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Firefighters say their retirement plans aren’t cutting it

By   /   December 21, 2012  /   9 Comments

Firefighters in mid-sized Nebraska cities say their retirement funds are inadequate, making it difficult for them to afford to retire.

By Deena Winter | Nebraska Watchdog

LINCOLN – Firefighters in medium-sized Nebraska cities are asking state lawmakers to sweeten their retirement accounts in order to live up to a 1983 promise.

During a legislative hearing earlier this week, representatives of firefighter unions told a panel of lawmakers that about 300 firefighters in first-class cities (population 5,000 to 100,000) have inadequate retirement plans.

John Corrigan, an attorney representing the Nebraska Professional Firefighters Association, told the Nebraska Retirement Systems Committee that prior to 1984, firefighters in first-class cities had a defined benefit retirement plan dating back to 1896. But in 1983, the Legislature passed legislation to deal with huge unfunded liabilities in some cities, promising to provide retirement benefits roughly equal to 50 percent of the benefits they had been getting prior to 1984 – but they’ve actually gotten closer to 24 percent.

Firefighters in Lincoln and Omaha get pensions that guarantee them a certain amount of retirement money per month until they die, whereas firefighters in first-class cities are on defined contribution plans, such as 401ks.

Twenty-eight years later, Corrigan says the retirement accounts are clearly not sufficient even though the firefighters and cities are contributing a total 19.5 percent of their pay. He said many firefighters can’t afford to retire, and cited a 53-year-old firefighter with 24 years of service whose retirement account is valued at $367,000, for a monthly benefit of about $1,344 and no health insurance.

“The firefighters are left with retirement not being an option,” he said. “This Legislature had every good intention in 1983… that’s not how it’s shaken out.”

Wilber Sen. Russ Karpisek said in his 20 years of self-employment and 12 years as a mayor and now senator, he’s always had to buy his own health insurance and pay self-employment taxes.

“I had to invest my own money and that’s not doing very well either right now,” he said.

Dave Engler, a Lincoln firefighter and president of the state firefighters’ union, told lawmakers the firefighters would like something closer to what was promised, “not to make them millionaires” or “so they can buy vacation homes.”

“We’re not trying to be greedy or anything like that,” he said.

He said older firefighters in first-class cities can’t afford to retire so they “hang around” even though they’re eligible to retire at age 55 – and at that age, they’re pushing it because they’re more at risk for injuries and heart-related injuries.

“You become a liability at that age,” Engler said.

Grand Island Fire Capt. Scott Keel is president of the local firefighters union and also sits on the city’s pension board. He said after 20 years of contributing nearly 20 percent of his pay, his own account hasn’t yet hit $200,000.

“I’ve seen this storm coming for quite awhile,” he said.

He said one firefighter retired about a year ago and had been earning about $50,000 and now lives on about $1,300 a month, out of which he must pay taxes and buy health insurance.

“It’s not working,” Keel said. “He’s trying to pick up part-time jobs” even though he has bad knees and shoulders and a bad back.

Another 57-year-old firefighter tells him he can’t afford to retire and can only hope he gets injured bad enough that he can’t be a firefighter but still work.

Keel doesn’t understand why the state differentiated between first-class cities and Omaha and Lincoln when drawing up the retirement plans, since all of the firefighters respond to fires, heart attacks and car accidents.

“I feel somewhat like a second-class citizen because I decided to be a firefighter in Grand Island,” Keel said.

Lynn Rex, head of the League of Nebraska Municipalities, said back in the late 1970s and early 1980s, first-class cities were struggling with unfunded liabilities in their police and fire pension funds, with some cities exploring bankruptcy. When the Legislature passed the legislation reforming the system, it did not provide funding to do so, “so they started out in the hole.”

Some lawmakers suggested Rex see if cities would open up their books so they can see why the retirement funds haven’t performed well from city to city.

Contact Deena Winter at deena@nebraskawatchdog.org.

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Deena Winter is a reporter for NebraskaWatchdog.org. Contact her at deena@nebraskawatchdog.org and follow her on Twitter @DeenaNEWatchdog.

  • country

    This is huge. Happy to see the request. Corrigan will lose this one. The retirements are fine, or possibly even high, compared to the average nebraska adult citizen that the legislature represents. Omaha and Lincol need to be on 401k’s like 90% of Nebraskans. Again, happy to see the request. The 53 yr old firefighter should get another job. No one should retire at 55; and private sector employees do not

  • http://twitter.com/GerardHarbison Gerard Harbison

    I’m about the same age as the firefighter, with 26 years service as a college professor, and my retirement account’s not a whole lot bigger. Plus I contribute most of it, not the state. I’m happy for what I have.

  • Watching_From_Lincoln

    No, Gerard, the State (us taxpayers) in essence pays ALL of your retirement, since we provide your salary from which you contribute into your 401(k), unless you teach at a private college.

  • http://twitter.com/GerardHarbison Gerard Harbison

    No. The State pays me to do a job. I actually had more lucrative offers elsewhere, but I came to Nebraska because I liked the state. And I choose to put some of the money they pay me into retirement. I don’t have to.

    I know working for a living is hard to understand for some people, but that’s how it goes.

  • JoeSixPack56

    Does the state need to require that all firefighters never smoke tobacco and stay fit so they can work past 55? I don’t know anyone who can retire at 55. Why should firefighters?

  • JoeSixPack56

    How about a story about the percentage of people in Nebraska, and other states, who get more than social security when they retire at 65 years, not 55?

  • Bart

    Working until 65 needs to be part of the solution for everyone, private or public. Public sector jobs need to move to Social Security and defined contributions like 401k’s, so their retirement programs become portable throughout their working lives. That is largely the way it works in the private sector. Public sector retirement programs should not be superior to private sector retirement plans.

    The rigid departmentalized practice in public sector employment is also so outdated. Older and I presume physically unfit firefighters should transition laterally to other departments. Certainly 911 call center positions, permit inspectors, corrections and courthouse security positions to name a few would allow for work until age 65. Many government practices seem to be 50 years outdated. Fixing them would be best for taxpayers and public employees.

  • Bart

    Additionally, Omaha’s firefighter pension is no place to look for a model. It is grossly unfair to taxpayers. It’s underfunded by $100s of millions. Taxpayer pension contributions to OFD employees are triple normal city contributions, and still it is not enough. Omaha is in a very sad financial state.

  • JoeSixPack56

    What is wrong with firefighters and all other government employees getting social security plus whatever they save for themselves for retirement???

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