Reprinted from

Auditor issues positive report on firefighter pensions

4/21/2008

By Laura Gossman

Post-Bulletin, Rochester MN

Many local volunteer firefighters have seen increases in their pensions in the past few years.

State Auditor Rebecca Otto recently released a report on the benefits, finances and investment performance for Minnesota's volunteer fire relief association pension plans for the 2006 calendar year. The report concluded that investment earnings increased statewide from $18.8 million in 2005 to $40.1 million in 2006.

Fire relief associations in this region had an average rate of return on investments of 9.2 percent.

The Lewiston Volunteer Fire Department had the highest rate of returned investments in the region with 14.9 percent. Preston and Red Wing volunteer fire departments weren't far behind; both had a 14.8 percent rate of return.

Lewiston Fire Association treasure Dean DePestel said his fire department began investing in stocks and bonds about 15 years ago.

The association works with a financial adviser from Merchant's Bank in Winona.

"A lot of veteran members of other fire departments just don't want to leave the local bank, so they invest in CDs which return little or nothing," DePesBoth DePestel and Unger said their associations have enough money built up to cover their entire roster if they all chose to retire at the same time.

Some fire relief associations haven't faired quite as well.

Unger said that fire departments with low rates of return likely just started their fire relief associations.

Otto has recommendations for relief associations that aren't doing well.

"Relief associations should consider investing in balanced portfolios," Otto said. "While investing solely in cash may seem safe, it is difficult for relief associations invested in cash to meet the statutory interest rate of 5 percent."

DePestel said the association's rate of return doesn't look as good for 2007 or 2008.

"The stock market just isn't as good right now," he said.

Otto recommends that relief associations consider stock investments as long-term investments.

"Moving out of stock investments after their value has declined eliminates the chance of benefiting from eventual stock market recoveries," Otto said.