Municipal Ratification Requirements
A relief association is a governmental entity separate from the city, town, or independent nonprofit firefighting corporation with which it is affiliated. However, because municipalities and independent nonprofit firefighting corporations are sometimes required to provide financial support to their affiliated relief association, Minnesota law requires that certain types of relief association decisions be ratified by the municipality or corporation.
Ratification of deferred interest rates set by a relief association’s board of trustees is always required before the interest rates become payable. Ratification is usually required before any bylaw amendment which increases or otherwise affects the retirement coverage provided by or the service pensions or retirement benefits payable from the special fund of a relief association becomes effective.
Under limited circumstances, relief associations are authorized to increase benefit levels or make bylaw changes affecting service pension or benefits payable without ratification.
There are limited circumstances under which benefit levels or benefit bylaw changes may become effective without ratification. If the increase in liabilities due to the benefit or bylaw change does not exceed 90 percent of the relief association’s prior-year surplus, and if the change does not result in the financial requirements of the association’s special fund to exceed the expected amount of the association’s state fire aid, ratification is not necessary. If a change is implemented without ratification and a municipal or independent nonprofit firefighting corporation contribution subsequently becomes required to pay, the change is no longer effective (unless ratified) and the association may only pay pensions and benefits that have been ratified.
These ratification requirements apply to lump-sum, monthly, and monthly/lump-sum combination relief associations. Defined contribution relief associations have no municipal or independent nonprofit firefighting corporation ratification requirements because contributions to these plans are not statutorily required.
Some relief associations go beyond these statutory requirements and require, though their bylaws, that municipal ratification be obtained for other types of bylaw changes. Relief associations should review their bylaws to ensure that all ratification requirements are met.
Published last in the April 2013 Pension Newsletter