Memphis plans to add 1,000 firefighters, police to 1978 pension plan

The city of Memphis plans to add about 1,000 firefighters and police officers to the legacy 1978 pension plan.

Memphis Mayor Jim Strickland said the decision, which requires Memphis City Council approval, would help retain personnel and lower attrition.

The funds to pay for the expansion of the pension plan will come from the 2019 sales tax referendum. The Memphis Police Association and Memphis Firefighters Association campaigned to add a half-cent to the sales tax rate to restore the pension plan after a segment of police and fire personnel were taken off the plan in 2016.

Voters, always reluctant to tax themselves, passed the referendum just ahead of the COVID-19 pandemic and explosion of stay-at-home spending that boosted city revenue and collections to the 2019 referendum fund.

The Memphis City Council voted in 2014 to take that personnel off the 1978 plan as part of austerity measures. Strickland, who was then a council member, voted for the cuts.

Strickland said Wednesday that he would not re-litigate the council vote and that economic circumstances required the cuts.

The 1978 plan — named for the year enacted — is a defined benefit plan. It guarantees former employees a salary each year equal to the average of their final five years of employment.

The city of Memphis billed Wednesday’s news conference as a public safety event. The announcement comes during a month that has been full of high-profile crimes, events that have brought the city's always simmering concerns with public safety to a low boil.

Strickland, Memphis Police Department Chief CJ Davis and Memphis Fire Department Chief Gina Sweat said giving personnel hired after 2016 and new hires the option of choosing the defined benefit plan would keep people from leaving the city.“Memphis is going to be where their feet rest and that they can have a career here and know that they have a pension ahead of them,” Davis said.

Todd Conklin, vice president of Memphis Fire Fighters Association, said he expected most personnel would take the option of choosing the 1978 plan and it would take away a key recruiting tool other major cities such as Dallas had.

Strickland said the city did not have the full cost of what the pension plan expansion would cost taxpayers, but one would be presented in the city’s budget next year, which the Memphis City Council has to pass.The expansion likely will mean hundreds of millions in pension liability for city taxpayers if most of the 1,000 people eligible sign up now and new hires also use the plan. The city’s plan pays retirees what is essentially the average of their last five years’ salary every year.Strickland said the referendum dollars would be able to cover the expansion of the pension plan and the city fund already had significant reserves.

It was unclear whether the city would be investing the reserves like it does its pension assets or if the city will be just increasing the amount it contributes to the pension plan each year from the 2019 referendum fund.

Lucas Finton contributed reporting.

Samuel Hardiman covers Memphis city government and politics for The Commercial Appeal. He can be reached by email at samuel.hardiman@commercialappeal.com or followed on Twitter at @samhardiman.

This article originally appeared on Memphis Commercial Appeal: Memphis to add firefighters, police to pension plan