City moves all employees to ‘Tier 1’ benefits

Published 5:12 pm Wednesday, September 23, 2020

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Troy Mayor Jason Reeves applauded the council’s approval of a resolution this week allowing the city to provide Tier 1 retirement benefits for all employees.

“This makes us much more competitive in recruiting and retaining employees,” he said.

The Alabama Legislature cleared the way earlier this year for state employees hired after January 1, 2013, as Tier II employees to transition to Tier I status, pending approval by local governing agencies.

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“Anyone hired after December 2012 automatically became a Tier II employee in the retirement system,” Reeves said at the council’s work session. “That limited the amount of money they have to pay into the retirement plan but it also limited their options on retirement.

“Basically, they have to work longer and retire at a later age.”

The tiers have different contribution rates, formulas and service requirements to collect benefits.

Tier I employees are vested in the program after 10 years of employment and can retire at 60 years of age with limited benefits or after 25 years of employment with full benefits.

For some public service employees, such as law enforcement and fire department first responder, the Tier I status combined with stress pay – which adds one year of service for each five years of employment – means they can retire significantly earlier with more benefits.

Employees will be required to increase their contributions into the retirement system, and the city will be liable for additional contributions each year as well.

Reeves said he and city clerk Shannon Bryan are working to finalize the budget, and he will provide specific costs for the retirement system changes at the budget hearing on Sept. 29.

The Pike County Commission previously approved a similar resolution for county employees.