Court dismisses lawsuit challenging Atlanta pension reform

Atlanta Mayor Kasim Reed./ AP Photo

A Fulton County Superior Court judge on Wednesday dismissed a lawsuit challenging the constitutionality of higher employee contributions for participants in Atlanta's three pension funds.

A group of participants in the Atlanta General Employees' Pension Fund, Atlanta Firefighters' Pension Fund and Atlanta Police Officers' Pension Fund filed a lawsuit in November 2013 challenging the city's 2011 reform that increased employee contributions by 5 percentage points.

The changes, which were effective Nov. 1, 2011, increased contributions to 13% from 8% for employees who had designated beneficiaries and 12% from 7% for those without designated beneficiaries.

The lawsuit contended that the change was unconstitutional due to the state constitution's clause that says no “laws impairing the obligation of contract should be passed.”

“This legal victory will allow the most comprehensive and effective pension reform in the United States of America to go forward,” said Atlanta Mayor Kasim Reed in a statement. “Thanks to pension reform, we were able preserve the financial sustainability of our pension system without layoffs, service reductions or tax increases. The city of Atlanta is now in strong financial health, which will allow us to make the necessary investments to maintain Atlanta's position as the dominant city in the Southeast.”

The city's three pension funds have combined assets of $2.5 billion as of June 30, 2013, according to the city's most recent comprehensive annual financial report.

John C. Bell Jr. and Lee W. Brigham, the plaintiffs' attorneys, did not return a phone call by press time.

Rob Kozlowski writes for Pensions & Investments, a sister publication of Business Insurance.