Memphis city employees sue to stop pension reduction

Five city of Memphis employee unions frustrated over benefits cuts sued the city Thursday to stop a reduction in the pension benefits for some employees from taking effect, according to the Commercial Appeal.

In front of the Shelby County Courthouse, flanked by statues of “Authority” and “Justice,” union leaders said the Memphis City Council’s Dec. 16, 2014 vote to cut benefits for employees hired since Jan. 1, 2009 violated the state constitution, the city’s pension ordinance and the city’s duty to pensioners.

Thomas Malone, president of the Memphis Fire Fighters Association, said the lawsuit “strikes an important blow” for employees, who are leaving the city en masse for other jobs because of the cuts. In the last four years, close to 300 firefighters left because of the cuts, union leaders said.

“We think once this lawsuit is settled, that we’ll be able to recruit and retain our employees because they’re getting what the deserve, what they signed on for,” he said. “This is something that has been taken away from them, and we say it’s illegal. That’s why we’re filing, and we’ll have our day in court.”

The lawsuit asks for an injunction to stop the city from moving newer employees from a defined benefit plan to a hybrid defined benefit and defined contribution plan July 1.

The lawsuit is the latest broadside in the unions’ attempts to stop Memphis Mayor A C Wharton’s administration from reducing benefits to help make up a $54 million gap between the $20 million the city was paying per year into its pension fund and the amount it needs to fully fund pensions — $73.9 million in the fiscal year that ends June 30, 2016.

The state gave the city until 2020 to make up the annual funding gap, which the council narrowed to $27.4 million when it approved a $46.5 million contribution for the fiscal year that ends June 30, 2016.

City officials estimate the pension changes would free up $5 million to $6 million that could help fill the funding gap.