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HomeMy WebLinkAboutRetirement Committee - Minutes - 08/02/2001City of Fort Collins Retirement Plan • GENERAL EMPLOYEES' RETIREMENT COMMITTEE AUGUST 2, 2001, MEETING MINUTES COUNCIL LIAISON: Mayor Ray Martinez COMMITTEE Terry Van Cleave, 221-6321 MEMBERS Michele Hays -Johnson, 416-2158 PRESENT: Bill Switzer, 221-6713 OTHERS Julie Depperman (Finance) PRESENT: Vincent Pascale (Human Resources) Nancy Wagner, Milliman USA (actuary) Approved September 6, 2001 Susan Lehman, 221-6813 Dottie Nazarenus, 204-4429 Alan Krcmarik, 221-6788 Greg Tempel (City Attorney's Office) Deb Weedman (Human Resources) CALL TO ORDER: Chair Susan Lehman called the meeting to order at 1:18 p.m. PLAN MEMBER COMMENTS: There were no Plan Member comments. APPROVAL OF MINUTES: Alan Krcmarik distributed the July 12, 2001, meeting minutes. Dottie Nazarenus moved to approve. Bill Switzer seconded the motion. The Committee approved the minutes unanimously, 6-0. DISCUSSION TOPICS Retirement Philosophy The Committee did not have any issues relating to this topic at this meeting. 2. Plan Restatement Process Greg Tempel reported that a sub -committee of staff and the Committee met to review the restated Plan draft prepared by Steven Weinstein (pension attorney). Greg forwarded the group's comments to Weinstein and said he expects the second draft soon. Mr. Weinstein is to attend the September meeting and discuss the Plan as restated. Nancy Wagner submitted comments on July 31 and Greg forwarded them to Weinstein. Since the Committee and Greg had not received Nancy's comments until just before this meeting, Nancy was asked to review her comments. Article II, Section 2(i) Performance Pay: Nancy asked if the payroll system treated performance pay as a bonus or as base compensation. Usually, bonuses are excluded from compensation. Performance pay is often included in base compensation. The Committee discussed how the City used performance pay in the mid- to late 1980s. The Committee concluded that it was included in base pay, but the City has not used the concept for several years. 215 North Mason Street • 2nd Floor • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 General Emnloyees' Retirement Committee ust 2, 2001, Meeting Minutes Page 2 of 4 Nancy advised that the Plan's definition of compensation should specifically exclude fringe benefit costs, including costs of life insurance over $50,000. Upon discussion, the Plan should also exclude the flex credit when calculating compensation. 2. Article IV, Section 4: Nancy advised that if possible, the Plan should simplify the $5,000 cash out language by eliminating the "look -back rule". It would cause unnecessary administrative burdens. 3. Article VII, Section 1: Nancy advised that new regulations may conflict with the ability of a Member to elect a 100% Joint and Survivor annuity with a non -spouse beneficiary. She suggested that the Plan include IRC 401(a)(9) regulations by reference rather than imply the calculation in Section 1. 4. Article XV: Nancy believes that this section, Benefit Restrictions on Early Termination, no longer applies to municipal plans. 5. Article XVI, Section 3: This section contains a 100% of compensation limit, which no longer applies to municipal plans. Conclusion and Next Steps: Staff will review the Plan records to determine the impact of performance pay on retirees' and current Members' benefits. Mr. Weinstein will attend the September meeting and conduct a complete review of the Plan changes with the Committee The Committee expects the next draft of the restated Plan one week before the September meeting. 3. Discussion of Retirement Benefit Calculation: Part time — full time issue The Committee reviewed Dottie's concern that by calculating a minimum based on the current Plan for calculation for each Member, the proposed change offers a benefit to some Members that the Plan did not previously offer. The Committee discussed the proposed change briefly. It is clear that legal review of the proposed change needs to be completed before we move forward. The Committee also agreed that before the change be implemented, staff should complete the review of historical records on the remaining Members of the Plan. While some Members have asked for estimates of how the proposed change might affect their benefit, the Committee advised that staff should not respond to Members asking for "what -if' analysis before the change. Conclusion and Next Steps: Greg, Julie Depperman, and Alan will finalize the description of the proposed Plan change and send it to Weinstein to determine the cost of legal review. The Committee will discuss the Plan change at the September meeting. 4. Investments, Mutual Fund Compliance Report Julie presented the mid -year report summarizing compliance with the investment policy. This has been a very difficult year for the market. The Plan is down about two percent through the end of July. Despite the disappointing market performance, the composite rating for the Plan's portfolio is 4-star. Filename: GMINAUG2001R Gener ployees' Retirement Committee ugust 2, 2001, Meeting Minutes Page 3 of 4 5. Other Business Nancy provided a copy of the Milliman USA newsletter for public plans to each of the Committee members. The newsletter summarized the new pension reform provisions in the Economic Growth and Tax Relief Reconciliation Act (EGTRRA). The pension reform provisions have little application to the defined benefit General Employees' Retirement Plan. Deb Weedman reported that the Human Resources Department would be sponsoring a training session about the Act and its effects on the City's 401(a) defined contribution plans and 457 deferred compensation plan. Vincent Pascale had circulated a similar summary that was prepared by Mercer. Both will be sent to Weinstein for review and coordination with the Plan restatement efforts. Nancy will add interested Committee members and staff to the mailing list for this quarterly publication. Greg reported that the State Legislature had passed a law that will affect how executive sessions are conducted. He will provide more information later. Alan noted that the Council is reviewing the Boards and Commissions that the City has set up. At their July study session, Council reviewed six boards and commissions. The schedule calls for the review of the General Employees' Retirement Committee to occur next year. Alan suggested that it be added to the Committee's 2002 Work Plan. Terry Van Cleave suggested that the Committee invite Mayor Martinez to attend the meeting at which the Committee begins to prepare for the review. The actuary has completed its first year of the contract. Alan moved that the Committee renew the contract for another year. Bill seconded the motion, which passed unanimously. Conclusion and Next Steps. Purchasing Agent Jim O'Neill will send out the renewal letter. 6. Actuary Performance The Committee has been discussing the review of the actuary's performance at the last few meetings. Susan asked Nancy if she had comments that she would like to make before the Committee resumes its discussion. Nancy stated that the first year of a new contract is always hard. In subsequent years, the actuary should have a better understanding of the data records and processes that it has to work with. After these remarks, Nancy left the meeting and the Committee discussed performance issues. The Committee members made several suggestions as to how the actuary could improve performance. The actuary needs to: Improve upon its knowledge of the Plan; Understand the contract and the billing requirements and amount; Be timelier in its responses to requests for information. Staff needs to provide background information describing how the actuary is not reaching the expectations in the contract and scope of services. Terry requested written updates from staff. Michele asked that both staff and the Committee be specific about performance issues. When expectations are clearly stated, the actuary will be more likely to meet them. Over time performance should improve. Filename: GMINAUG2001R General Emnloyees' Retirement Committee ust 2, 2001, Meeting Minutes Page 4of4 Susan stated that the Committee needs to manage the relationship and that it is learning how to do so. The Committee agreed that it is their responsibility to oversee the actuary and they expect staff to provide information to do so. Conclusion and Next Steps. Staff will provide a written summary to the Committee. The Committee will address issues with the actuary at the meetings and between the meetings necessary. 7. SCHEDULE FOR NEXT REGULAR MEETING The next regular meeting will be September 6, 2001, at 1:15 PM in the Council Information Center (CIC) of City Hall. The tentative agenda includes: ♦ Citizen Participation and Plan Member Comments ♦ Consider approving the July 12, 2001, Minutes ♦ Discussion of Retirement Philosophy ♦ Report on Plan Restatement Activities and Schedule ♦ Discussion of Possible Change in Calculating Retirement Benefit ♦ Monthly Investment Update ♦ Other Business ♦ Actuary Performance ADJOURNMENT: Terry adjourned the meeting at 3:07 PM. GENERAL EMPLOYEES' RETIREMENT PLAN AND COMMITTEE WEB PAGE ADDRESS: Since the switch to FCGOV.com, our web page is "under construction". FUTURE MEETING SCHEDULE: The regular meeting time for the Committee is at 1:15 p.m. on the first Thursday of each month. The regular location is the Council Information Center, City Hall. The next scheduled meeting will be Thursday, September 6, 2001, at 1:15 PM. The Committee has scheduled meetings for 2001 as shown below: 2001 CALENDAR THURSDAY, OCTOBER 4, 2001 THURSDAY, NOVEMBER 1, 2001 THURSDAY, DECEMBER 6, 2001 Filename: GMrNAUG2001R