Minnesota state court hears arguments on reductions to current retirees’ future COLAs
From John Curry, March 23, 2011
Former Minnesota Workers Battle State in Court Over Law to Reduce Pensions
Bloomberg March 22, 2011
Six former Minnesota public employees claiming to represent 130,000 others asked a court to invalidate cuts in their retirement benefits.
The state Legislature last year reduced cost-of-living increases the workers say they were guaranteed by contract. They sued the governor and three pension plans, seeking class-action, or group, status for the case. In court today, both sides asked state Judge Gregg E. Johnson in St. Paul to rule in their favor.
“I cannot find any other case where the court has allowed the government to cut the vested benefits of a group of retirees,” workers lawyer Stephen M. Pincus of Pittsburgh’s Stember, Feinstein, Doyle & Payne LLC, told Johnson.
Assistant Attorney General Rita Coyle Demeules told the judge active employee pension terms too were altered to spread the burden and that the retiree cuts should be upheld. “The benefits they cite are future and speculative,” she said.
The summary-judgment hearing in St. Paul, the state capital, comes as state governments nationally are coping with reduced revenue and pressure to cut spending.
In neighboring Wisconsin, the state government is battling workers over enforcement of a law that would curb state employees’ ability to unionize and engage in collective bargaining.
“Minnesota law demands balanced protection for the pension interests of all plan members,” the state said in a September filing. The retirees, state lawyers said, “urge the court to sacrifice the interests of active employees, or taxpayers, merely to protect their future, anticipated increases.”
Lawyers for the former workers disagree.
“Defendants could have taken other actions to shore up the retirement systems’ funding levels without breaking their promises to retirees,” the former workers said then.
“You’re deferring salary partly in agreement that you’re going to get that money back when you retire,” Pincus said today.
The reductions to retirees’ cost of living increases are projected to expire in about 25 years. Pincus said that time frame is too long for those he represents.
“For any of these people who are retired, already in their 60s and 70s, they will not live that long,” the attorney said.
Demeules, the state’s lawyer, said the reductions were necessary because projected pension insolvency dates were otherwise within the lifetimes of current retirees.
“Contributions were changed, vesting periods were changed. This was a measured response,” the assistant attorney general said. “Everyone’s suffering.”
Johnson said he would render a decision within 90 days and instructed both sides to submit proposed orders to him not later than May 13.
The case is Swanson v. State of Minnesota, 62-cv-10-5285, Ramsey County, Minnesota, District Court, Second Judicial District (St. Paul).
posted by Kathie Bracy at 4:17 PM
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