FORT SMITH (KFSM)- Fort Smith police officers and firefighters are going to see a reduction in their retirement benefits.
The city Board of Directors approved that decision Tuesday night (June 2) in a 5-2 vote.
Fire Chief Mike Richards said the decision will affect all firefighters and police officers hired after January 1, 1983. Now, they will have to work up to 3 ½ years longer to get the same maximum benefit.
“The situation with the police and fire pension system in Fort Smith is very complicated,” Chief Richards said. “The board had to take action last night to try shore that up as the pension system is due to go in the red as early as 2019.”
Richards said the Board of Directors’ vote will not be enough to solve the pension problem, but said he's not surprised by the decision.
“It would create much larger problems in the future the longer we wait, so it had to be fixed,” he said. “It was a hard decision; it was a tough decision, but it has to be fixed.”
Chief Richards said the problem stems from unfunded liabilities that were part of a pension system years and years ago.
“As a matter of fact, firefighters and police officers that are affected today have nothing to do with that system that was underfunded,” he said.
He tells 5NEWS the vote is affecting morale at the fire department.
“Our human resources department has studies showing Fort Smith firefighters and Fort Smith police officers rank last in all the survey cities the city uses to prepare salaries and benefits with, and to put this on top of that is pretty hard for them to take.”
City Director Mike Lorenz said the change in benefit programs will save the city about a $500,000 annually.
“This is only part of the solution,” Lorenz said. “We need about $2.5 million per year in additional funding.”
“Nobody likes this, but everybody`s trying to work together to find a good solution for the best interest for the city of Fort Smith,” Chief Richards said.
The retirement benefits cuts go into effect on July 1, and the city’s board of directors will be meeting later this month (June 23) to come up with more sources of revenue for the pension plan.