VOL. 130 | NO. 221 | Thursday, November 12, 2015
Five City Unions Go To Court Over Pension Changes
By Bill Dries
Five unions representing city of Memphis employees, including police officers and fire fighters, are taking the city to court in an effort to stop pension and benefits changes.
Union leaders have vowed for the last year to file a lawsuit in reaction to the changes, which would reduce pension and health insurance benefits for city of Memphis employees and retirees.
The unions filing the Chancery Court lawsuit are: the Memphis Fire Fighters Association, Memphis Police Association, International Brotherhood of Electrical Workers, International Union of Operating Engineers and International Association of Machinists.
New city employees and those with less than seven and a half years of service to the city go to a hybrid pension plan effective July 1, the start of the new fiscal year. The new plan is a combination of a market-based retirement account and a defined contributions plan.
The unions claim the change violates the equal protection clause of the Tennessee Constitution and the city pension ordinance.
The seven-and-a-half year threshold for the hybrid pension plan was a compromise the Memphis City Council approved in December 2014. The council had previously rejected Memphis Mayor A C Wharton’s proposal to switch all unvested city employees – those with less than 10 years of service – to the pension hybrid.
Changes related to health insurance coverage are set to start in January. With the new calendar year, city retirees younger than age 65 come off the city’s health insurance plan.
Earlier this year, the council approved an extension of the pre-65 coverage beyond Jan. 1. But that extension is something the council can only suggest; the city’s mayoral administration has the ultimate authority on the issue. Prior to the council’s vote, Wharton’s administration indicated it would not extend the coverage.
In September 2014, three retired police officers and the widow of a Memphis Police Department officer filed suit in Chancery Court. The group sought a temporary restraining order to stop changes to the health insurance benefits as the October 2014 open enrollment period approached.
The lawsuit aimed to preserve the 70 percent city government subsidy of insurance premiums for all retirees and their spouses.
The court denied the temporary restraining order at the end of arguments, which centered on whether city employees were specifically promised health insurance coverage for the rest of their lives.