Bill Summary for Bill Number SB06-039

Date: 03/14/2006

Final
BILL SUMMARY for SB06-039

HOUSE COMMITTEE ON LOCAL GOVERNMENT

Votes: View-->	Action Taken:
Refer the bill to the Committee of the Whole. The	PASS

01:34 PM -- Senate Bill 06-039

Representative McGihon, bill sponsor, explained the provisions of SB 06-039 that allow employers to enroll future hires in the Fire and Police Pension Association (FPPA) defined benefit plan. The bill also allows current employees to switch from their current money purchase plan to the FPPA plan. She explained the other provisions of the bill regarding an employer's decision to offer, and the irrevocable nature of joining, the FPPA plan. She clarified that under current law, employers who want to offer the FPPA plan must require all employees to leave their current plans in order to join the FPPA plan.

01:38 PM

Richard Ciesielski, West Metro Fire Protection District, spoke in opposition to the bill. Mr. Ciesielski addressed his concerns for the effect that requiring all new hires to participate in the FPPA plan, if offered, would have on the viability of existing money purchase retirement plans. Mr. Ciesielski also spoke to his concerns that those joining the FPPA plan do so irrevocably.

01:47 PM

Todd Mowbray, Aurora Fire Department Money Purchase Pension Plan (MPPP), spoke in opposition to the bill. He questioned the effect of the bill on the existing MPPP and spoke to the division the bill has created within his fire department between those who want the option to join the FPPA plan and those who want to stay in the MPPP. He explained the divide between individuals who are close to retirement and not willing to change to a defined benefit plan and the younger members who want to join a defined benefit plan.

01:53 PM

Robert Stef, Aurora Police Money Purchase Pension Plan, spoke in opposition to the bill. He explained that the current plan is under local control and that the bill, if adopted, would require relinquishment of that control in order to join the FPPA defined benefit plan. He explained the differences between the two-tiered MPPP and the three-tiered FPPA plan. He indicated that at some point, all current members will be forced out of the MPPP as all future hires are forced into the FPPA.

01:56 PM

Richard Cimms, Aurora Police Money Purchase Pension Plan, spoke in opposition to the bill and provided some background on how the Aurora Police opted out of the FPPA back in 1987 in favor of the MPPP. He spoke in opposition to the loss of local control and to the irrevocable nature of moving to the FPPA. Mr. Cimms responded to a committee question about increased expenses for current MPPP members if the bill is adopted explaining that as future members are hired and forced to join the FPPA, the costs to maintain the MPPP with fewer members and more retirees will increase.

02:08 PM

Ray Rahne spoke in support of the bill. He explained that the current MPPP of which he is a member does not work well for him as an individual who is close to retirement. He further clarified that the bill requires only future hires to join the FPPA plan if the governing body such as the city or district agrees to offer it. He also clarified that even when a city or district agrees to make the FPPA plan available, current employees will not be required to join. Representative McGihon provided further clarification of the language in the bill that allows employers to decide whether to offer the FPPA plan in lieu of obtaining the approval via an election of 65 percent of the employer's members before making the plan available.

02:16 PM

Kevin Lindahl, FPPA, spoke in support of the bill. Mr. Lindahl reiterated prior testimony indicating that the bill does not require anyone to join the FPPA and that employers (city or district) will decide whether or not to make the FPPA plan available. Mr. Lindahl explained the bill's progress through the Senate and he explained the amendments adopted by the Senate. He clarified that the amendment that says that nothing in the bill is construed to waive the requirement for an election that is contained in a trust or labor agreement may be the election requirement to which individuals who spoke earlier were referring. Mr. Lindahl further explained the reason for the irrevocability provision in the bill.

02:26 PM

Jim Hofstra, Littleton Fire Rescue, spoke in opposition to the bill. He spoke to his fears that requiring future hires to join FPPA will drain current MPPP plan resources and he spoke against the irrevocability provision explaining that individuals should have the option to join a different plan in the future if need be.

02:31 PM

Rick Rogers, Insight Employee Benefit Communications, spoke in opposition to the bill. He indicated that the bill's provisions will limit an employee's choice if he or she joins the FPPA plan. He spoke to the differences between defined benefit and defined contribution plans and he indicated that employers do not like the fact that they will have to make future hires join FPPA irrevocably. In addition, he noted that members do not like that employers will, without a vote of the members, get to decide whether or not to make the FPPA plan available. Mr. Rogers responded to committee questions.

02:41 PM

Mr. Lindahl returned to the table to respond to committee questions. He explained how an employer such as a city council or district board would decide whether or not to add the FPPA defined benefit system plan as an option. He explained that under current law, newly created fire districts and departments may only offer the FPPA plan. Current law also allows only employers offering an MPPP prior to 1987 to continue to offer those plans. Mr. Lindahl responded to a committee question regarding the effect of allowing individuals to "flip" in and out of retirement plans explaining that according to actuarial studies, the effect would be that the plans would be more expensive to join and maintain since for any plan, a certain number will stay through retirement, a certain number will find other employment and elect out prior to retirement, and a certain number will not vest.

02:48 PM

Representative McGihon provided closing comments on the bill.


BILL:	SB06-039
TIME:	02:51:50 PM
MOVED:	Lindstrom
MOTION:	Refer the bill to the Committee of the Whole. The motion carried on a 9-2 roll call vote.
SECONDED:	Decker
		VOTE
	Berens	Yes
	Cerbo	Yes
	Curry	Yes
	Decker	Yes
	Massey	Yes
	Merrifield	Yes
	Soper	Yes
	Stafford	No
	Stengel	No
	Lindstrom	Yes
	Hodge	Yes
Final YES: 9 NO: 2 EXC: 0 ABS: 0 FINAL ACTION: PASS

02:52 PM

The meeting adjourned.