Former Colorado Springs PERA Members Sue City.

From Plan Sponsor: "Hospital Employees Sue Colorado Springs for Colorado PERA Pension."

"A lawsuit claims the City of Colorado Springs’ termination of Memorial Health System’s affiliation with the state pension system violated state law."

"Employees of Memorial Health System, owned by the City of Colorado Springs, Colorado, have sued the city, claiming they were unlawfully removed from the state’s Public Employees Retirement Association (PERA) and subsequently not given promised benefits."

"Prior to termination of the City’s administration of Memorial, Memorial employees were repeatedly told that when PERA affiliation was terminated, their pension plan would be replaced by another plan that would be at least as good as the PERA benefit plan."

"The lawsuit alleges the new employee pension benefit plan for Memorial employees after October 1, 2012, is inferior to the benefits they would have accrued under PERA."

"For Memorial employees (except the Children’s Hospital sublease employees) the retirement benefits accrue at the rate of only approximately 1% of the average of the highest five years of service per additional year of service, instead of 2.5% of the average of the highest three years of service under PERA."

(This rate of accrual of PERA benefits is called the pension "multiplier." In 2010, rather than PROSPECTIVELY reducing this PERA pension multiplier from a 2.5 percent level for PERA benefits not yet accrued, the sponsors of SB10-001 sought a RETROSPECTIVE reduction of Colorado PERA pension [ABI] COLA benefits that had already accrued, that is, PERA pension benefits that had already been earned by Colorado PERA retirees. SB10-001 was challenged in court [Justus v. State] and ultimately blessed by a Colorado Supreme Court that: disregarded 50-year old Colorado public pension precedent, ignored federal case law [US Trust,] ignored ubiquitous evidence of the contract, and failed to conduct a "contract analysis" . . . all of this to summarily eliminate legal Colorado governmental debts. The plaintiffs, Colorado PERA retirees, had exchanged years of labor and pension contributions for this ABI benefit. How did the Colorado Supreme Court justices reach the conclusion that Colorado PERA members do not exchange their labor and contributions for the ABI benefit? In their superficial, state-serving review, the justices did not address this question.)

Plan Sponsor:

"In addition, as newly minted private-sector employees, these employees now must contribute to and qualify for Social Security. They have not accrued Social Security credits because previously they did not contribute to Social Security."

(The Colorado PERA pension system is theoretically a replacement for Social Security. The Colorado PERA pension system is theoretically a "qualified" public pension plan under the Internal Revenue Code. "Qualified public pension plans" must have "definitely determinable" benefits under the Internal Revenue Code. The Colorado Supreme Court recently ruled in [willful?] ignorance of this federal requirement. Evidence and law are much easier to bury when no trial or discovery are allowed.)

Plan Sponsor:

“'These differences amount to tens of thousands, or even hundreds of thousands of dollars per employee, in lost retirement benefits,' the lawsuit says."

"The lawusit is filed on behalf of all affected employees, and the city has acknowledged that approximately 4,000 or more such employees of Memorial Hospital existed as of October 1, 2012."

Complete article at PlanSponsor:

http://www.plansponsor.com/Hospital_Employees_Sue_Colorado_…

The complaint, Romstad v. City of Colorado Springs:

http://www.plansponsor.com/…/RomstadvCityofColoradoSprings.…

http://coloradopols.com/…/the-colorado-supreme-court-politi…

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One Community Comment, Facebook Comments

  1. hawkeye says:

    Mixed bag as many with over 20 years service took action in the two years prior to the transfer to purchase up to perhaps 10 years of service credits.  Now these particular employees are participating in another DB plan, which could work out well if they stay long enough to vest.  The ones who ended up at Childrens Hospital are really screwed.

    If the courts took 5-years to decide the SB10-001 lawsuit without trial or discovery, surely it will take at least that amount of time in the current Memorial Hospital case.  However, since it is a prospective change, maybe it will get decided sooner rather than later.

     

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