INTERNATIONAL ASSOCIATION OF FIREFIGHTERS, AFL-CIO, CLC PENSION ASSISTANCE AND LITIGATION POLICY ADOPTED 2011

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1 INTERNATIONAL ASSOCIATION OF FIREFIGHTERS, AFL-CIO, CLC PENSION ASSISTANCE AND LITIGATION POLICY ADOPTED 2011 I. General Policy Statement on Retirement: The retirement benefits earned by firefighters are the single most valuable economic benefit provided by the employer. It is the policy of the IAFF to preserve those benefits for the protection of firefighters and their families. It is also the policy of the IAFF to take appropriate political or legal action when necessary to protect those benefits from the growing effort to diminish or eliminate a meaningful retirement program. II. Reasons for this Policy: This policy has been prepared set forth the types of circumstances in which the involvement or assistance of the IAFF is warranted and the manner in which that assistance or involvement is to be delivered. It also sets forth the circumstances in which IAFF involvement is not appropriate. III. Definitions: For the purposes of this policy, the following terms shall have the meanings set forth below: Actuarial assumptions mean the various predicative behaviors of the ultimate cost of funding a defined benefit retirement plan. Actuarial valuation means the study performed by an enrolled actuary to determine the contributions necessary to maintain a retirement plan on a sound actuarial basis. Amicus Curiae mean friend of the court and refers to the filing of a written brief or other appearance in a state, provincial, or federal trial court or appeals court. Annuity means a retirement benefit, guaranteed for life, which is paid in equal monthly installments to a retiree, or where a survivorship option has been selected, for the life a deceased firefighter s beneficiaries. Back-DROP means a partial lump sum distribution which si actuarial equivalent of the benefit which would have been paid had the firefighter retired on the earlier date used the calculation of the benefit.

2 Beneficiary means a person designated by a firefighter to receive his or her retirement benefits upon the death of the firefighter. Board of Trustees means the body or agency charged with the management of a retirement plan. Collective Bargaining Proceedings means the process of preparation for and presentation of proposals for the formation of collective bargaining agreements, by whatever name known, including the formation of proposals; cost analysis of proposals; attendance at actual bargaining sessions; and any impasse resolution process or binding interest arbitration. Constitutionally protected contract right means a benefit or plan feature protected from reduction or impairment due to protection of a state or federal constitutional provision. Contribution means a sum paid by the firefighter or by the employing agency to pay for the cost of retirement benefits as earned. This term can apply to employer contributions or employee contributions including tax deferred pick-up contributions. Cost of Living Adjustment (COLA) means any form of post-retirement increase paid to retirees or beneficiaries, whether or not made or a guaranteed basis or an ad hoc basis. Deferred Retirement Option Program(DROP) means an optional from of retirement payment in which the member benefit becomes fixed as if the member had retired. Benefits accrue in a notional account for the benefit of the member who is permitted to remain employed for a period of time after entering DROP. Defined Benefit Plan means a retirement plan which pays a fixed percentage of an employee s salary and payment is guaranteed for the life of the employee. This is also known a DB Plan. Defined Contribution Plan means a retirement plan which is based on a fixed percentage of compensation to an individual retirement account. This is also known as a DC Plan. Fiduciary means any person or entity charged with some aspect of the administration of a retirement plan and who owes a duty of undivided loyalty to the plan to act in the best interest of its members and beneficiaries. Hybrid Retirement Plan means a plan incorporating elements of both DB and DC plans, including cash balance plans. IAFF means the international headquarters, including officers and staff. Legislative Proceeding means any hearing, workshop or other meeting relating to the passage of local, state, provincial or federal law.

3 Litigation means any suit, agency proceeding, arbitration, trial court proceeding or appeals court proceeding. Local means a municipal or county government. Province means a province of Canada. Reported Appellate Decision means a decision of a court (or arbitrator) which is publicly disseminated and which may serve as binding precedent in similar disputes in other parts of the country. Retirement benefits means any DB. DC or hybrid pension benefit, including post retirement insurance benefits. This term is interchange with the term Pension Benefits. Sound Actuarial Basis means the funding methodology and practices of a retirement plan which, if followed, will assure the presence of adequate plan assets to pay benefits as and when they become due and which avoid attempting to shift the cost of retirement benefits to future generations of taxpayers. Stakeholders means firefighters, both active and retired, and the beneficiaries of deceased firefighters who have a property right in present or future retirement benefits. State means a state of the United States, its commonwealths and territories. IV. Determination of Matters Warranting the Assistance of the IAFF A. Legislative Proceedings: In the case of any local, provincial, or state legislative act which, if adopted, would result in the diminution or reduction of accrued or future retirement benefits, the IAFF has a direct interest in preventing or ameliorating the effect of any such proposed legislative action. In such cases, the IAFF may provide the following assistance: 1. Analysis of the legal effect of the proposed legislation under the state of the law for protection of retirement benefits in a particular jurisdictions and the availability of any litigation remedies. 2. Comparative analysis of proposed legislation to other jurisdictions and the effect of any challenges to similar proposed legislation. 3. Comparative analysis of actuarial valuations and actuarial assumptions to determine whether they are contrary to keeping the retirement plan on a sound actuarial basis.

4 4. Preparation of presentation materials for local officers to be used at any legislative proceedings to challenge the legality or wisdom of proposed legislation. 5. Appearance by an IAFF representative at legislative proceedings as the primary spokesperson for members. B. Collective Bargaining In collective bargaining proceedings involving the creation or modification of retirement benefits, including post retirement health care benefits, the IAFF has a direct interest in fostering a well planned and fully informed presentation of ideas and proposals. To the extent possible, and consistent with the wishes of local membership, the IAFF has a direct interest in encouraging the presentation of a uniform message and methodology for the cost analysis of proposals. In such cases, the IAFF may provide the following assistance: 1. Provide model proposals. 2. Assist in the development of written proposals consistent with local needs. 3. Provide cost analysis of proposals and counter-proposals, including interpretation of employer budget, finance and actuarial valuations and assumptions. 4. Evaluate the effect of counter proposals. 5. Provide training for bargaining team members. 6. Attend bargaining unit meeting, including a bargaining session to provide on site guidance. 7. Assist in the development of impasse resolution materials. 8. Attend an impasse resolution hearing (including an interest arbitration) to provide on site guidance on the specialized issue of retirement benefits. C. Litigation It is sometimes necessary to seek judicial or other dispute resolution process to protect retirement benefits. The IAFF is keenly aware that litigation matters may result in a reported appellate decision that may be relied on in other states or provinces or on a national level. In such circumstances, the decision of the IAFF to take a visible public role must be carefully scrutinized and analyzed before committing the name and resources of the IAFF. The message presented by the IAFF needs to be consistent. The unique nature of public employee benefits law and the limited number of knowledgeable legal practitioners also makes recommendations of counsel particularly sensitive.

5 The types of cases warranting are IAFF participation include: 1. Legislative action reducing accrued or future benefits without the consent of the members, including closure or termination of DB plans or the adoption of lower tiers fo benefits on a unilateral basis.. 2. Legislative action unilaterally reducing the employer s duty to fund retirement plans on a sound actuarial basis. 3. Legislative action mandating unsound actuarial practices or assumptions. 4. Legislative action seeking to unilaterally reduce the presence of or degree of control by stakeholders on boards of trustees 5. Suits by employers against retirement boards of trustees or retirement plans seeking to gain control. The types of cases which do not warrant IAFF participation: 1. Claims of individual members to benefits. 2. Actions against boards of trustees by individual members for denial of benefits. 3. Disputes between classes of members which are purely of a local nature. 4. Disputes between retired and active members over bargaining issues, provided nothing in the bargaining process will reduce the present or future benefits of retirees. 5. Cases where the underlying facts or law lead to the conclusion of a minimal likelihood of success or the substantial likelihood that the result achieved will be of a regional or national disadvantage to the IAFF and its members. V. Selection Criteria for Lawyers by the IAFF A. General Policy Issues The selection of lawyers by individual IAFF locals has always and remains a matter of local governance. The criteria in this section refers to lawyers selected by the IAFF to assist with, intervene in, or take the lead position in cases in which the IAFF is an amicus curiae or a party. The lawyers representing the IAFF must be able to reflect the message of the IAFF favoring the preservation of meaningful retirement programs for firefighters and their families.

6 B. Experience 1. As earlier noted, the law governing public employee retirement is highly specialized. Each unit of government may be subject to its own unique set of laws, unlike, for example, the uniform laws applicable to private sector pensions in the United States and governed by ERISA. Governmental plans in the United States are not subject to ERISA and lawyers specializing in ERISA matters may lack the substantive knowledge or experience to distinguish between the two very different legal standards. Knowledge of public employee labor relations law governing state and local employees is also desirable. 2. The IAFF will establish a panel of recommended lawyers in various geographic locations who have demonstrated experience in the presentation of public pension cases. The IAFF may also appoint a firm or firms of lawyers to provide national advisory assistance to other IAFF appointed lawyers to address the potential effects of an action in one state on matters in other states. 3. The potential for conflicting legal positions should be considered by the IAFF in the cases in which it provides direct assistance or takes a partisan role. The lawyers in the IAFF national advisory role should be assigned to assist in analysis of individual cases in which assistance from the IAFF has been requested to determine this potential for harmful conflict. 4. The type of issue will also bear on the lawyer to be selected. Tax and investment related issues present a specialized sub-set of pension litigation. The same is true for cases involving plan design issues, such as age discrimination or constitutional issues; and whether the case is a trial issue or an appeal. Some very skilled trial lawyers lack appellate experience and vice versa. This again is an area where the advisory attorneys can assist in the assignment of the right person for a particular matter. 5. When the IAFF is providing the primary counsel, consideration should be given to often parochial nature of state trial courts. The presence of an attorney from another state, without the presence of local counsel often works to a disadvantage. Additionally, the knowledge of the law of the jurisdiction may be a critical element. When the IAFF is acting in an amicus curiae role, or in appellate courts, or the federal courts, the hometown issue is far less pronounced, if present at all. C. Case Management 1. Once the IAFF decides to participate in a case, case management is a critical element, both in terms of case presentation and cost control.

7 2. Each case should have a particular set of rules of engagement attached to it to enable review at regular intervals to measure the value of the investment and the adherence to the IAFF policy and goals. 3. Litigation costs are difficult to control. An attempt should be made at the outset to estimate the long term cost and set a budget. Where the IAFF is in a defense role, rather than a plaintiff s role, such estimates are more difficult to establish as a defendant cannot simply decide not to litigate anymore. 4. The IAFF should receive regular briefings on each material stage of a case. Such intervals at the trial level should include: a. Analysis of the original court filings. b. The results of any motions to dismiss. c. Where the IAFF is supporting a defense position, the filing of an answer and any affirmative defenses. d. The nature and progress of discovery, particularly any expert witnesses. e. The likelihood of mediation or settlement discussions. f. Trial scheduling. If the case is an appeal: a. A careful review of the order being appealed is needed to determine the likelihood of success on appeal and the ramifications of an unfavorable decision. b. Determine if the IAFF is going to seek party status or friend of the court status. Generally, friends of the court file written briefs but do not participate in the oral argument due primarily to time constraints. c. The same conflicts and budget processes as set forth above apply. d. The critical reporting stages are the filing of the briefs of the parties and the oral argument. VI. Policy Review The rapidly changing nature of the public pension debate means that static policies will quickly become outdated. This policy should be reviewed and revised as circumstances

8 warrant, but not less than annually. The type of circumstances warranting a review are major legislative changes or significant legal decisions which change the current precedents. Adopted this day of, 2011.