transfer—
H. R. 4—229
‘‘(A) the limitation under subsection (d)(1)(C) shall not
apply, and
‘‘(B) notwithstanding subsection (d)(2), an employer
may contribute an amount to a health benefits account
or welfare benefit fund (as defined in section 419(e)(1))
with respect to collectively bargained retiree health liabilities
for which transferred assets are required to be used
under subsection (c)(1)(B), and the deductibility of any
such contribution shall be governed by the limits applicable
to the deductibility of contributions to a welfare benefit
fund under a collective bargaining agreement (as determined
under section 419A(f)(5)(A)) without regard to
whether such contributions are made to a health benefits
account or welfare benefit fund and without regard to
the provisions of section 404 or the other provisions of
this section.
The Secretary shall provide rules to ensure that the application
of this paragraph does not result in a deduction being allowed
more than once for the same contribution or for 2 or more
contributions or expenditures relating to the same collectively
bargained retiree health liabilities.
‘‘(5) TRANSFER PERIOD.—For purposes of this subsection,
the term ‘transfer period’ means, with respect to any transfer,
a period of consecutive taxable years (not less than 2) specified
in the election under paragraph (1) which begins and ends
during the 10-taxable-year period beginning with the taxable
year of the transfer.
‘‘(6) TERMS RELATING TO COLLECTIVELY BARGAINED TRANSFERS.
—For purposes of this subsection—
‘‘(A) COLLECTIVELY BARGAINED COST MAINTENANCE
PERIOD.—The term ‘collectively bargained cost maintenance
period’ means, with respect to each covered retiree and
his covered spouse and dependents, the shorter of—
‘‘(i) the remaining lifetime of such covered retiree
and his covered spouse and dependents, or
‘‘(ii) the period of coverage provided by the collectively
bargained health plan (determined as of the
date of the collectively bargained transfer) with respect
to such covered retiree and his covered spouse and
dependents.
‘‘(B) COLLECTIVELY BARGAINED RETIREE HEALTH LIABILITIES.
—
‘‘(i) IN GENERAL.—The term ‘collectively bargained
retiree health liabilities’ means the present value, as
of the beginning of a taxable year and determined
in accordance with the applicable collective bargaining
agreement, of all collectively bargained health benefits
(including administrative expenses) for such taxable
year and all subsequent taxable years during the collectively
bargained cost maintenance period.
‘‘(ii) REDUCTION FOR AMOUNTS PREVIOUSLY SET
ASIDE.—The amount determined under clause (i) shall
be reduced by the value (as of the close of the plan
year preceding the year of the collectively bargained
transfer) of the assets in all health benefits accounts
or welfare benefit funds (as defined in section 419(e)(1))
H. R. 4—230
set aside to pay for the collectively bargained retiree
health liabilities.
‘‘(iii) KEY EMPLOYEES EXCLUDED.—If an employee
is a key employee (within the meaning of section
416(I)(1)) with respect to any plan year ending in a
taxable year, such employee shall not be taken into
account in computing collectively bargained retiree
health liabilities for such taxable year or in calculating
collectively bargained employer cost under subsection
(c)(3)(C).
‘‘(C) COLLECTIVELY BARGAINED HEALTH BENEFITS.—The
term ‘collectively bargained health benefits’ means health
benefits or coverage which are provided to—
‘‘(i) retired employees who, immediately before the
collectively bargained transfer, are entitled to receive
such benefits upon retirement and who are entitled
to pension benefits under the plan, and their spouses
and dependents, and
‘‘(ii) if specified by the provisions of the collective
bargaining agreement governing the collectively bargained
transfer, active employees who, following their
retirement, are entitled to receive such benefits and
who are entitled to pension benefits under the plan,
and their spouses and dependents.
‘‘(D) COLLECTIVELY BARGAINED HEALTH PLAN.—The
term ‘collectively bargained health plan’ means a group
health plan or arrangement for retired employees and their
spouses and dependents that is maintained pursuant to
1 or more collective bargaining agreements.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to transfers after the date of the enactment of this
Act.
Steve -
http://www.dol.gov/ebsa/pdf/ppa2006.pdf
Here is a link to a pdf of the whole act. Read pages 226-230.
Additionally, look up IRS forms 13069 and 13070. These are the forms the city MUST fill out before they can set up a 401h account. They clearly show that the city can do nothing unless they change pension language to include a 401h sub account. Pension language cannot be changed unless it is bargained. Governor Rell upheld that view today with her proposal to suspend binding arbitration for two years. She specified that when it is reactivated it will include salary and benefits, including pensions, as mandatory subjects of collective bargaining.
Here are the links to the forms the city must fill out.
http://www.irs.gov/pub/irs-pdf/f13069.pdf
http://www.irs.gov/pub/irs-pdf/f13070.pdf
Here are questions on form 13069:
b. Does the plan contain a medical benefits account within the meaning of section 401(h)? If “Yes,” complete the remainder of this worksheet. If “No,” secure amendments to include the section 401(h) account provisions or request an explanation from the applicant.
c. Is the section 401(h) account part of a pension or annuity plan (including a money purchase pension plan)?
The first line of 13070 states:
"For a section 420 transfer of excess assets to retiree health accounts, the plan must be amended to include provisions for a medical benefits account within the meaning of section 401(h). IRC section 420(e)(3)."
The "plan" means the pension plan, which is part of the collective bargaining agreement. It cannot be changed unless the change is negotiated. It boggles my mind that neither Mr. Barth nor Mr. Lemanski, the two experts that Klocko said cost $400.00 to retain have this information. Obviously, they don't, because otherwise, they surely would have brought it forward.
Steve just curious if you got a chance to read my most recent posts and if you have any thoughts on them.
I looked up many of the statutes. I think Bruce Barth's interpretation is correct. But I'm a reporter, not a judge or a pension lawyer, so ....
"I looked up many of the statutes. "I think Bruce Barth's interpretation is correct. But I'm a reporter, not a judge or a pension lawyer, so ...."
What statutes exactly are you talking about? What I posted is current IRS code. Did you even look at the information I provided? Did you follow up with Mr. Barth for comments on the information or why he failed to mention any of it? You say you are a reporter, but these are the things that reporters do. How can you say you believe Barth's interpretation when you have information that seems to contradict his opinion and you don't even ask him about it? You aren't a pension lawyer, but he is. By the way, if you do want to look up a statute look up Connecticut general statute 7-459. It pretty much renders the vesting issue a moot point. It says that negotiated retiree health benefits "may not be reduced or eliminated". State law.
Poboy -- I took the time to read the IRS code provisions you cited and other statutes, including the one you mentioned in the Connecticut books. I don't think they apply.
Fundamentally, it seems like you believe that if the city were to do this it would reduce or eliminate the health care and pension provisions you have negotiated in good faith. I don't see how that is true.
The change that's under consideration would not alter the benefits one bit except to vest city employees sooner and lock in their generous 10-year health care coverage after retirement for five more years after the change is done. That's pretty sweet, if you ask me.
The change would not have any impact at all on the city's obligation to provide what the contracts say it must. It would only make it easier on taxpayers to do it.
And I really don't have any doubt that the way things are going, the alternative isn't going to be that taxpayers chip in tens of millions of dollars more that there's no rational reason to ask them to pay. It's going to be growing political pressure to crack down on the generous benefits that city employees get.
If I were a city union official, I'd be thrilled to see this all happen. It would lock in the benefits and make it so they were paid up.
There's no reason the city would ever revoke pension or health care benefits that are tied up in fully funded trust accounts.
But if what we're looking at is a financial black hole, it would make all the sense in the world to snatch away the post-retirement benefits to whatever degree it could be done in future negotiations.
Personally -- and remember this is not my decision to make -- I can't understand the reluctance of so many city workers to jump at this. It is your best hope of keeping these generous benefits over the long run.
What I believe is that the vesting language is not needed because state law already exists to protect retiree health care. The federal vesting rules , should the unions agree to the terms, would be icing on the cake. The key misunderstanding you have is of the IRS law. It requires that a 401h sub account be established within the pension language. This simply cannot be done unless it is negotiated with the unions. The pension language is in the contracts and is a mandatory subject of collective bargaining. The two IRS forms 13069 and 13070 clearly state that 401h language be in the pension plan before any transfer can be made. You can't transfer money into a fund that does not exist. Many pension plans are set up for at will employees and a qualified or future transfer can be done because no collective bargaining language needs to be changed. A collectively bargained transfer is the ONLY one that can be done in the city of Bristol. You also misunderstand the vesting issue. A collectively bargained transfer requires vesting for either lifetime or the terms of the collective bargaining agreement whichever is shorter. (ten years in the city's case).
A qualified or future transfer requires vesting for the year of the transfer and the following four years. Your interpretation would guarantee retiree health care for 15 years. No way anyone on the city's side would agree to that. The state statute I mentioned is the statute the city used to create the health care trust. I think that would make it relevant.
Take some extra time to read and comprehend part d that refers to 401h transfers. It is only 5 pages. You are completely misinterpreting the act. I believe that is mainly because you are listening to the wrong people (Klocko). He is giving you bad information. Over the last year or so he has made statements about the pension fund and the new health care trust that were either misleading or completely untrue. In one article you quoted him as saying that there was over a million dollars in the trust, later Klocko stated there was no money to put in the fund and that it was empty. The health care trust was created in Feb. 2008 and in subsequent articles you wrote quoted Klocko and Cockayne as saying the lawyers told them that the trust could be used to transfer pension fund money, when they knew as early as April 2007 that the trust could not accept pension money. There is more, start asking hard questions if you want a real story otherwise continue being a mouthpiece for Mr.Klocko. Don't forget you have a new boss and he might eventually expect some real reporting.
Poboy,
Good luck finding another reporter anywhere who would even try to understand this GASB 45 issue!
I can see why you argue this needs to be negotiated, but I believe you can reasonably argue that the negotiation has already been done in granting the benefits. I suppose it's all going to wind up in court if the city tries to move ahead.
GASB is a whole other animal, really has nothing to do with 401h or 420 transfers. Pre-funding of retiree benefits was always a good idea, probably the reason that 401h accounts have been available since 1964. GASB is a not for profit multi million dollar corporation made up of accountants and actuaries whose main purpose is to make up rules that ensure that accountants and actuaries always have jobs. They are under FAF (Financial Accounting Foundation) which includes FASB the private sector version of GASB. FASB was first, GASB didn't exist until 1987. Check out their website some time if you want a real eye opener. One of their main sources of funding happens to be from municipal bond issues - they get a cut of almost every municipal bond floated in the US. Their other main source of income is from publications (yes somebody had to pay to read the full text of GASB45.) they sell to their clients (check out Klocko's office the next time you visit, I'm sure he will have a couple of GASB publications around). Ironically, GASB employees have some of the best defined benefit pension plans in the country (including lifetime health care).
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