An audit of the city’s pension plans has revealed both overpayments and underpayments to retirees due to misalignment with plan documents and legal requirements.  

At the Sept. 3 Apopka City Council meeting, Morris Jackson and David Pappalardo from the financial services company Empower explained remotely the recalculation of benefits due to changes in the average monthly earnings definition. This affects 106 retirees, with 62 experiencing benefit increases and 44 experiencing decreases. 

Pappalardo, who is the vice president for benefit consulting services for Empower and Apopka’s lead actuary for the three pension plans that the city sponsors, detailed the recently completed audit of retiree benefit calculations that touched all three of the pension plans.  

“The purpose of the audit was to ensure alignment between the plan document and the associated state and local ordinances that govern pension benefits,” Pappalardo said. “It is our standard operating procedure to make sure that our record keeping systems reflect all of the provisions of the plan document that define the benefit obligations of any particular plan sponsor. So, it’s not unique to the city.”  

According to Pappalardo, 15 of the 44 individuals whose benefit decreased were affected by the corrected earnings information, while 27 were linked to the change in the average monthly earnings method.  

Empower representatives also explained the legal necessity to correct benefits prospectively, and that underpaid retirees were compensated with interest, while overpayments would not be recouped retroactively.  

The city has three pension boards with five members each, totaling 15 board members in all: the general employees pension board, the police pension board and the fire pension board.  

Captain Steve Brick, police pension board chair, expressed his disappointment with how long it took to identify and correct the pension calculation errors. He also expressed frustration with the lack of urgency and communication from Empower and the previous company that managed the city’s pension program, Prudential.

However, he emphasized that the pension board always aimed to follow the law and do what’s right for retirees and that the board is committed to transparency, urgency, and finding a fair solution for everyone affected. 

“There is a sense of urgency to get this taken care of,” Brick said. “People should not have to live in limbo. And you have my commitment, as Chairman [Lt. Mark] Fry [for the fire pension board] said, I’ve kind of been spearheading this. You have my commitment.”  

Fry said that the pension miscalculation issue is an isolated incident affecting a limited number of people and should not reflect negatively on the overall management or funding of the city’s pension plans, which he described as “some of the best in the state.”  

Fry, a 22-year pension board member, said that the plans remain sound and well-funded and expressed confidence that the process underway would lead to a fair resolution. He also highlighted the board’s long-standing practice of following legal and professional advice. 

“Don’t let this one isolated case be a negative reflection upon what’s going on with all the city workers,” he said. “It’s an isolated case that we knew about, and everything that’s happening now is part of the process that we have to go through to get to the final answer, which I have confidence that we’ll be able to do.”  

The city has retained legal counsel to further review the matter, aiming for a resolution at a future pension board meeting.  

Mayor Bryan Nelson told Empower representatives that he hopes a resolution can be reached.  

“We’re waiting, I guess, for your team to get us the next special meeting of the pension boards,” Nelson said. “I don’t know we’ve got that date set but we’re waiting on that to try to get this thing resolved at the next meeting. That would be my goal. I hope it’s your goal as well.”