Minnesota City Settles Pension Surplus Suit

A Minnesota city has agreed to settle a dispute with its firefighters over an unusual problem: what to do with a $1.5 million pension surplus. The City of Maplewood filed suit against the Maplewood Fire Relief Association earlier this year following the city’s decision to eliminate part-time firefighters in favor of a full-time department.

The decision to eliminate the part-timers ended up having two major implications. First, some 25 part-time firefighters would be reduced to 9 full-timers, resulting in 16 fewer firefighters in the department. Second, a pension fund that the relief association oversaw would be terminated. With $4.9 million in assets and $3.4 million in liabilities, the $1.5 million surplus was in dispute.

The firefighters through the relief association sought to apply the surplus to compensate both the 16 part-timers who were being eliminated and well as those who were continuing with the career department. The city pointed to a state law that said that if a pension is terminated, any  surpluses would be applied to the municipality’s general fund.

After the city filed suit in February, the state legislature stepped in and enacted special legislation that prevented the association from dividing up the surplus. The legislature also required the city and the association to reach a settlement that would pay a lump sum to the 16 firefighters who were being eliminated.

The settlement calls for 90% of the pension fund to be paid out to the firefighters, with all the firefighters being vested. The eliminated part-timers will receive a lump sum of $11,000 per year of service. Attorney’s fees will be paid out of the surplus.

Here is more on the story.