Chattanooga (Tenn.) Fire & Police Pension Fund’s cost-of-living-adjustment changes in 2014 have been affirmed by a federal appeals court.
The city changed the $230 million pension fund’s COLA in 2014 to a lower, variable annual increase from the fixed 3% annual increase the pension fund had previously instituted in 2000.
Four retirees filed a lawsuit soon after the COLA was changed, claiming a right to the previous COLA under the contract clause of the U.S. Constitution, according to court documents.
Judge Curtis Collier of the U.S. District Court in Knoxville, Tenn., ruled in favor of the city in November 2015, and the plaintiffs appealed to the 6th U.S. Circuit Court of Appeals, which affirmed the ruling on Nov. 3.
The new COLA depends on the funding level of the pension fund, with an average 1.5% increase if the pension fund’s funding ratio is below 80%, depending on the existing size of pension benefits. When the pension fund reaches 80%, the COLA is tied to the consumer price index with a maximum possible 3% annual increase.
The appeals court’s decision is available online.