Hefty Pensions for City of Lansing Retirees
October 6, 2011

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Here are the pension details for some recent City of Lansing retirees:

Name

Position

Age

Service

FAC

Multiplier

Pension

Salary

William Barnes

Police Officer

52 yrs 3 mos

25 yrs 0 mos

$69,958

3.20%

$55,966

$57,179

Donald A. Ballard

Golf Manager

56 yrs 11 mos

31 yrs 2 mos

$95,683

2.80%

$83,499

$92,082

Jeffrey D. Hudak

Police Officer

50 yrs 4 mos

25 yrs 0 mos

$80,603

3.20%

$64,482

$57,179

Jimmy L. Butt Jr.

Senior Programmer

57 yrs 10 mos

24 yrs 6 mos

$68,737

2.80%

$47,154

$63,045

Todd E. Burnett

Fire Captain

47 yrs 0 mos

25 yrs 0 mos*

$77,266

3.20%

$61,813

$50,586

Edward L. Monroe

Equipment Mechanic

61 yrs 7 mos

24 yrs 10 mos

$53,308

2.75%

$36,400

$47,091

Peter L. Haueter

Firefighter

50 yrs 5 mos

25 yrs 0 mos*

$89,187

3.20%

$71,350

$58,282

*Purchased 2 months of service

I got this information from the City with a Freedom of Information request. The City provided the pension calculation sheets for 7 employees named by me who retired in 2010 or 2011. The City didn't provide the salaries, but I calculated them by multiplying the hourly wage by 2080, the number of hours in a year assuming a 40-hour work week. The hourly rates came from an earlier FOIA request (see 2010 Wages for City of Lansing Employees).

Note that the pension in some cases exceeds the employee's salary. That is because the pension is not based on salary, but "final average compensation" (FAC), which for City employees is the annual average of the highest consecutive 24 months in the last 10 years. Those 24 months are almost always the employee's final 2 years, and include a "final leave payment", a payoff at retirement of accumulated sick leave, etc. Employees are often able to boost those payments in order to increase FAC, a practice known as "pension spiking", addressed in a 3/8/2011 article in the Washington Post:

Public-sector workers frequently can retire earlier, often in their 40s and 50s, receiving pension checks even as they go on to another career - or sometimes, "double-dipping" in their old one. Some public employees end up getting paid more in retirement than they did during their working years, thanks to pension-benefit formulas that encourage practices such as "spiking," the inflation of salary and overtime payments in the final years before retirement.

Pensions are calculated by multiplying FAC times service (in years) times a "multiplier". For City police and firefighters, the multiplier is a whopping 3.2%, more than double the 1.5% for state employees. And they can retire at any age with 25 years of service. That is why the Fire Captain (above) was able to retire at age 47 - with an annual pension of $61,813. If the factor had been 1.5%, his pension would have been $28,975.

The City has 2 separate retirement systems, one for police and firemen and one for all other employees, called the Employees Retirement System (ERS). "Fireman" means a permanent employee in the Fire Department who holds the rank of firefighter or higher. "Policeman" means a permanent employee in the Police Department who holds the rank of patrolman or higher. A description of the Police and Fire system can be found in this summary provided by the City and in section B of the actuarial valuation for the Police and Fire system.

It should be noted that police and firefighters don't participate in the Social Security system. They will not be eligible for social security benefits. But they also don't pay into the Social Security system.

The Employees Retirement System includes these groups: Teamsters, Exempt, District Court, Executive Pay Plan, Police 911, and UAW. Elected officials are excluded, but they are in a defined contribution plan to which the City contributes an amount equal to 6% of gross salary. A description of the Employees Retirement System can be found in this summary provided by the City and in section B of the actuarial valuation for ERS.

While the Police and Fire System has the highest multiplier at 3.2%, ERS offers the earliest eligibility. Except for UAW members, employees hired before 10/1/1990 can retire when age and service equals 65. For example, if you were hired at age 25, you could retire at age 45 (20 years of service + age 45 = 65). Or if you were hired at age 20, you could retire at 42 (22 years of service + age 42 = 65). If you are UAW or you were hired after 10/1/1990, you can retire at age 50 with 25 years of service. And anyone can retire at age 58 with 8 years of service.

The multiplier for ERS varies depending on employee group and hire date:

Hired before 10/1/1990:
 

 

Teamsters, Exempt, District Court Exempt, Executive Pay Plan and Police 911: Final average compensation times the sum of a) 2.80% times the first 35 years of credited service, plus b) 1.5% times the next 5 years of service, plus c) 1.0% times credited service in excess of 40 years to a 100% maximum.
 

 

UAW: Final average compensation times the sum of a) 2.75% times the first 35 years of credited service, plus b) 1.5% times the next 5 years of service, plus c) 1.0% times credited service in excess of 40 years to a 100% maximum.
 

 

District Court Teamsters: Total service times 2.3% times final average compensation.
 

Hired after 10/1/1990:
 

 

Teamsters, Exempt, District Court Teamsters, District Court Exempt, Executive Pay Plan and Police 911: Final average compensation times 1.6% times credited service.
 

 

UAW: Final average compensation times 2.75% times credited service.

Of course, retirees get health, dental and vision insurance for themselves and their dependents - regardless of retirement age.