Beach Fire Department Pension Changes


After a two-year impasse over pension woes relating to the firefighters, St. Pete Beach staff proposes some changes that will still offer city firefighters a pension – albeit a different one – with less risk to the city and taxpayers.

“They had a great deal,” St. Pete Beach City Manager Mike Bonfield says of the St. Pete Beach firefighters’ pension plan. The down side? “It cost a lot of money.”

Here’s how the current and proposed plans work.

Right now, firefighters receive a “defined benefit” plan where they may retire after 20 years of service (although most wait for 25 years) and receive a predefined amount of money. Here’s how it works:

  • Firefighters typically earn 85% of their three highest–earning years (or 3.4% for every year of service). Overtime hours factor into their annual earnings.
  • After seven years of retirement, they receive an additional 3% increase every year
  • They may still participate in something called a DROP (Deferred Retirement Option), where they continue to work and receive a paycheck for five years but the city starts paying out their pension into a fund with a 7.5% rate of return, which they receive at the end of five years.
  • Firefighters contribute 10.3% of their salary.
  • The city receives money from the state, called “F.S. 175” funds and so named for Florida Statute 175 which details the rules about these monies, to help pay for this plan. You pay this money as part of your property insurance bill. F.S. 175 pays the pension plan 10% of the city’s firefighter payroll.
  • If the investments backing this pension plan – chosen by investment manager selected by the pension board – don’t make enough money to pay the defined benefits for retired firefighters, the city must pay the difference.
  • The current pension plan has a $9.5–million deficit.

The proposed pension plan will offer a hybrid of this defined benefit plan and a defined contribution. Under this proposed plan (read this story online Friday for the outcome of Thursday’s commission vote on this plan), the plan would work as follows:

  • Firefighters may retire after 30 years or age 60 before drawing a pension.
  • Firefighters would earn 37.5% of their salary, and overtime would not factor into the equation when calculating the highest-earning three years. This is based on them receiving 1.25% (rather than the current 3.4%) for every year of service. They also would not receive the 3% cost of living raise after seven years – or at all. This is the defined benefit portion of the program.
  • They cannot participate in the DROP program.
  • Firefighters will contribute a minimum of 3% of their salary.
  • Firefighters may also, if they wish, participate in a defined contribution retirement plan whereby they may manage their own investments.
  • Under the defined contribution plan and separate from the portion of the plan that remains a defined benefit, firefighters will manage their own investments.
  • Firefighters with less than 14 years of service on St. Pete Beach, the city will match 50¢ per dollar (up to five percent of the firefighter’s pay).
  • For firefighters with more than 14 years of service on St. Pete Beach, the city will match 75¢ per dollar (up to 7.5% of the firefighter’s pay).
  • The city may or may not still receive FS175 money, pending a proposed August review on the state level. This issue reared its head when Naples made a similar change and the Florida Division of Retirement said Naples would no longer qualify for FS175 funds. Under pressure from the Governor’s office, the Division of Retirement reversed its interpretation. St. Pete Beach receives, according to Mr. Bonfield, “a couple hundred thousand dollars” per year in FS175 funding. Should the Division of Retirement reverse its interpretation again, the Commission will have to decide if it wishes to switch back to a defined benefit plan. 

The city’s pension board will remain in place to oversee the defined benefit portion of the plan only. The pension board consists of two employees, two commission appointees, and one firefighter. Florida Statute 175 mandates the city maintain a pension board to manage the pension plan’s assets (through a money manager). The board ensures that the city does not mix the pension funds with other monies or spend it on anything other than the pension. The board does not get involved in bargaining issues or benefits. The pension board would continue under the new pension plan

St. Pete Beach currently has 28 people in the fire department’s pension plan. The plan’s deficit, called an unfunded liability, grew by $500,000 over the past year. City property taxes cover this liability.

The new plan will offer firefighters less money as a defined benefit but, under the defined contribution, firefighters have the chance to invest more money. City Manager Bonfield also points out that firefighters will have 7.3% of their salary freed up to invest as they see fit or, if they wish, not at all.

“We’re trying to minimize the risk that created the $9.5 million deficit,” Mr. Bonfield says.

Contact Cathy Salustri at

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