COLUMBIA-An ordinance authorizing a new retirement option for employees of the Columbia Police and Fire departments will be introduced to the City Council on Monday.
The deferred retirement option plan, also known as the DROP program, was designed to help alleviate turnover within the city’s public safety agencies by offering incentives for police and firefighters to postpone retirement. In discussing the plan during his presentation of the budget proposal for fiscal 2008 last week, City Manager Bill Watkins cited the city’s aging workforce and a desire to retain some of the institutional knowledge of long-time city employees.
Currently, the Columbia public safety retirement program states that employees are eligible for retirement with benefits after 20 years of service or at age 65, whichever comes first. When they choose to retire, a pension plan that pays a percentage of their highest paying salary goes into effect.
One issue addressed by the new option is that many fire and police employees begin serving at an early age, sometimes qualifying for retirement in their 40s, when they’re not ready to stop working and are happy in their current jobs. They can choose to stay, but their benefits plateau.
“Without the DROP program, it would make more financial sense for (officers) to retire,” Police Chief Randy Boehm said.
The DROP program, however, would allow employees to continue working with the same department for up to five years beyond retirement eligibility, continuing to earn a salary and be eligible for raises and promotions, and to keep their health care and insurance plans. Participants would continue paying into the pension fund, while their benefits are frozen at a fixed rate and deposited into an account until retirement.
“Instead of retiring and having your pension mailed to your address, the check stays in a savings account for you,” explained Columbia Fire Lt. Keith Dothage, who will be eligible for retirement at 47. “My daughter’s almost 2, so I plan to take advantage of the DROP program to help with her college tuition.”
Dothage, who is on the Firefighter Pension Board, said that group has been working on the issue for several years, and it’s finally coming to fruition.
“We’ve been kicking the idea of this program around for awhile,” he said. “It’s not a new concept. It’s been around for years and started in Louisiana for oil rig organizations.”
Dothage said the program “is very popular with fire and police (departments) throughout the country.”
Boehm said he thinks the program is a good idea, because, “as the baby boomer generation approaches retirement, the city is losing a lot of expertise.”
City Finance Director Lori Fleming agreed. The city believes the program is desirable, “because we can keep employees with seniority around,” she said.
The overall hope is that the DROP program’s incentives will encourage experienced public safety staff to stick around and act as mentors for fledglings in the field.
“(The program) sounds like a good idea from what I’ve heard,” Columbia Fire Engineer Michael Orth said. “I don’t know that you’ll find anyone against it.”
Boehm said he has noticed a general enthusiasm for the idea within the Police Department as well.
“It’s harder for younger officers to comprehend how they’ll feel after 20 years of service, but veterans see it as a real benefit,” he said. “Whether they decide to use it or not, they appreciate the option.”
Fleming said the program is designed to be cost-neutral. Interest rates for pensions of participants will be 4 percent, rather than the 8 percent rate earned during their initial 20 years of service. Participants will also continue paying into the pension fund at a higher level based on their higher salaries than those who have been serving for fewer years, so it should balance out, she said.
Dothage said proponents of the plan hope it will be adopted at the Aug. 20 meeting of the Columbia City Council. That way, he said, the city can avoid new state restrictions on enhancements to benefit plans that are scheduled to become law on Aug. 28 as part of Senate Bill 406.