Whatever changes in your pension that "went the other way" didnt affect people already vested, right? At least in my state, thats not legal. They cant take away benefits for people already hired on.
Besides, theres no need to be lowering benefits unless the people managing your pension funds are incompetant. Our benefits are constantly being raised, not lowered.
I'll try to be brief but its pretty complicated.
We manage our own pension assets through an independent pension board with trustees elected from active duty and retired members. Mayor has a rep on the board and City Treasurer is a member. Benefits are set in state law, but the law that affects us is written so that it only affects us ("in cities with population greater than..."). The pension system negotiates with the city to decide benefits, and then they go to the legislature and get them to enact the law.
We got the "meet and confer" version of (watered down) collective bargaining in 1999. Prior to that, salary, benefits and pension were strictly a mater of politics. Before our first contract we had a decent pension but had seen years of salary and benefit changes/erosion. In the late 1980's, when the salaries were suffering and some benefits were getting whacked, the city started the practice of taking away money from salary in the present but promising us more in the future by adding to what we would get when we retired.
In 1999, when we started negotiating our first contract, the stock market was at all time highs and the pension was well over 100% funded. The City gave us some nice raises. The raises naturally affected the pension's future liability.
2001/2002 the stock market was in the tank and the pension was no longer 100% funded. The City suddenly realized they were hurting as well, and a lot of salaries and benefit increases that were about to go into effect were renegotiated with our MBA. The City pleaded poverty and the Union allowed the City to push our raises farther off into the future and to freeze payments to the pension system at the current rates. Like right after the Mayor would be term-limited out in 2003. In return, the Union won concessions like greater future raises and moving a lot of money into benefits (other than salaries) that were calculated as part of overall compensation for pension purposes (OT, Hazard Pay, Acting Pay, Education Pay). All of that greatly increased our future pensions - by a lot.
The pension board screamed. Cops on the pension board were ticked at the cops on the Union board of directors because nobody had asked the pension board if they could afford any of the changes. The pension filed a lawsuit against the City.
January 2004 brought in a new mayor and one of the first things he was presented with was a huge bill for all of the police raises that were about to go into effect, along with a projection of what the City was going to have to pay into the pension to make up for several years of underfunding as well as all of the changes in compensation that had pushed up the pension benefits. Meanwhile, there were problems in the pension plan for all of the other city employees.
The new mayor said "I can't pay for all of this" and reopened the contract with the pension board (not the MBA). He got away with this because the MBA controlled salary and work conditions, but had no control over pension benefits.
Current employees had a raise in the percentage of their salary as contributions into the pension immediately. There was a three-year grandfather clause on calculating pensions (went to a 3 year average rather than highest salary plus average of extra pays), DROP interest floor was raised, but the maximum interest was capped at 7% until the pension was 100% funded and then it would go to a maximum of 10% - in 2000 the interest had been 16%). What pays were included in compensation for pension calculation purposes were drastically reduced. A lot of other things were changed, and we got some good things in return, but the majority of the department was eligible for retirement and 15% walked out the door and collected their pensions and rolled their DROP accounts over to IRAs.
New employees really got shafted. No more DROP, minimum retired age introduced (age 55) as opposed to 20 years service being only requirement, greatly increased employee contribution to pension, 45% pension after 20 years as opposed to 55%, etc.
If you look at this and say "that's a mess", you would be absolutely accurate. But when you work for a bunch of short sighted politicians that is the sort of thing you can expect.
If you think this is a mess, Google "Police Pension Problems" and you will see different, but equally screwed up, problems in cities, counties and states across the country. The great majority of the problems are caused by political decisions that must have seemed like a great idea at the time they were made.
As complicated and weird as our situation was, I think that we all came out pretty well in the end. But change was the order of the day. Some of us left three - five years earlier than we expected and others are staying that much longer than they expected. It depended on your individual situation and how the changes affected you. Luckily for me, my pension was just a part of my overall retirement financial picture and I had more options than some folks did.
