Dear Mr.

Nicklaus:

This is a response to your article in the business section of the Post Dispatch on Friday,
February 12, 2010, concerning what is headlined as “Pension costs are putting the squeeze on city”.

The city did not throw $143 million at pension problems. There was a City bond issue because the
City lost a Supreme Court decision that forced the City to pay what they are required to pay by
State Statute and City Ordinance. Beginning in 2003 and continuing until 2007 the City failed to
make the required contributions to all three city pension plans and instead only contributed 6% of
salaries to the city, fire and police pensions. The trustees of FRS (firefighters) and PRS (police)
took the appropriate fiduciary action and filed suit against the City and the Board of E&A. In that
case, a total of 11 judges ruled against the City and none for the City. After four years of litigation,
after the City lost the Supreme Court case, they paid FRS and PRS and decided at that time they
would also pay ERS, the non-uniformed City employees pension system. Thus the bond issue. I
suppose you could say the City threw money at a problem the City created, through some very poor
decision-making by elected officials regarding budgetary matters.

It is true that the Missouri legislature must approve any changes to the Fire and Police pensions.
What is not stated is that negotiations for firefighters must also get those changes approved by the
Board of Alderman and then they must also get the Mayor’s signature. For FRS it is not always the
case that both bodies of State and local government approve those changes. Many changes that
have been approved by the State Legislature were NOT approved by the Board of Aldermen.
Subsequently those changes have NOT been made to FRS pensions. Any past increases given in
benefits for firefighters occurred only after approval by the Board of Aldermen and the Mayor.

Cost of living increases are not automatic. Firefighter retirees prior to March of 1973 get NO cost
of living increase. Fire retirees from March 1973 to December 1983 get 3% a year but only if the
consumer price index increase is 3% for 3 consecutive months during that year. All Fire retirees
from January 1984 until present receive between 1.5% to 3% per year based on their years of
service, or whatever the cost of living is for that year. Never more than the actual cost of living
increase, but sometimes less. And this past year they received nothing.

The only comment I have about the deferred option (DROP) is that there is no cost to the city for
this benefit. Firefighters do not accumulate more benefits while they participate in this deferred
benefit and they are not calculated in the annual valuation of the Plan as they are considered to be
retired. DROP Benefits were adopted nationally to keep experienced uniformed officers on the job,
after they could have retired and started collecting benefits.

Fire Fighters contribute 8% of their pay to the retirement system. They do not pay into Social
Security nor does the City. This is the only retirement benefit they will receive and most of them
work 25-35 years to be able to receive it. In fact, they have to stay on the job 20 years to get a
pension. If they quit after 18 or 19 years, they receive no pension. When you and your readers
think about benefit reductions, consider the implications if your Social Security benefits being cut,
because some government officials wanted to save money for other things in their budget.
Also, FRS and PRS provide the funding for disability benefits for firefighters and police officers.
When other governmental entities around the country realized this, the talk about benefit reductions
almost always came to a halt. Police officers and firefighters are in very high risk professions,
where a lot of people are disabled, and some die. Most people don’t go into burning buildings to
help save people, or run toward people firing guns.

Please provide your readers with the benefit of these facts and these perceptions, as part of the
balanced view that the Post no doubt wishes to present.

Vicky Grass
Executive Director
The Firemen’s Retirement System of St. Louis
1601 S Broadway
St. Louis, MO 63104