Houston filed suit against the $3.6 billion Houston Firefighters' Relief & Retirement Fund on Wednesday in an effort to receive more input on contributions and plan design of the pension fund.
Under state law, the city is excluded from financial decisions related to the pension fund, including benefit levels and employer contributions. All decisions are made by the pension fund board. However, Mayor Annise Parker believes the law under which the pension fund operates is unconstitutional, spokeswoman Janice Evans said.
“We have to have the ability to negotiate these benefits at the local level and be able to verify the financial health of HFRRF. We cannot and will not kick the can down the road,” Ms. Parker said in a news release.
The city is able to negotiate with trustees of the $3.8 billion Houston Police Officers' Pension System and $2.3 billion Houston Municipal Employees Pension System, which has “helped obtain changes that have reduced the city's long-term financial burden for these two systems,” Ms. Evans said in an e-mail.
“This lawsuit is not anything more than a power grab and publicity stunt by the mayor … to continue in her vendetta against the (pension fund) for certainly not supporting her campaigns,” said Todd E. Clark, board chairman for the firefighters pension fund, in a statement e-mailed to Pensions & Investments. “The lawsuit is a political tactic to attack and hurt elderly and disabled firefighters and their families.”
The city has twice unsuccessfully petitioned the Legislature to overturn the law. The city claims the board has a conflict of interest because it is controlled by current and retired firefighters, and that the pension fund uses taxpayer money to lobby in favor of the current law.
According to the Ms. Parker's news release, firefighters who retire with 30 years of service are eligible for a monthly lifetime annuity of 94% of their average pre-retirement salary, plus an average lump sum of about $850,000.
The lawsuit does not seek changes in benefits paid to current retirees and would also have no effect on the other two Houston retirement systems. The lawsuit was filed in Harris County state district court.
HFRRF was 87% funded as of July 1, 2012, according to its most recent annual report.