Guest songlaw Posted December 19, 2002 Report Share Posted December 19, 2002 The first of my questions concerns whether the trustees of a governmental plan (specifically, the DB plan of the municipality's Police Officers and Firefighters) can use part of the plan's overfunded surplus to make a COLA increase to the retirees' health insurance allotment without also having to give the same stipend to the current participants. At least one other municipality in GA has authorized annual, automatic COLA's for its retired policemen participants, but those COLA's are part and parcel of that city's pension, and they do not necessarily owe their source of funding to that plan's overfunded surplus. We may also want to add such a provision to our workers' plan, but we would like to use the surplus as the means to the funding end. Next, we are concerned about the State Constitution's anti-impairment of contracts provision. For example, if we were to authorize a 1.5% COLA, would we ever be able to scale it back (or undo it)? We do not suppose that the application of the aforementioned State Constitution provision would cause us much of a headache in regard to current employees, who are exchanging services for their pay (whether in cash or benefits), but the potential headaches Re: the retirees could be bad ones. The ERISA anti-cut back provisions come to mind (even if our governmental plan is not subject to ERISA per se), and the immediate, funding impact, on the actuarial bottom line also gives us pause. We would welcome any input from your subscribers. Please suggest if and how ERISA Sections 420 and 401(h) may apply even though our plan is not subject to ERISA per se. Link to comment Share on other sites More sharing options...
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