Legislative Update 2014
This legislative season, we are asking the General Assembly for several changes and improvements to our Code section for the benefit of our participants and the protection of the Fund. The following is a list of the bills that have been proposed and/or introduced. As a staff looking out for your best interest, we hope and trust you will continue to support our efforts with the legislators.
HB 460 – This bill was introduced last session and then sent to the auditors for evaluation for its fiscal impact. It returns this year with no impact and is now making its way through the process. This bill does two things. First, if a firefighter member of the fund becomes incarcerated and then is used to fight fires in the local community as an inmate firefighter that service does not count as pension creditable service. Secondly, if an incarcerated individual becomes trained as a firefighter and then is used as a volunteer in the community while incarcerated, that individual cannot join the fund and use the training and fire attendance for pension creditable service.
SB 235 – This bill was introduced last session and then sent to the auditors for evaluation for its fiscal impact. It returns this year as having some minimal impact to be evaluated as it makes its way. This bill redefines, for pension fund purposes, a firefighter as either compensated in a permanent job and working at least 1040 hours a year or as a volunteer. This definition eliminates the issue of discerning between full-time and part-time firefighters and sets a minimum standard for compensated, permanently employed firefighters. The bill also provides for a special buyback provision for those part-time firefighters who were denied participation in the fund in the recent period when the issue of part-time participation surfaced.
HB 844 – This is a new bill this session. It is intended to recognize the value of the benefit of the Firefighters’ Pension Fund by raising the penalty to a felony from a misdemeanor, and the fine to $5,000 from $500 for anyone convicted of defrauding the fund. The bill also empowers the Board of Trustees with the authority to remove members who are found to have attempted to defraud or colluded in an attempt to defraud the fund for benefits. As we continue to improve record keeping and reporting, we are finding that the misdemeanor level of penalty is not a sufficient deterrent to false reporting, nor is it worth pursuing for prosecution. However, a full felony and the loss of benefits for co-conspirators seem fitting for the rewards at stake.
HB 937 – This is a new bill this session. This initiative is long overdue. It is a bill to define the term “in good standing” with the pension fund. This term is used throughout Title 47-7 to determine when a participant is entitled to certain benefits such as retirement and leave of absence, yet it has never been defined. It is important, especially when a participant is not “in good standing,” not vested, and becomes deceased. In that instance, the participant’s beneficiary is not entitled to the death benefit, only a refund of the participant’s paid-in dues.
Drafted – This bill is drafted, but not introduced as of this writing. It is a request to allow the staff to invest a larger portion of the fund in alternative investments with additional controls on the allocation. The Firefighters’ Pension Fund staff invests the alternative investing allocation in private equity, which has a very long term horizon. We feel that we need a slightly larger allocation to provide the fund with an adequate cache of working capital to support a long term program.
Drafted – This bill is drafted but not introduced as of this writing. It is a request to allow the staff to invest in Master Limited Partnerships, (MLP). MLPs are publicly traded partnerships, similar to Real Estate Investment Trusts, (REIT), which must pay out a certain portion of their income as dividends in order to garner tax exemptions. As a result, the securities typically boast a high yield and are favorably rated. MLPs are predominantly used in the energy sector in pipelines and infrastructure.
Look for these bills to be presented to the respective Retirement Committees and on the floor of the respective Chambers in the coming weeks.