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HomeMy WebLinkAboutRetirement Committee - Minutes - 11/02/2000Retirement Plan 0 City of Fort Collins FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE NOVEMBER 2, 2000, MEETING MINUTES Approved on December 7, 2000 COUNCIL LIAISON: Mayor Ray Martinez COMMITTEE MEMBERS PRESENT: Terry Van Cleave, 221-6321 Bill Switzer, 221-6713 Dottie Nazarenus, 204-4429 Susan Lehman, 221-6813 Alan Krcmarik, 221-6788 Michele Hays -Johnson, 416-2158 OTHERS PRESENT: Julie Depperman (Finance Staff) Greg Tempel (Legal Staff) Deb Weedman (Human Resources) Nancy Wagner, Milliman & Robertson (the Plan's actuary) CALL TO ORDER: Chair Susan Lehman called the meeting to order at 1:15 PM. ITEMS OF NOTE: None. PLAN MEMBER COMMENTS: Terry Van Cleave reported a few active Plan members had asked him to raise the issue of early retirement. Alan Krcmarik provided a brief overview of the last early retirement program. Terry will invite interested Plan members to future meetings if they desire to discuss this topic in more depth. Deb Weedman will inspect the Human Resources files for more background information. Bill Switzer had received a question regarding the calculation of the death benefit for a surviving spouse. Does the Plan base the benefit to the beneficiary on the member's accrued benefit value or the minimum amount calculated for the money purchase plan conversion process? The Committee had considered this very question in 1999. The Committee reviewed minutes from May 1999 that concluded that the minimum amount was available only to the Plan member and did not succeed to the beneficiary after death. The Committee continued this discussion under Other Business. APPROVAL OF MINUTES: Alan handed out the October 5, 2000, draft meeting minutes. Michele Hays -Johnson moved to approve the minutes. Bill seconded the motion. The Committee approved the minutes unanimously (6-0). Alan noted that he would send out a correction to the September minutes. The premium for continuing medical coverage should have been 130%, not the 103%, of the monthly premium for active employees. Deb clarified this benefit is only available to employees with at least ten years of service. Filename: Gminl102Final.doc 300 LaPorte Avenue • P.O. Box 380 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 • • GERC Meeting Minutes November 2, 2000 Page 2 of 4 DISCUSSION TOPICS: 1. RETIREMENT PHILOSOPHY DISCUSSION MAIN POINTS: At prior meetings, Committee members had asked for more information about how the "retirement philosophy" was determined. Alan brought information from the education process that the Committee sponsored in 1997. This process included eight focus groups of members, educational presentations by the actuary with assistance of members of the Committee and staff, and a follow-up survey of active members that attended the meetings. From this effort, the actuary, Watson Wyatt, wrote a summary of findings and recommendations. Based on the recommendations, the Committee decided to make a few minor changes to the Plan, but concluded that it would not offer a conversion option to the Plan members. CONCLUSION AND NEXT STEPS: Susan and Alan will arrange for the summary report of the focus groups to be scanned into a format that can be made available to the Committee and Plan members. 2. ACTUARIAL VALUATION METHODS MAIN POINTS: Nancy Wagner, Plan Actuary from Milliman & Robertson, reviewed a short handout on methods to value the Plan's assets. At a prior meeting, Nancy had suggested the Committee consider a different method of valuing assets. The primary reason for this recommendation was to remove some of the volatility of the asset valuation. The Plan has a large percentage of equity holdings that fluctuate in value as the stock market rises and falls. Under the current method, the value of the assets tends to lag market value when returns are good. Because of the lag, a fund manager might take unwanted action in the management of the assets. She recommended that the Committee begin to use a 5-Year Smoothing of Market method for the next valuation. Based on the information presented, there would have been virtually no difference in the valuation if the Committee used the new method for the most recent valuation report. CONCLUSION AND NEXT STEPS: Nancy will re -check the actuarial model and data used to prepare the report on valuation methods and provide an update at the next meeting. 3. PLAN CHANGE FOR PART-TIME SERVICE CREDIT AND BENEFIT CALCULATION MAIN POINTS: Greg Tempel distributed a first draft of the Plan change to implement the calculation of the Service Credit for part-time employees. After some discussion and review, the staff and Committee members decided the proposed change would need more work before it is ready for the Council to consider. CONCLUSION AND NEXT STEPS: The Actuary and staff will meet on November 20 to work out the language for the plan amendment. Alan will reserve a spot on the December 19 Council Agenda. If the draft is not complete by the Committee's next meeting, staff will delay the amendment. • • GERC Meeting Minutes November 2, 2000 Page 3 of 4 4. BENEFIT CALCULATION DATABASE AND BENEFIT ELECTION FORMS MAIN POINTS: Julie Depperman reviewed the progress staff has made on developing the benefit calculation database. According to the information flow chart that she developed, four sources of information will be part of the database. The types of information include: 1) Basic demographic information about the member, 2) Payroll information from the JD Edwards OneWorld system for the years 2000 and beyond, 3) Payroll information for 1991-1999 from the Compensation Database, and 4) Actuarial information to calculate benefits. Julie next handed out the benefit election forms that staff has recently updated. The forms include: the Benefit Calculation and Distribution Options cover letter, the Retirement Benefit Election Form Notice (this includes a Spousal Consent Form), the Election Form for Direct Rollover, and the Special Tax Notice. Alan reported that staff has used the forms for a few members and they seem to work. CONCLUSION AND NEXT STEPS: Staff will continue to work on the database information and provide an update in the future. Staff will use the Benefit Election Forms for upcoming communication with affected Plan members. 5. GERC WORK PLAN — 2001 MAIN POINTS: The Committee is required to submit a Work Plan for next year to the City Clerk's office for Council review. Susan presented a list of items for the Committee's 2001 Work Plan. The Committee made two minor wording changes. CONCLUSION AND NEXT STEPS: Alan moved to adopt the 2001 Work Plan with two minor changes. Michele seconded the motion. The Committee adopted the motion 6-0. Susan will file the 2001 Work Plan with the City Clerk. It will be available at the web -site or members may request a copy from the Committee by calling the Finance Department 221-6788. 6. THIRD-QUARTER INVESTMENT REPORT MAIN POINTS: Alan distributed the third quarter Plan Investment Report. As of September 30, 2000, the total market value of the portfolio was over $35.1 million. The annualized combined yield on the portfolio was 0.84%. The report provides detailed information about the current market volatility and the effect that the Federal Reserve has had on the overall market. Julie provided the mutual fund quarterly compliance report to the Committee. Julie reported that during the December quarter, fees on the Vanguard funds would be lower because of the size of the Plan's holdings. This change will increase the return to the Plan. Alan noted the Plan mutual fund portfolio has an overall rating of four stars from Morningstar that is indicative of a well -managed, high -return, low -risk portfolio compared to the universe of other mutual funds. CONCLUSION AND NEXT STEPS: In December, Alan and Julie will provide a monthly update. The next quarterly report will be in February. • . GERC Meeting Minutes November 2, 2000 Page 4 of 4 7. OTHER BUSINESS The Committee resumed its discussion of the calculation of the death benefit that had begun under Plan Member comments. Nancy said the Actuary could estimate the cost of allowing the higher amount to be extended to the beneficiary. This would cost the Plan about $1,000 to answer. Bill suggested that the Committee amend the Plan to remove the possible ambiguity. While the Committee has been consistent in the interpretation of the clause, a minor Plan amendment would make the Plan more clear. Bill moved, with the second from Susan, to amend the Plan to clarify that the higher minimum rollover amount be limited to the Plan member and not succeed to the beneficiary. The motion passed 6-0. Greg will draft this Plan amendment to go to Council at the next meeting. Susan distributed the copies of the standing rules the Committee had reviewed at the October meeting. 8. SCHEDULE FOR NEXT REGULAR MEETING The next regular meeting will be Thursday, December 7, 2000, at 1:15 PM in the Council Information Center (CIC) of City Hall West. The tentative agenda includes: 1. Citizen Participation and Plan Member Comments 2. Consideration of the November 2, 2000, Minutes 3. Discussion of Valuation Method 4. Consider Plan Change in Calculating Part-time Service Credit 5. Monthly Investment Update 6. Other Business ADJOURNMENT: Susan adjourned the meeting at 3:50 PM. GERC AND GERP WEB PAGE ADDRESS: http://www.ci.fort-collins.co.us/CITY HALL/BOARDS_COMMISSIONS/RETIREMENT/index.htm FUTURE MEETING SCHEDULE: The Committee normally meets at 1:15 p.m. on the first Thursday of each month in the Council Information Center, City Hall West. The next scheduled meeting will be Thursday, December 7, 2000, at 1:15 PM. The Committee has scheduled meetings for 2001 as shown below: 2001 CALENDAR THURSDAY, JANUARY 4, 2001 THURSDAY, FEBRUARY 1, 2001 THURSDAY, MARCH 1, 2001 THURSDAY, APRIL 5, 2001 THURSDAY, MAY 3, 2001 THURSDAY, JUNE 7, 2001 THURSDAY, JULY 5, 2001 THURSDAY, AUGUST 2, 2001 THURSDAY, SEPTEMBER 6, 2001 THURSDAY, OCTOBER 4, 2001 THURSDAY, NOVEMBER 1, 2001 THURSDAY, DECEMBER 6, 2001