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HomeMy WebLinkAboutRetirement Committee - Minutes - 06/07/2001AmirNftative Services finance Administration COLLINS GENERAL EMPLOYEES' RETIREMENT COMMITTEE JUNE 7, 2001, MEETING MINUTES Approved on July 12, 2001 COUNCIL LIAISON: Mayor Ray Martinez COMMITTEE Terry Van Cleave, 221-6321 Susan Lehman, 221-6813 MEMBERS Michele Hays -Johnson, 416-2158 Dottie Nazarenus, 204-4429 PRESENT: Bill Switzer, 221-6713 Alan Krcmarik, 221-6788 OTHERS Julie Depperman & Sue Wilcox (Finance) Greg Tempel (City Attorney's Office) PRESENT: Deb Weedman (Human Resources) Nancy Wagner, Milliman USA (actuary) CALL TO ORDER: Chair Susan Lehman called the meeting to order at 1:20 PM. ITEMS OF NOTE: Nancy Wagner distributed business cards showing the actuary's new name, Milliman, USA. Susan Lehman noted Dottie Nazarenus would need to leave at 3 PM and Greg Tempel would be a few minutes late. Susan suggested moving the full-time — part-time issue item earlier on the agenda to be sure that all members are present for the discussion. PLAN MEMBER COMMENTS: To help Plan members better understand the agenda items, Alan Krcmarik added short descriptions for each item. A Plan member asked Bill Switzer for an update on the full-time — part-time issue, which the Committee will discuss at this meeting. Susan circulated pension -related mail she had received as Committee chair. APPROVAL OF MINUTES: Alan distributed the May 3, 2001, draft meeting minutes. Committee members suggested minor wording changes. Bill moved to approve the minutes as amended and Alan seconded the motion. The Committee approved the minutes unanimously (6-0). DISCUSSION TOPICS 1. CALCULATING RETIREMENT BENEFIT (FULL-TIME - PART-TIME EQUITY ISSUE) MAIN POINTS: The Committee has been searching for a method to produce a more equitable benefit for members who move from a full-time position to a part-time position or vice versa. Currently, a person who works part-time and then moves to a full-time position for five years would receive the same benefit as an employee who had worked full-time for their full City employment. The previous actuary proposed a method, but it only worked in simplified situations. Staff has evaluated many options, but all had created other inequities. Under the current Plan, the formula to calculate the monthly retirement benefit uses average monthly compensation (highest consecutive 60 months of the last 120 months worked) X 1.50/c X years of credited service X vesting percentage. A part-time employee earns a full year's service credit, regardless of the percentage of full time they worked. This inflates the benefit and 31DO LaPorte Avenue - P.O. Box 580 - Fort Collins, CO 80522-0580 - (970) 221-6788 - FAX (970) 221-6782 General Employees' Retirement Committee June 7, 2001, Meeting Minutes Page 2 of 4 causes the inequity. A method that is fairer to all would annualize the rate of pay, but would credit service based on the time actually worked. Alan and Julie Depperman have been working to develop this method, which appears to resolve the inequity. Alan described the method, which annualizes salary based on the highest 60 months out of the most recent 120 with an adjustment for actual time worked. Alan and Julie provided the Committee with seven examples, based on actual pay records, to illustrate the proposed method. The charts displayed: 1. Each member's benefit under the current Plan formula. 2. Each member's benefit assuming the employee was full-time for their whole career. This benefit is based on the employee's hourly pay record. 3. Each member's benefit based on an annualized rate of pay and the actual hours worked. The following observations were made: • The proposed method would create a more accurate match between the hours worked and the amount contributed to the Plan on the members' behalf. • Service credit earned would be for regular employment hours worked. • Employees who had always worked fulltime would not be affected. • Employees who had always worked the same number of part-time hours would not be affected. • Members current credited service earned would be determined as of the date of the change. If the new method of credited service yielded a lower benefit amount, the member could not receive less than the determined amount. • The proposed change would only be in effect going forward. • The vesting status for the 62 members who are not fully vested might change. • There could be some financial impact on the Plan, but the Plan benefits for individuals would more closely match the contributions made on their behalf. To implement this benefit formula change, staff would prepare a full employment history for each Plan member. This would entail a staff person spending 1-2 hours reviewing member's file and keying in each personnel action form change and labor market adjustment, beginning with their date of hire in an eligible position. Staff would update the database each year. The Committee and staff would provide an explanation and education program for Plan members Greg suggested that a pension attorney review any proposed change. The actuary noted that President Bush signed a pension law today, which might have some impact on the amendment. CONCLUSION AND NEXT STEPS: Staff will prepare a one -page description of proposal and the proposed Plan amendments to accomplish it. Greg recommended the Committee obtain the advice of a pension -law specialist attorney for an opinion once the proposed change is drafted. The Committee will review the information presented and bring questions to the next meeting. 2. DISCUSSION OF RETIREMENT PHILOSOPHY The Committee did not have any items to discuss related to this topic. The Committee retained this item for the next agenda. • Gener mployees' Retirement Committee June 7, 2001, Meeting Minutes Page 3 of 4 3. PLAN RESTATEMENT AND SCHEDULE MAIN POINTS: The Committee updates the Plan every few years to include new Plan amendments and comply with federal regulations. Greg reported pension attorney Steve Weinstein, hired to restate the Plan, expects to have a first draft ready in about two weeks. However, Steve will not be able to attend the July 12 meeting. Other options include having an associate make a presentation at the July meeting, waiting until the regular August meeting to have Mr. Weinstein present it himself, or calling a special meeting to present the draft. The required implementation date is January 1, 2002. CONCLUSION AND NEXT STEPS: Greg will provide copies for the Committee and staff. Depending on reviewer's reactions to the draft, one of the three options will be selected. 4. DOMESTIC RELATIONS ORDER MAIN POINTS: Some Committee and staff members met to clarify the forms and administrative process for Domestic Relations Orders (DRO). Greg distributed a packet, including Resolution 2001-01, to incorporate the changes. CONCLUSION AND NEXT STEPS: Alan moved that the Committee adopt Resolution 2001-01 to revise the Domestic Relations Order forms and administrative procedures. Dottie seconded the motion. The Committee approved it unanimously (6-0). Greg will provide copies of the signed Resolution and packets of forms and procedures to Committee and staff members at the next meeting. 5. PERFORMANCE REVIEW OF ACTUARY MAIN POINTS: The Committee Standing Rules provide for a annual review of the actuarial services. Since Milliman USA has been the Plan's actuary for about nine months, it is appropriate for the Committee to begin the review. Alan provided a form that the Committee and staff could use for this purpose. Members suggested adding a column for 'insufficient information' and allowing space for examples. Final review forms will be distributed to Legal, Finance, and Human Resources staff, as well as Committee members. CONCLUSION AND NEXT STEPS: Alan will finalize the format for the review and will transmit it to Committee members and staff. When completed, the forms should be returned to Alan. NOTE: Greg Tempel left the meeting at 2:45 PM. 6. MAY 2001 INVESTMENT PREVIEW MAIN POINTS: Julie reported that there was not much change in the portfolio during May. Although some mutual funds are moving upward, the general trend is flat for the year-to-date. The international stocks are weak. Some analysts suggest that the tech stocks may begin an upswing soon. Finance staff is still looking for investments to increase the value of the portfolio. General Employees' Retirement Committee June 7, 2001, Meeting Minutes Page 4 of 4 CONCLUSION AND NEXT STEPS: Members may contact the Finance Department to obtain a copy of the monthly investment update. 7. SCHEDULE FOR NEXT REGULAR MEETING Because of the July 4 holiday, the next regular meeting will be on Thursday, July 12, 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 June 7, 2001, Minutes ♦ Discussion of Retirement Philosophy — The Committee uses this item to review how the Plan works and changes that should be considered. ♦ Plan Restatement Process and Schedule — The Plan is updated every few years to incorporate Plan amendments and comply with federal regulations. ♦ Actuary Performance — The contract with the Actuary calls for an annual review. ♦ Discussion of Possible Change in Calculating Retirement Benefit — Payments to Retirees should be equitable for full- and part-time members ♦ June, 2001 Investment Update — A monthly review of the Plan investments ♦ Other Business ADJOURNMENT: Susan adjourned the meeting at 2:48 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 location is the Council Information Center, City Hall. However, because of the July 4 Holiday. The July meeting will be Thursday, July 12, 2001, at 1:15 PM. The Committee has scheduled meetings for 2001 as shown below: 2001 CALENDAR THURSDAY, JULY 12, 2001 THURSDAY, AUGUST 2, 2001 THURSDAY, SEPTEMBER 6, 2001 THURSDAY, OCTOBER 4, 2001 THURSDAY, NOVEMBER 1, 2001 THURSDAY, DECEMBER 6, 2001