The Ottumwa Courier

February 2, 2013

Devil in the details of pension system story


OTTUMWA — The recent article in the Courier regarding Chapter 411, police and fire pension system and concerns about the city paying 30 percent effective July 1 leaves out a lot of facts that should be considered. I am not sure if the “devil is in the details” or if it is the details left out which makes it look like a devil.

The simplest way to try and explain how it works is that the police and firefighters’ pension system (not IPERS) is a self-contained system, which means that the 30 percent figure is made up of several components. Those components are the actual pension contribution, workers compensation cost and medical. All together, those components equal a figure that appears to be large but when broken down and compared to IPERS, it really isn’t. The city of Ottumwa pays workers’ compensation insurance rates on all other city employees in addition to the IPERS retirement contribution rate and social security but with police and firefighters’ workers’ compensation costs included as a part of the employer’s contribution rate. Now take the 30 percent figure reduced by the estimated workers compensation cost and medical of 20 percent, and the city pays only 10 percent toward the police and firefighters’ pension.

Also, another factor to consider is that the city does not pay Social Security on Chapter 411 police officers and firefighters, which saves them 6.2 percent of payroll that they pay on all IPERS employees.

When you do the math for what the city pays for IPERS employees and 411 employees, the cost is really about the same. The city’s contribution for IPERS will be 8.93 percent on July 1, plus workers compensation cost for higher-risk jobs is approximately 15 percent, and social security at 6.2 percent equals 30.13 percent. Maybe there isn’t really a “devil in the details” when you understand the details.

Besides, if the public wants people to serve in these high-risk and physically demanding jobs to protect, serve, provide medical services and keep the citizens safe, then it comes with a cost.

Jack Reed