Answer to a Commenter's Question: "Are You Saying Retirees Are Becoming Millionaires Because of Their Pensions? I can't Wait To Hear The Answer To This One."
Here is a screen shot of a Warwick Watch Facebook post from Friday Oct 20th, 12:12 pm.
Tim Malone commented: "Are you saying retirees are becoming millionaires because of their city pensions? I can't wait to hear the answer to this one."
Tim, as you have been eagerly awaiting a response, here is the answer to your question regarding the "City's Millionaire Retiree Club."
To show just how unsustainable the Fire II, Tier 1 plan is right now with retirees receiving a 3% compounded annual COLA-- these recently retired Warwick firefighters (above) receive a monthly pay check of two times the amount listed, since the benefit is semi-monthly.
So for example, former Fire Chief Edmund Armstrong will receive an annual pension of $97,975 his first year of retirement. Going forward, he will receive a 3% compounded COLA every year thereafter. That means in 19 months, he will have received the same amount of money he contributed into the pension fund throughout his entire career.
All of the individuals on this list will exceed the total amount of money they contributed to the pension fund in under 36 months.
If we calculate Chief Armstrong's total amount of pay from the retirement system over the next 20 years based on the 3% compounded COLA, he will receive a total of $2,632,625 while only contributing a total of $157,329 to the fund. His annual pension by that time will be $171,800. This is clearly NOT sustainable.
The six recently retired Warwick firefighters (above) contributed $764,056 into their pension. All six retirees getting a 3% compounded COLA over the next 20 years will receive a combined total pension payout of $11,139,072. This does NOT include the costs of their free LIFETIME HEALTHCARE coverage for the retiree and their spouse. For all current City retirees and their spouse, it is costing Warwick taxpayers millions in healthcare costs per year, last year it was $8 million.
This is what defines the term : "The City Millionaire Retirement Club."
Per the current Warwick Fire union contracts, the total annual pension contribution is 35% with the firefighter/city employee member paying 11.67% of it, and the taxpayers paying the difference, 23.3%.
For Your Information:
The Warwick Fire II pension plan is broken down into Tier 1 & 2.
The Tier 1 plan includes members hired before 6/30/2012 and retire after completing 20 years of service. Tier 1 retirees receive a 3% COLA upon retirement.
Tier 2 members are those hired after 6/30/2012 and retire at age 50 or older and with at least 25 years of service. Tier 2 benefits include 2% of FAC (final average salary times years of service.)
A Tier 2 pension plan change was implemented by the City back in 2012 to reduce pension costs and improve the city's ability to pay future pension obligations. These Tier 2 pension plan changes over 37 years (until 2049) would supposedly save the Warwick taxpayers $9 million, or $243,243.00 per year. However, what taxpayer savings are actually being realized when Mayor Avedisian cut the sweet deal with the WFD last year and increased their sick pay bonus by 50% which will cost Warwick taxpayers $34.5 million over the next 32 years? Not saving a penny.
The Warwick Firefighter Union is now suing the City by challenging the revised Tier 2 pension plan changes and want to bring back the more lucrative benefits that they will never earn and that the Warwick taxpayers can't afford even today.