Temporarily Decrease Benefit Level
Sometimes, relief association trustees inquire about their ability to reduce the relief association’s benefit level. A relief association may choose to approve a reduction to its benefit level, and may wish to temporarily reduce its benefit level.
One way to voluntarily decrease the benefit level would be for a relief association to draft its bylaws in such a way as to temporarily decrease its benefit level, and then return to the benefit level ratified by the municipality or independent nonprofit firefighting corporation after a specified period of time.
For example, a relief association could voluntarily choose to decrease its benefit level and adopt a bylaw amendment doing so with a specific expiration date. The decreased benefit level would be in effect only until the expiration date, at which point the previously ratified benefit amount would again become effective. Because the original bylaw amendment approving the higher benefit level remains in effect, this process would not require another bylaw amendment, so would not require municipal ratification of the benefit level a second time.
It is important to note that members separating from active service while the benefit level is temporarily decreased would receive service pensions or ancillary benefits based on the decreased benefit level, not the municipally-ratified level.
Changes to a relief association’s benefit level must be initiated by the relief association. An affiliated municipality or independent nonprofit firefighting corporation cannot initiate or unilaterally change a relief association’s benefit level. In the case of a temporary benefit decrease, the relief association can act unilaterally without consent from or ratification by the municipality or independent nonprofit firefighting corporation. However, if the relief association chooses to temporarily reduce its benefit level, it may wish to inform the municipality or corporation of the goals of and risks associated with the temporary benefit decrease.
Before approving any benefit level decrease a relief association should carefully consider the change and seek guidance from an attorney.
Published last in the March 2020 Pension Newsletter