Union leaders and other task force members reached an agreement this week on reforming pension benefits for Chattanooga firefighters and police officers.

Mayor Andy Berke accepted the plan Thursday morning after months of private negotiations that have frustrated public safety employees in both departments. Based on initial estimates, the recommendation would save the city at least $4 million per year.

Among the changes listed in City Hall’s announcement are a modified deferred retirement option plan, a reconfigured cost-of-living adjustment, increased employee contributions, and increases in benefits for the families of employees killed in the line of duty.

Since November, stakeholders have met privately to hammer out a solution to the troubled pension plan’s $150 million shortfall. A consultant hired by the city of Chattanooga was in town this week to move those discussions over the finish line.


Some of the major levers that have been part of those discussions were included in the city’s announcement. The changes are subject to legal and actuarial review.

The DROP, a lump sum benefit some employees receive upon retirement, will be modified. In one of the scenarios, it was reduced by roughly two-thirds, depending on an employee’s years of service with the city. The announcement did not indicate how it will change.

The COLA will be reconfigured so that employees with lower pension benefits will receive a higher adjustment.

Employee contributions will be increased gradually over the next three years. Police officers and firefighters currently contribute 8 to 9 percent of their base pay to the pension fund.

The announcement does not mention a minimum retirement age or changes to the multiplier used to calculate pension benefits. Both were part of previous discussions and scenarios.

Additionally, benefits will be increased for widows and the families of employees killed in the line of duty.

Public safety employees have grown increasingly frustrated with the few details that have emerged from ongoing discussions. Police officers and firefighters say the pension helps offset other cuts that have been made to employee benefits over the past five years. Because they often find themselves in high-stress emergency situations, the defined benefit is one of the key factors keeping them on the job.

By the end of 2013, twice as many public safety employees had retired than normal. The pension fund’s office received many calls from employees who were concerned about the status of their retirement benefits. Most of the police department’s command staff resigned in December. Former Police Chief Bobby Dodd told the Times Free Press the state of ongoing pension talks was one of the factors in his decision to retire.

Berke said in a prepared statement the recommendation would put the pension system on a “sustainable path in a fiscally responsible way.”

Updated @ 11:30 a.m.to make a correction and add clarification. Pension board officials were originally mentioned alongsideunion leaders and task force members as having reached agreement on the issue. A spokesman for the pension board said that is not the case.