Maximum Benefit Levels
Relief associations that offer or pay lump-sum, monthly, or monthly/lump-sum combination service pensions must annually calculate the average amount of available financing per active covered firefighter.
The OSA provides the Maximum Benefit Worksheet to help relief associations perform this calculation. The calculation determines the maximum lump-sum and monthly benefit levels the relief association is authorized to establish for the year. Relief associations are to perform the maximum benefit calculation on or before August 1 as part of the association’s annual certification of the financial requirements and minimum municipal obligation.
A relief association does not have the authority to set a benefit level higher than the maximum level, even if the benefit level is ratified by the affiliated municipality.
We are seeing more relief associations operating at or near their maximum allowable benefit levels. It is very important for relief association trustees and municipal officials to monitor maximum benefit levels. Penalties for paying service pensions using a benefit level higher than the maximum level may include disqualification from receiving fire state aid.
There are some limited circumstances in which a relief association that discovers it is operating at a benefit level higher than the calculated maximum benefit level may continue to do so. A relief association that discovers it is operating at a benefit level higher than the calculated maximum benefit level may continue to operate at the higher than maximum benefit level if:
- the benefit level was properly adopted;
- the benefit level was at or below the allowable maximum benefit level when it was established; and
- the decrease to the calculated maximum benefit level was due to either a decrease in fire state aid or an increase in the number of active members.
Relief associations that qualify to be “grandfathered in” at their current benefit level cannot increase their benefit level until the annual calculation shows that an increase is allowed.
The Maximum Benefit Worksheet is contained within the Schedule Form or FIRE Form and can be accessed in SAFES.
For additional information about maximum benefit levels, see our Statement of Position on this topic by clicking here.
Published last in the July 2021 Pension Newsletter