The Truth About Firefighter Retirement Benefits
Firefighters often retire earlier, and earn a higher percentage of their salary in retirement than many other professions besides law enforcement. There are many factors that contribute to the enhanced retirement benefits that firefighters have fought for over the past 50 years. Here are some facts that tend to be "overlooked" in reports on firefighter retirements, salaries and benefits:
- Firefighters do not receive Social Security. This is a cost savings to the cities and counties that employ firefighters (the employers do not pay the 6+% payroll tax for Social Security),Firefighter retirements, like all public sector retirements in California, are funded by the employees as deferred compensation. Out of every dollar that funds a firefigter's pension and health insurance plan, 100 cents comes from the workers because the "contributions" consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash.but also means retired firefighters can't collect this benefit. The lack of Social Security benefits and the payroll savings to local government is rarely mentioned in discussions about public employee benefits. Because firefighters can't collect social security, they have negotiated increased retirement benefits.
- Firefighters in Marin (and much of the US) work a 56 hour work week - 40% more hours than the average worker. They work 24-48 hour shifts, and respond to emergencies at any hour, night or day, 365 days per year - even on holidays like Christmas and Thanksgiving when virtually no one else is working. Because they work 40% more hours but earn a salary comparable to any other technically skilled professional, their hourly wages are relatively low for a skilled profession. In Marin, the average fire engineer with 15 years of experience earns $32 per hour in 2010. A comparable earner in the private sector makes $45 per hour (40% more per hour than a firefighter)...
- Firefighters have shorter life expectancies than the average population and are three times more likely to die on the job, due to inherent risks, physical and mental stresses, and exposures to toxic and carcinogenic compounds released in smoke. (source: US Bureau of Labor Statistics, University of Cincinatti). Do not confuse rhetoric showing that "safety" members live as long as other employees! The majority of "safety" members in the retirement systems are corrections officers, law enforcement, probation and court employees and unlike firefighters do not have a reduced life expectancy from toxic exposures and other physical job stresses.
- In a public defined benefit retirement system, when a firefighter dies, their retirement contributions and all earned interest go Firefighters are at much greater risk than the general population for cancer: Type, Increased risk * Testicular cancer 102% * Multiple myeloma 53% * Non-Hodgkin lymphoma 51% * Skin cancer 39% * Brain cancer 32% * Prostate cancer 28% * Stomach cancer 22% * Colon cancer 21% The Journal of Occupational and Environmental Medicine, Copyright © 2010. LexisNexis. All rights reserved.back into the"system" to help pay for other living retiree's benefits, unlike a private sector 401K where the retiree's family keeps 100% of their retirement contributions (and interest earnings and market growth) upon their death. A firefighter's spouse keeps only 50% of the retiree's benefits, unlike a private sector retiree's spouse who keeps 100%.
- Firefighter retirement benefits are not paid by the "taxpayers," cities, counties or state. Benefits are deferred compensation, and are paid by the employee funded retirement systems (typically CALPERS or a 1937 act Retirement Fund which are not government agencies). These funds come from employee and employer contributions made while the employee was working, and the vast majority of benefits paid come from market growth and interest from the investment of those contributions. Out of every dollar that funds a firefigter's pension and health insurance plan, 100 cents comes from the workers because the "contributions" consist of money that employees chose, through negotiations, to take as deferred wages – as pensions when they retire – rather than take immediately in cash.
- Firefighters pay more into their retirement system than other public or private sector employees. In Marin, firefighters pay 8-16% of their salary towards retirement. By saving more towards retirement, they earn more once retired - no different than a 401K in the private sector.
- Like the rest of the population, aging firefighters are at significantly higher risk of injury and illness - it is a young person's profession. Due to the extremely strenuous nature of the job (with little or no "warm up time,") firefighters suffer higher rates of disabling occupational injury . The older the firefighter, the more likely these injuries become, and recovery times (and cost) increase. These injuries are expensive to taxpayers and firefighters, decreasing quality of life and requiring expensive treatment, overtime pay to replace the injured worker which stresses already low staffing levels. Relatively low minimum retirement ages are a recognition of these factors above all else (much more so than the more widely reported life expectancy issue).
- It's a myth that all firefighters retire at 50 with 90% of their salary. While less than 1/2 of Marin firefighters are covered by an age 50 retirement, few have the years of service by age 50 to retire at all, much less at 90%. The reason very few receive this level or benefit is that they would have had to start working age 20 to earn 30 years by age 50. Data shows that most firefighters start their careers between age 27-29, and is increasing as education and training requirements increase. Besides this, the majority of firefighters pay into a 3 percent at age 55 retirement plan. They would need 37.5 years of service at age 50 to earn 90 percent, and would have had to start working at age 12.
- When firefighters negotiate for enhanced retirement benefits (in recognition of the above factors) other potential benefits or salary enhancements are given up. This is the nature of collective bargaining. The cost to a city or municipality is no higher than if a comparable salary increase were negotiated in place of retirement benefits.
- Firefighter jobs have become significantly more complex and technical over the past 30 years, with the additional responsibilities and training for Hazardous Materials Response, Emergency Medical Services, Homeland Security, Fire Prevention, Public Education and more. In return for providing more and better services to the community, firefighters negotiated for improved benefits and salaries, though their compensation has not risen as fast as other technical or dangerous jobs in the private sector.
- Young firefighters always pay more into the retirement system than current retirees did, ensuring the long term viability of the public defined benefit retirement systems.
- PERS (Public Employees retirement System) and MCERA (Marin County Employees Retirement Association) In September 2008, at the beginning of the 2008-2009 market decline, MCERA's fund stood at $1.26 billion. By February 2009, the fund value dropped by $275 million. As of October 2010, the fund had grown to $1.36 billion, recovering from the market loss and GAINING $100 million in additional investment returns.
The CalPERS fund continues to grow, earning more than $70 billion in investment returns since the financial crisis began. CalPERS recently reported a 12.5 percent return on investments for the one-year period ending December 31, 2010, well above its 7.75% assumed rate of return needed to pay long-term pensions. Source: MCERA, CALPERShave billions of dollars of assets from employee and employer contributions and outstanding market growth from investment during the "boom years." PERS is the single largest investor in the stock market, and their investments have beaten the market even during the recent economic downturn.
- When an employer (a city, county or district) pays "catch up" arrears to the retirement system, it is reported widely in the media because of the short-term spike in cost to a municipality's budget. This occurs when investments return less than actuarial predicted. What is NOT reported is that during economic upswings (most of the past 15 years) employers often paid NOTHING into the retirement system, because investment returns exceeded expectations.
- Most firefighter salaries in Marin are low by Bay Area standards. For example, Marin County Fire Department paid its line personnel nearly a total compensation package that was up to 40% less than other similar sized county fire depatremtns in the Bay area in 2008, despite the fact that cost of living in Marin is higher.
- Few firefighters are able to afford to live in Marin or other affluent bay area communities were they work. Young firefighters often commute 2-3 hours (or more) to work, because of the cost of home ownership in the Bay Area, despite local governments claiming that their priority is to have emergency services employees live in the community for disaster preparedness. Of the 387 active professional firefighters in Marin, 274 live outside of the county.
- The average firefighter salary is not enough to qualify to purchase even below median priced homes in Marin, but is too high to qualify for housing subsidies that are supposed to encourage firefighters to live in Marin in case of local or regional disasters.
- Firefighters in California tend to make up for their relatively low hourly wages by working overtime in addition to their already long work-week. It is almost always cheaper for employers to hire back off-duty firefighters on overtime than hiring additional personnel. During the summer months firefighters are doing the risky business of wildland firefighting, often gone from their families, working 12-24 hour shifts on the fireline without rest.
- Fire engines in Marin are dangerously understaffed, with most agencies choosing to forego the additional cost of staffing their department would need to meet the minimum standards outlined by the National Fire Protection Association - at a great cost in safety to the community and firefighters. While most Marin fire engines have only two firefighters, the NFPA recommends a minimum of four - studies show that four firefighters are required to perform the most basic firefighting tasks. A minimum of four firefighters is required by OSHA before interior structure firefighting can occur. This means you need two fire engines to arrive at your home before firefighters can even begin the dangerous process of attacking the fire.
- Firefighters have accepted pay and benefits cuts during the economic downturn. Salaries have been cut, retirements have been "rolled back," second tiers added, and benefits reduced in order to help local goverments and municipalities balance budgets.
- Firefighters are citizens and taxpayers who understand more than most the benefit of contributing to their communities. Firefighters have sworn a commitment to protect our communities, our assets, and our local economy from the effects of fire, natural and man-made disasters, and other costly emergencies.
Dispelling other myths and misconceptions about public employee retirement:
FACT: The current economic crisis was driven by Wall Street excesses and corporate abuses, not factory workers, teachers, firefighters or police officers. This crisis is the real threat to retirement security for ALL Californians.
FACT: Cutting retirement for public employees does nothing to solve California's current budget problems. Small budget decreases would be seen in 16-18 years for benefit cuts enacted today.
FACT: Opportunistic politicians are using the national economic crisis to blame teachers, police, nurses and firefighters for the nation's economic problems rather than putting responsibility where it belongs - on politicians, Wall Street, and the impact of corporate excesses on stock market performance.
FACT: The average public employee retirement benefit in California is $24,000 a year. 75% of all retirees earn less than $30,000 a year.
FACT: The majority of high pensions ($100,000+) are received by top level management - not ordinary working folks like line firefighters, police officers, nurses or teachers.
FACT: Artificially inflated retirement payouts ("Pension Spiking") are absolutely opposed by firefighter labor unions. They are wrong, and associate everyone with immoral excesses by a few. Ordinary working people should not be punished for the excesses of a few.
FACT: MCERA has bounced back and recovered the market losses. The fund was down to $1.25 billion in 2008, and is now $1.36 billion through market recovery and growth.
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