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The IAFF opposes S. 1270, the Secure Annuities for Employees (SAFE) Retirement Act.


In response to concerns that taxpayers may need to bail out underfunded pension plans, legislation has been introduced to replace traditional defined benefit pension plans with annuities purchased from insurance companies. Under the SAFE Retirement Act (S. 1270) public employers would purchase insurance annuity contracts each year on behalf of all employees. An employee’s retirement benefit would be determined by the number of contracts purchased on their behalf and the amount of each contract.

Proponents of the legislation claim that shifting responsibility for paying retirement benefits to insurance companies will protect taxpayers because pensions will no longer by guaranteed by the government. They also claim that, if fully utilized, annuities would pay an adequate retirement benefit. The proposal allows employers to purchase annuities worth up to 30% of a fire fighter’s salary (20% for non-public safety officers) each year. If contracts are purchased at the maximum amount each year for 30 years or more, the total benefit paid should be enough for a public safety officer to retire.

Opponents of the legislation counter that employers are unlikely to invest the full 30% of salary each year, which means that the total benefit paid by the annuities may not provide enough income to retire on even if a fire fighter works for 30 years—a long career for such a demanding occupation. Employees would have no way of knowing from year to year if their employer is going to purchase an annuity contract on their behalf or the amount of such contract, so they would have no way to plan for retirement. Moreover, the proposal does not provide for death and disability benefits—as current defined benefit plans do—and sets the minimum retirement age at 57, which is past when many fire fighters feel able to continue performing their duties.

Finally, opponents note that the legislation is based on a faulty premise. The vast majority of defined benefit plans are adequately funded and present no risk to taxpayers. The few plans that are facing significant challenges are being overhauled and expected to return to full solvency. As long as employers make their annual required contributions, current pension plans will continue to be able to pay adequate benefits, as well as death and disability benefits, for current and future generations.


U.S. Senate:         S. 1270, the Secure Annuities for Employees Retirement Act
                            Sponsor:     Senator Orrin Hatch (R-UT)

Summary:            S. 1270 would replace public employee defined benefit plans with insurance annuities.


On July 11, 2013, S. 1270 was introduced in the U.S. Senate and Referred to the Committee on Finance.


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