This question was sent by an Islander reader. It was forwarded to the Village for response, but they declined because of the pending litigation.
While the Village would not comment, Don Elisburg, a Village residents with extensive background in pension matters, agreed to provide a short lay explanation of the dispute. Mr. Elisburg spent over 50 years working on various aspects of labor law and held a wide variety of positions within the U.S. government. During the Carter administration, he served as assistant secretary of labor for employment standards.
A. What is clear:
John Gilbert joined the KB Fire Department in 1992 after serving with the City of Miami FD for many years. He became KB Fire Chief and remained so until 2012, when he became KB Village Manager. At the time he became the KB manager, Gilbert was eligible to retire under the KB Police and Fire Pension Plan. This current discussion is about those contributions. Gilbert exercised his rights to retire in 2012. The Pension Fund and the Village of Key Biscayne are two separate entities. The Fund manages and disburses the retirement benefits of the participants. The assets under management are the contributions from each of the employee’s paychecks with the agreed upon match from the employer.
B. What is in dispute:
At the time of his engagement as Village Manager in 2012, John Gilbert signed a contract with the Village and also exchanged letters with the KB Police and Fire Pension Fund, the meaning of which are the subject of the litigation. The question is over the status of the monthly retirement payments that Gilbert was entitled to receive as soon as he retired from the Fire Department in 2012.
It is Gilbert's position that the agreement was to postpone (not forfeit) these monthly payments until he left the position of Village Manager, which required the Pension Fund to hold his monthly-retirement payments in a separate account until he left his position as manager and then pay him the deferred amount. This accounting in the pension system is known as the deferred retirement option program (DROP). Many current, and former, Village employees participate in the program.
Gilbert also argues that the Pension Fund’s fiduciary requirements support his position in that it was never expressed to him that he would be forfeiting his retirement benefit to the Fund. The Pension Fund's interpretation is that Gilbert agreed to forfeit these monthly payments while Village Manager, essentially that Gilbert was donating his retirement to the Fund.
This retirement benefit issue surfaced sometime in 2016 when Gilbert asked for an accounting and was advised that the Fund had not placed his retirement payments in a separate account. These discussions have been public for two years at Pension Board open meetings and have been discussed in many council executive and open sessions. The amount in question is known, had the appropriate accounting taken place. The Pension Fund has asked for an ordinance from the Village Council authorizing them to pay Gilbert’s postponed money that he paid into the Pension Fund while he was a fire department employee. The Village Council has not acted on this request.
C. Current status:
Gilbert has filed a lawsuit for his postponed retirement money. The lawsuit is centered on the fiduciary responsibility of the Pension Fund. All committees and boards appointed by the Village are governed by state Sunshine Laws. However, in addition to those rules and regulations, the Pension board and administration have fiduciary responsibilities to the participants of the Fund that are governed by state and local laws. The Village and Pension Fund have not yet responded. Stay tuned for the next steps in this now long running dispute.