County sues pension board for refusing to implement reduced benefits for new employees
* The county said it has the authority to approve the changes, but pension officials say the plan requires legislative approval.
* The lower tier of retirement benefits was created early this year to reduce future pension liabilities.
The county filed a lawsuit this week against the
The five-page legal complaint asks a
"Despite the fact that the Legislature authorized counties to use the formula, SDCERA has refused to implement Tier D," the lawsuit states. "SDCERA wrongly contends that the 2006 legislation approving the use of Tier D is somehow inapplicable."
Under Tier D, non-safety employees upon retirement would receive a pension amounting to 1.62 percent of their final annual salary for every year of county employment. That's a decline from Tier C, which pays 2.3 percent per year.
The change also lowered the amounts the county and affected workers would be required to contribute to the retirement fund from 8.27 percent to 6.02 percent.
Members of the county
Pension officials said the county did not follow the law when creating the lower tier. PEPRA, or the Public Employees' Pension Reform Act of 2013, is at the heart of the legal dispute between the county and its retirement system.
In a hand-delivered letter to board Chairwoman
"
County supervisors say the reform act and previously existing law allow them to change the terms of defined-benefit retirement plans as they see fit, so long as the pension board finds "no greater risk and no greater cost" to the portfolio they manage.
The retirement board made just such a finding in December, but resisted enacting Tier D, citing the "plain language" of the reform law, which says the changes "must be approved by the legislature."
The mandate comes at the end of of a 70-word sentence that could be interpreted more than one way.
In a message posted on its website Friday, after being asked about the lawsuit by
"SDCERA has a fiduciary duty to administer the plan according to the law," the statement says. "By requiring the county to satisfy all the requirements of PEPRA prior to implementing Tier D, SDCERA is following its constitutionally mandated duty to the plan and its members and beneficiaries."
Supervisor
"While we've already made significant changes to reduce pension costs, we worked with our labor organizations to secure an even lower pension tier for new employees," said Jacob, who voted in favor of suing the retirement board she chairs. "Clearly there is a disagreement between the county and SDCERA, and it needs to be resolved in order to further protect taxpayers and safeguard the health of the pension system."
"Various labor organizations have entered into binding agreements with the county in which they agreed to accept the Tier D formula for new employees in exchange for significant wage and benefit increases," the lawsuit states.
It was not immediately clear whether the enhanced wages and benefits would persist if Tier D is not implemented.
"We are monitoring it closely," union President
If the county does not prevail in court, supervisors are expected to pursue legislative approval for Tier D.
[email protected] (619) 293-1708 @sdutMcDonald
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