City Government Scales of Justice 2

Published on November 2nd, 2015 |

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Ga. Supreme Court gives city win over employees in pension battle

The Georgia Supreme Court Monday unanimously upheld pension reforms adopted by the Atlanta City Council four years ago, handing Mayor Kasim Reed a victory in his fight with city firefighters, police officers and other city employees over a class-action lawsuit.

In a ruling on the class-action suit, Presiding Justice Harris Hines declared three pension reform ordinances “did not alter plaintiffs’ pension benefits, but rather modified their pension obligations, and in no manner divested plaintiffs of their earned pension benefits.”

Lawyers for the workers argued before the court last May that pension reforms pushed through the council by Mayor Reed illegally increased city employees’ contributions toward retirement.

The city’s lawyer countered that all employees agree to abide by their plan’s provisions “as amended” when they enroll in a plan, language that opens the plans to the possibility of being changed.

The ordinances required the workers to contribute 12 percent of their annual salaries toward their pension plan, up from 7 percent, and increased the vesting period from 10 years to 15 years. The move was based on recommendations from a committee of business leaders, elected officials and union representatives Reed appointed to find ways to keep the pension plans financially afloat.

Monday’s 23-page opinion upheld a lower-court ruling, declaring that “where the legislation establishing a pension plan itself provides that the plan may be subject to modification or amendment, the participant does not acquire a vested contractual right in an unchanged plan.”

The three pension ordinances were in the form of amendments to existing ordinances.

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