Some information that might help explain Act 345

History of police and fire pensions

A little explanation is needed. 40 years ago, against the advice of the city manager at that time, the city commission placed Act 345 on the ballot, and the residents voted it in. Act 345 sets up a special account for police and fire pensions that is outside of the general fund. These pensions are “defined benefit” pensions, meaning the retirees receiving them get a guaranteed amount of benefits from the city – as opposed to the “defined contribution” model where the employee gets a set amount of contribution towards his or her retirement fund. Most people are familiar with defined contribution retirement benefits as the rule in the private sector.
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Because Act 345 uncoupled the funding of police and fire pensions from the general fund, the cost city taxpayers pay to fund these pensions changes each year independently of any action by the city commission through the budget process. Instead, the amount city taxpayers must put into the fund each year is determined by an actuarial study. The actuarial study looks at the size of the city’s fund, the assumed rate of return on the city’s investments, and the amount of benefits that likely will have to be paid out to support the city’s future obligations to police and fire retirees.
Read the rest at the link.

This might help this is what someone put in a  comment.

Vegas Lady,
Act 345 pays for their pension when they retire. Police and fire also have money taken out of each paycheck that they receive when they retire or enter the DROP. This is separate from their pension. To me, it seems like a savings account. This “annuity” as it is called is paid in a lump sum. This is 100% of their money. I hope this helps a little. I’m not an expert on Act 345, but I know a little.

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38 thoughts on “Some information that might help explain Act 345”

  1. Michigan Molly,
    Sorry, you’re correct, you said “60k is a good wage, lot’s of people would love to make that much”. You’re also right in that I don’t know if you’ve been to any academy, however, your posts are often anti city employees so it seems quite unlikely you are a police officer or firefighter. So it’s pretty safe to assume in this situation that you have not attended one of the academies. Please correct me if I’m wrong.

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  2. Mr Jones
    Sorry but I have never been in trouble with the law. I have not been scorned by a police officer. I do not know any police officers. I have been trying to get some info about pensions and act 345.I am just tired of all the BS that has been thrown around. Some of this crap is an insult to one’s intelligence. I know police and fire work as hard as anyone else. I would not want their job. Read between the lines no more.

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  3. Michigan Molly,

    I have not exaggerated or mislead people in my post and have done my homework before I post. I have never disrespect the auto workers and actually said I respect them and that they deserve there pensions.

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  4. anonymous 48125
    Assuming is making an ass out of you and me. How do you know if I have or haven’t gone to any academy. I never said I would love to make any amount of money.

    Private
    When it was said not to go to this site for information because it was not exactly truthful. You were one of the first to get on that bandwagon. Yet you get on the site and play the innocent one. You color truths to suit you and you want respect for your police officers . You were making fun of the auto workers. Completely disrespectful. Show me a w2 of a line autoworker that makes 100 to 150 K . Completely false. Judge yourself first.

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  5. Michigan Molly,
    You clearly have an issue with the DHPD. It’s obvious is every post you make. I’m not sure if it’s because you have been in trouble with the law or scorned by an officer, but when reading between the lines, it’s obvious you have an axe to grind with someone in the department.

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  6. Privite
    I have worked for Ford Motor for 38 years, I am in skilled trades and had to go to school AFTER high school to do the job I have. I don’t know your friend who made $150,000 in one year, but I have never made $100,000 in any year. The years I made over $85,000 I spent more than 3000 hours in the shop. That takes a big toll on ones family life. I am willing to show you 38 years worth of W2’s if need be to prove to you that the media has our pay overstated. I am not one who takes any time off and work all of the hours that I can get. So please do not write anything about anyone’s pay other than yours. This is not to say that what you feel is not correct, but it sends a bad message about what auto workers make. Thanks any way for you comment about the hard work our police and fire departments do. They are great.

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  7. Michigan Molly,

    Our police officers also have a two tier system if you read the contract….I believe the fire department skated around a two tier system and actually have the better contract. As to the auto workers 28k is what a new hire may be making, but not an employee that has been there for 20 years. I agree that new hires should be on a second tier and I do not oversell our police officers, but I do not believe that we should have the right to take away from an employee that was hired with the promise of a pension. 60k is a good wage, but not much when you have been doing a job for 15-25 years and have a college education. I am more upset with the money that is being taken from me by the Detroit Water Department then the couple hundred a year for my city services.

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  8. Michigan Molly,
    Go to the Police Academy or Fire Academy, get your EMT and paramedic licenses and then you can make the 60K you’d LOVE to make.

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  9. Auto workers now have a two tier pay system. They do not make 100 to 150 K even with overtime. Their pensions are not 50%. They average out at about 28 K. for their pensions. Second teir workers are lucky to make 30k . Everyone deserves a good pension unfortunately that is not reality. By the way 60 k is a good wage . Lots of people would love to make that much. You oversell the police department with every post. I am sure no one has to be reminded of how much police officers make or how much their pensions are. I see it in my tax bill every year.

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  10. John,

    You have to remember that our police officers and firefighters make a base pay of under $60k a year. They have college educations, work holidays and do put there lives on the line for us. I have several friends that work for the auto company with only a high school education making $100k-$150k per year with overtime and work no holidays. BIG difference in the yearly salary plus they will still get a great pension. 50% of $60k is not much after serving us for 25 years and dealing with the shit that they do, but $50% of $100k-150k is a good living for throwing a part on a car rolling down the line. I respect our police officers, firefighters and our UAW workers and they deserve there pensions.

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  11. John,
    No, we don’t live in a war zone. And, yes, you’re lucky if you’ve never needed any of the emergency workers in this city to come to your aid. Not all of us have been so lucky as to not need them. But to deny the fact that these men and women DO put their lives on the line for you when needed is plain ignorance. Whether you believe they deserve the pensions they receive, or not, that is why they negotiate contracts. And, as has been said on here before, they do pay into their pensions, beginning with the day they start their jobs. I just want to know one thing, when was the last time you went on a domestic violence call and worried for your safety or that of your fellow officers or went into a burning building to save someones family member?

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  12. Nicely put about the percent of the police & firemen retirement. This is the problem, there should never be anything over 50%, most auto retirements are in the 40s & they pay into the pension on every contact. If all outside companys that pay pensions allowed overtime into the payout, everyone would be out of business. To put this extra cost on the tax payers is wrong & this needs to be fixed. I have read most of these replys & to have the same line over & over again about how these people risk there lives everyday, one would think that we must live in a war zone, I don’t think so, otherwise our papers would be full of events that are happing now.

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  13. All this anger and resentment over $100 – $200 dollars (A YEAR), while your city services benefit you in the most tangible ways . . . . And yet the FEDS take you for 25 – 35 % of your income year in and year out…….what a foolish waste of energy.
    Be wise: focus your energy on the Federal government or at least the State !

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  14. When you are a member of a committee that does illegal things , sends mailings that are incorrect. As a public official do you not publically come clean about the goings on of the committee, Do you not resign to protect yourself? These mailings went out with his name attached. Calling him to get the truth does not cut it. I am afraid the real truth is the city is not going to pay for the drop program to make the HO work for a couple of years . Then without a vote of the people we will get a very major tax increase to make up the money due Act 345. Ask the treasurer about that.

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  15. MeMyselfAndI

    I agree he is the one to talk with if you want to know the facts and just the facts. He was the one pointing out his concerns long ago there was just no one listening. I give him so much credit for what he has done over the past year. We need to fix our city and then we need to take a good hard look at this administration and the part they played in all of this. The Mayor has a part to play in the situation we find ourselves in and no he is not responsible for the housing collapse.

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  16. Anonymous,
    You are absolutely correct!!!!!!! He is not in charge of these mailings. In fact, he is opposed to the fact they are saying that taxes will not go up. This is not true in ALL cases. Please give him a call and he will explain everything to you! He is that kind of person. I called him and got the truth!

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  17. The treasurer is not in charge of the HO committee. He is just a member. He cannot dictate what the committe says.

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  18. I have had two experiences with the police in Dearborn Heights. Neither were the result of my breaking the law. I was not impressed with their behavior. Respect is earned . I understand being a police officer is sometimes difficult. But I also think sometimes it changes their prospective and they become difficult. The chief of police went after a citizen at a council meeting he was very angry. He carries a gun. Some of the things that go on are very scary.

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  19. I’m not angry. I am a retired Detroit police officer. I believe that most of the people that have not had good experiences with police officers, are the ones that break the law. Nobody likes getting a ticket, but if you are breaking the law, you deserve a ticket, don’t you think? That is US doing our job. To keep everybody safe. I wasn’t trying to lecture you. I also don’t think I need to lighten up. I have risked my life, been shot at (on more than one occasion), etc. for people I don’t know. I don’t think I, or my brothers that have also risked their lives, deserve to be on a pedestal, but I do think that police and fire deserve respect and to at least be taken care of by the city in which we worked. Detroit or Dearborn Heights!

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  20. Just received a two sided postcard from the save our city people. It shows the fire department being closed on Friday. Has all the gloom and doom on it. Now this is the big kicker it quarantees that your taxes will not go up one dime. How the hell do they expect to get 3.4 million from no taxes will go up. If you can make that much money from nothing please tell me the secret I want to make money also. Violating the law again putting the vote yes signs back on city property. When my taxes go up again I will take the card and sue them .. I am surprised our treasurer is involved in such behavior. Makes me wonder about all our elected officials. It seems they will stop at nothing to get the HO passed. The end does not justify the means.

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  21. Kerry
    What are you so angry about? Just maybe some peoples experience with the police doesn’t justify putting them on a pedestal. I haven’t seen any post that says police don’t deserve a pension. It is a matter of how much. The taxpayers of this city haven’t turned down a millage that supports public safety. I respect all posts. I read them and take them all with a grain of salt. It is a matter of prospective. They come from many points of view. However, lectures I can do without. As I said before lighten up.

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  22. “Recall the Mayor”,

    I’m sorry….. but did you seriously just compare a police and fire person to a repo man? I don’t know how a repo man is out to protect YOU! I guess EVERYBODY risks their lives just to go to work driving, right? Geez…. what an ungrateful person you are. It’s karma that will have a police officer unavailable when you’re being robbed (or worse), or a fire person unavailable when your house is burning down.

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  23. Recall,
    Exactly what is it that makes you think that I DO NOT thank people doing the jobs you mentioned? But we aren’t talking about them when it comes to this blog or the upcoming vote, are we? And I’m not sure where you are getting the idea of “special” treatment either. I simply said that they have already made concessions and that I don’t think we need to expect them to take all of the cuts themselves. So get off your high horse and stick to the subject at hand. If you want to start talking about other professions, well, we can do that too but this isn’t the place for it.

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  24. Recall the mayor,

    Remember 911 or when one of are officers got killed back in 2006….other then that your post does not deserve a response!

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  25. I think you are sort of overplaying your card on this one recall. It is a question of scale. Although payrates are debateable, the chances some professions take far outweigh others. I guess anyone could have a tragic photocopier accident tomorrow or get struck by a meteorite on their porch, but I would wager most everyone has a better survival rate than those professions.

    The police are charged with dealing a community’s undesirables almost every day and enforcing laws that many do not like having enforced on them. They reinforce our entire concept of property rights. Fire protects our lives and our homes more directly.

    I am not saying that one cannot look at a budget and adjust, but I would not go so far as to say that their risking life or limb should be trivialized either.

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  26. Anonymous48125- your comments are wrong! You asked who would put their life on the line everyday taking risk for people they don’t know? Well I know for a fact that working as a Dearborn heights police or fire has its risk but come on their lives are at no greater risk then anyone else walking out their door to do their job! You keep putting police & fire on some sort of pedestal as if they are above other city employees and they should not be!! Many of us take risk everyday for people we do not know but do we have the same recognition? NO we don’t!!

    It is exactly because of people like you, thinking that because they carry a badge & are out on the streets chasing a criminal, or because they may get a call to a fire, that they should be placed upon a pedestal & given more!!

    Well everyday good people get up & leave for work & we all have risk that we take to do that job! Everyday a semi-truck driver gets out on the streets to do their job & they take risk hauling loads for people they don’t know, if it wasn’t for them the cops would receive the supplies they need. Accidents, being in the street & facing the public can be just as dangerous as a DH cop or Fireman.

    A nurse walks out their door facing the dangers of disease & illness to help people they don’t know! Some work with chemicals that can burn them up, a linemen climbs a utility pole to make repairs and fix what they need to working with enough juice to definitely qualify them as risking their life for strangers people who they don’t know.

    When was the last time you felt the need to thank a lineman for risking his life? What about the repo man his job has huge risk every day & they don’t know who they will run into, they are risking their life & not getting no recognition for it, if we don’t have repo men then no one would pay for cars & well that would not be any good for the big 3.

    Everything is connected & everyone has a part in doing their work to the best of their ability!! Just because u have a badge, a gun, a hose or truck don’t make your job any more dangerous or heroic then anyone of us doing our jobs!! Stop the pedestal tactics… I appreciate police & fire, mailmen & linemen, the cable guy, I appreciate them all no 1 person is anymore important.

    Thanks to all who get up risk their life & do their part to keep our world working! Not just a thank u to police & fire!! How many here risk their life, well I believe a lot more the you have given credit to!! Equal compensation for city employees!! Stop the “special” treatment!! That’s what got us in a financial nightmare!

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  27. Kerry
    Lighten up.Was just a figure of speech. I don’t think they should leave with squat. How much percentage wise does police and fire pay into their retirement and what is the percentage the taxpayer pays? Just trying to get info about act 345. Which is a clear as mud.

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  28. Well said, Anonymous48125!!!!! I have seen how “privatizing services” affects a city. That is definitely not something I would like to see for Dearborn Heights. And I just can’t believe that people think that paying a police or fire person a pension is wrong. They serve their career protecting the people that live in Dearborn Heights. Should they leave with squat? As for a ponzi scheme? Really? Every member pays into the retirement system. So, how is that a ponzi scheme? The correct definition of a ponzi scheme is: “A ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.” Key word there: FRAUD! I see no fraud there!!! With that statement, a lot of police and fire should be ticked off. I’m still shaking my head thinking that a resident would not want to say “thank you” for putting their lives on the line every single day for YOU! What a shame!

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  29. There is noting wrong with a defined benefit but what needs to be worked on is all the add ons that the fire & police enjoyed for all these years. Their definded benefit must be based on there pay not the added overtime, vacation time, sick time added to the mix. If an officer makes say 70,000 it should be based on yearly pay. What has happened not just in the Hts but all over // prime example a officer I know that worked in Taylor worked as much overtime as he could in his last 3 yrs. He made about 100,000 per year for 3 years (contract calls for last 3 years to average pension) if he works 25 years he get 80% or 80k thats over double what I receive in a year working full time. The city can’t change the past so what they’re going to have to do is new officers get 50/60/70/80% of there base pay upon retirement. The guys working now would go under the current contract. Its time the city put that into place.

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  30. Linda,
    I’m not sure where you get the idea that public employees are the highest paid but please do check your information. As far as privatizing services, that is NOT, I reapeat, NOT, the answer here. You will not be happy when you are sitting around watching your mother/father/child/grandchild perish before you while you wait for an ambulance to show up from another city. The “top tier” as you call it is on it’s way out, it’s called retirement. I would love to know how many people on this blog would have the guts to go out there day after day and put their lives on the line for people they do not know. I realize they chose the police/fire professions, but my God, they deserve to be compensated. Take a look back 10 years ago, we were hailing them heroes then because they paid the ultimate price, now we want them to do it for less.

    Chuck,
    I would personally like to say “thank you” for giving of yourself to our city for years. Here is one resident that appreciates the risks you took for me and my family.

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  31. So this is a ponzi scheme. Long ago this was voted in to put the burden on taxpayers 30 years later. Time to look at all the cities fringe benefit plans. Fringe benefits are the costliest item in the budget.

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  32. The link on this article references Traverse City. The detail regarding how the change was made, who voted and it being against the advice of professionals may not reflect Dearborn Heights history. The bottom line though is that change needs to be made – we can’t fund this plan – so it needs to reflect reality. I along with many others in the private sector have been moved to 401K contributory plans. Regardless of education or position in the company these plans have become the norm…..everywhere except city gov’t. Let’s change that.

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  33. I wish someone would mention the fact that all Police and Firefighters contribute to the pension fund for their entire career. People seem to be under the impression that retiree pensions are are funded totally on the backs of the taxpayers. Kindly include all the facts! Police and Firefighters for the City of Dearborn Heights pay for their pensions! It’s not just a given!

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  34. That’s not unlike the situation that Chrysler and the other autos are facing with the two-tier wage system. The only REAL solution is to get rid of the top tier, although no one is really saying that in so many words. For the autos, the solution would involve buying out top tier workers. In the public sector, it could involve privatizing those functions that are too expensive to support and then going back to a “public” system at a later time.

    No one has had the guts to face this issue … yet.

    But as public employees begin to be the highest compensated among us, it’s an issue that is not going away.

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