City of Independence employees will soon contribute to the cost of their retirement program for the first time in more than 20 years.

City of Independence employees will soon contribute to the cost of their retirement program for the first time in more than 20 years.
Effective Sunday, employees will pay 4 percent of their eligible compensation, including salary, overtime and allowances, into the city’s retirement program, the Missouri Local Government Employees Retirement System.
The Independence City Council unanimously approved the change Monday night after a labor-management group reviewed existing employee benefit programs.
“That’s a drastic change,” said Bruce VanCompernolle, a business representative with IBEW Local No. 53, who represents Independence Power & Light employees. VanCompernolle served on the labor-management committee that reviewed the changes. “If somebody was coming to you and asking you to take a 4 percent cut in your wage, you would feel that.”
Since 1988, the city of Independence had paid 100 percent of the LAGERS retirement program. Prior to 1988, employees paid a portion of associated costs. The city joined LAGERS in 1968.
Under the city’s previous pension plan, employees eligible for full retirement were able to draw 2 percent of their average pay annually until age 65 when it dropped to 1.5 percent of their annual average pay. (LAGERS determines that age 55 is the eligibility for full retirement in public safety, police and fire departments. Other employees may retire at age 60 for full retirement benefits.)
The new plan will allow retired employees to draw 2 percent of their average pay after age 65. Annual benefits are determined with an employee’s years of service with the city.
The annual average pay is calculated using an employee’s top three salaries in the last five years of service. For example, an employee who made $60,000 on average would multiply it by .02 (2 percent allowed to draw), which equals $1,200. Then, the employee must multiply the total years of service with the city to determine the amount of annual benefits ($1,200 multiplied by 20 years of service equals $24,000 in annual benefits).
The city’s health benefit program also will be affected. For existing employees and for those who will retire on or after Sunday, they will pay 17 percent of their health insurance, which represents an increased share in the distribution for health premiums. The city will pay the remaining 83 percent. Those who’ve already retired will continue paying 14 percent, with the city paying the remaining 86 percent.
The health benefit program also will be modified from a two-tier rate structure (individual and family) to a four-tier rate structure (individual; employee and spouse; employee and children; and family).
City Manager Robert Heacock said the changes are designed to be financially neutral for the city because employees are structuring their benefits to match up. He also said the change will put Independence on par with other municipalities that offer similar benefits.
“We’re not redirecting city funds away from other priorities,” Heacock said. “We’re allowing employees to restructure benefits and compensation for the change.”
The Missouri Local Government Employees Retirement System, or LAGERS, is a nonprofit public pension system that provides retirement, disability and survivor benefits to Missouri’s local government employees, according to its Web site. Other area municipalities and agencies that utilize the LAGERS L-6 plan include Lee’s Summit, North Kansas City, Cass County and the Mid-Continent Public Library system.
“Is it what I would have preferred if I would have put it together myself? Absolutely not,” VanCompernolle said. “In these economic times, it’s difficult to go to cities and ask for a $2.1 million increase for pension plans for employees. Would I be happier if the city was paying for all of it? Yes.”
VanCompernolle said he was personally unhappy with many of the changes that will take effect Sunday, but he would agree with them as long as they went before a vote of the city’s employees. The city clerk’s office conducted an election in mid-October, with about 74 percent of 1,126 eligible employees participating.
About 79 percent of those who voted were in favor of the proposal.
“I’m going to stand behind it, and the employees have spoken,” VanCompernolle said. “Overall, it ended up being a halfway decent plan for the employees.”
Heacock said the change represents city officials working together with labor representatives.
“That’s pretty significant from our standpoint,” Heacock said. “This has been on the wish list for employees for a long time. All of the labor groups have indicated they will live with this change.”
Both Heacock and VanCompernolle want Independence residents to rest assured that employees, not taxpayers, are accounting for the new plan’s total cost.
“That’s important, too, with the state of economy, people being taxed and maybe being unemployed is the last thing they want to look at is paying for the employees’ pension plan,” VanCompernolle said. “The entire cost is getting picked up by the employees.”