Minneapolis wants specifics on pension repayment

Minneapolis says pension funds aren't complying with judge's order on recovery of pension overpayments of $75M.

By STEVE BRANDT, Star Tribune

June 22, 2010 at 4:16AM

Attorneys for the city of Minneapolis have asked a judge to order two pension plans to get specific about how they'll recover $75 million in pension benefits that she ruled were overpaid to retired city police and firefighters.

In a strongly worded filing released Monday, the city's outside attorneys accused police and fire pension funds of delay tactics and being argumentative rather than complying with Hennepin County District Judge Janet Poston's ruling.

The city said the June 4 filing by the pension funds was "marked with defiance" of Poston's ruling that they devise a collection plan for the overpayments by that date. "Demonstrating disrespect for this court, defendants act as if the court were an adversary and its rulings were somehow preliminary," attorneys for the city wrote.

The long-running dispute, now in its second lawsuit, concerns whether the pension funds improperly included some fringe benefits in calculating pensions, which are based on the salary and some fringes paid to top-grade firefighters and police.

Poston ruled in November that some fringes were improperly used, a ruling the city said would save taxpayers tens of millions of dollars in future payments if it stands up in a planned appeal by the pension funds. A month ago, the judge ordered the funds to collect past overpayments from pensioners dating to mid-2000. The pension funds also plan to appeal that.

Walter Schirmer, executive secretary of the firefighter pension fund, said Monday it makes no sense to spend time and money on determining recoupment if it won't happen until the appeal is decided. The city and the funds agreed to stay recovery efforts and freeze benefits while the appeal is heard.

"They are just trying to terrorize our members into accepting less than they were promised by the city," Schirmer said. "The city's letter to the judge is just trying to make these retirees' lives more difficult."

However, the city argued to Poston that the pension funds' plans on recouping the payments were vague. The police fund outlined general principles, and the fire plan added only that it would freeze benefits. They spent much of their submission to Poston on what they regard as the practical difficulties of devising a repayment plan.

The city argued that previous pension litigation and federal pension practices offer guidelines for how the money could be recovered, either by freezing future benefits until the amount is recovered or by reducing them to collect more quickly. The city's attorneys acknowledged it may be impractical to collect from the estates of dead pensioners if the cost exceeds the amount to be gained.

But at a minimum, the attorneys argued, the plans should specify the manner and amount of recovery, to which pension plan members or spouses the recovery would apply, the period of recovery and a process for unique circumstances.

The city suggested pensioners sitting on the boards of the funds have a conflict of interest because they face loss of benefits. It said it's important to have the recoupment plan so that all issues in the lawsuit can be considered in one appeal.

Steve Brandt • 612-673-4438

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STEVE BRANDT, Star Tribune

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