New London, Conn., firefighters are back to participating in a municipal defined benefit plan after being in a 401(a) defined contribution plan for 17 years, said Taylor Maxwell, a spokesman for Amalgamated Bank, which assisted the firefighters union.
The International Association of Fire Fighters Local 1522 determined that the DC plan was not serving the needs of its 70 members. The firefighters are now part of the $1.8 billion Connecticut Municipal Employees Retirement System, Hartford. The plan was finalized in October and went into effect retroactively, so firefighters were considered CMERS participants as of Aug. 1.
“The decision to switch to a 401(a) retirement plan in 1997 was not a good one,” said Jonathan Paige, vice president and pension chairman of the IAFF Local 1522, in a news release. “Amalgamated Bank helped us get back to a defined benefit plan that makes more sense for our members.”
Since some of the union's members had borrowed money against their 401(a) contributions, in order for the union to move back to a defined benefit plan, all members had to pay back the loans to the DC plan.
Until all members could produce or borrow funds to pay back the money they borrowed from the 401(a) plan, the union was stuck with the DC retirement plan, the news release said.
Amalgamated Bank offered a series of special personal loans to the members who did not qualify for traditional personal loans. The local union chapter agreed to back the loans and provided collateral, allowing the entire membership to switch back to a pension fund that better served its needs.
The firefighters will no longer be able to contribute to the 401(a) plan.