Legislative Update 2014
Pension Fund Legislative Update
This legislative season, we asked 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 were 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 returned this year with no impact and made 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. This bill passed both House and Senate.
SB 235 – This bill was introduced last session and then sent to the auditors for evaluation for its fiscal impact. It returned this year as having some minimal impact to be evaluated as it made its way through the process. This bill redefines, for pension fund purposes, a firefighter as either compensated in a permanent job and working at least 1,040 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. This bill passed both House and Senate.
HB 844 – This was a new bill this session. It was 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. This bill passed in the House, but was tabled in the Senate for further consideration and thus died for the session. A new bill will be introduced next session to pursue the initiative.
HB 937 – This was 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. This bill passed in the House, but was passed over in the Senate in the sheer volume of bills that had to be handled in the waning moments of the session. It will be introduced next session to pursue the initiative.
Drafted – This bill was drafted, but not introduced due to a clerical error. 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. It will be introduced next session.
Drafted – This bill was drafted but not introduced due to a clerical error. 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. It will be introduced next session.
The Board and Staff are pleased to have the most important of all the initiatives, the “part-time bill,” through the process. While we are a little disappointed some of our other efforts did not quite get there, “it is a process.” We will be back! If you have any questions or comments relative to any of these issues, please do not hesitate to call us here at the office.