Protecting your Retirement

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I have been to several conventions, meetings, seminars, and conferences in the past year or two. I have learned a lot of information from the firefighters who have been protecting our benefits in the past. We have retired firefighters still lobbying for firefighters across Virginia. At the VPFF Educational Seminar we began the legislative process for next year. Several bills we pushed last year never made it to a vote and will be re-emerging next year.

Today, I was able to learn from Bruce Roemmelt, a retired Prince William County Firefighter. Bruce has been involved in politics for a long time. He has lobbied for firefighters benefits for many years in Richmond.

One big issue facing firefighters is protecting our Pensions. Yeah I know, some of you might say ““I have 20 more years until I retire, why should I care about that stuff.” The answer is that right now while you are not caring, your pension might be in jeopardy. If you have ever cared about anything relating to your job, this needs to be it. Sure, pay is an important issue, but I want to be able to walk away at a reasonable age and enjoy my retirement.

Across the United States, localities are trying to change the Pension Plans from a Defined Benefit system to a Defined Contribution system. This change is not new, rather it is a trick that Local and State Governments learned from Companies like IBM and Hewlett Packard. A defined benefit, or traditional retirement plan, offers a guaranteed benefit after required number of years of service. A defined contribution plan, which is often a 401(k) plan, requires employees to contribute a defined amount and bear the entire risk of opportunity of investment results (employees will not have a guaranteed benefit).

The reason why these Pensions are in trouble goes back to investment strategies in the late 1990′s. When the stock market was doing well many States and Localities decided to capitalize. Pension funds were invested in the stock market and flourished for a couple of years. However, when the stock market tanked nothing was done about supplementing the funding and the Pension funds declined.

New Jersey‘’s Public Employees’ Retirement System (PERS), equivalent to the Virginia Retirement System (VRS), floated $2.8 billion in 30-year bonds in 1997. This was a great investment for a couple of years until the stock turned. Now the fund is playing catch up and faces $10 billion in payments on the principal and interest.

I hear guys say ““Let’’s get the multiplier increased””. I agree. However, I am wondering how much can get done by talking about it. We need to begin with making sure our pension fund is funded properly.

I will offer more information soon. If you have any questions let me know.

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