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Board votes to request ordinance draft to allow partial lump-sum option of 5–20% for retiring members
Summary
Trustees voted unanimously to ask city staff to draft an ordinance that would allow retiring members to take a partial lump-sum payment equal to 5, 10, 15 or 20 percent of their benefit in exchange for a reduced lifetime monthly payment.
The Firefighters' Pension Board voted unanimously to ask city staff to draft an ordinance that would add a partial lump-sum option (PLAP) for retiring members. Under the options discussed, retirees would be allowed to elect a one-time lump-sum payment equal to 5%, 10%, 15% or 20% of the actuarial value of their retirement benefit in exchange for a correspondingly reduced lifetime monthly benefit.
The board's actuarial consultant explained the feature is typically structured so the lump-sum option is actuarially equivalent on average and does not change the plan’s funding status in aggregate; results vary by individual life span. The consultant said the plan is designed so that, on average, the option is neutral to the plan’s funding and to city costs.
Board action: Trustees directed Anna (city staff) to draft a proposed ordinance and to include the four percentage options (5, 10, 15 and 20 percent). The motion to request the ordinance was made and seconded and passed by unanimous voice vote.
Why it matters: If adopted by ordinance, the PLAP would give members more flexibility at retirement, but it also requires city council action and ordinance change before becoming effective.
