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HomeMy WebLinkAboutRetirement Committee - Minutes - 12/03/1998Genei*mployees Retirement Plan • City of Fort Collins FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE DECEMBER 3,1998, MEETING MINUTES Minutes Approved on February 2, 1999, As Amended COUNCIL LIAISON: Mayor Ann Azari COMMITTEE MEMBERS PRESENT: ABSENT: Jim Hume, 221-6776 Susan Lehman, 221-6813 Alan Krcmarik, 221-6788 Patti Teraoka, 221-6715 Kevin Westhuis, 221-6156 OTHERS PRESENT: Ken Jamison, Watson Wyatt Worldwide, the City's actuarial firm Gwen Feit, (Staff Support — Human Resources) Greg Tempel, (Staff Support — Legal) Julie Depperman, (Staff Support — Investments) Sue Wilcox, (Staff Support — Clerical) Fred Garth, GERP Retiree CALL TO ORDER: Chairperson Kevin Westhuis called the meeting to order at 1:23 p.m. ITEMS OF NOTE: Ken Jamison was present representing Watson Wyatt Worldwide, the Plan's actuary. Russ Proctor was unable to attend the meeting. Gwen Feit attended for Human Resources; Deb Weedman was in training this week. Fred Garth, former City Light and Power employee, was introduced. APPROVAL OF MINUTES: Alan distributed copies of the minutes for October 15, 1998. Greg Tempel requested that in Item #2 the first sentence of the 3rd paragraph be stricken. Kevin Westhuis moved that the minutes be approved as corrected. Jim Hume seconded the motion, which passed unanimously. Alan distributed the minutes of the November 5, 1998 meeting. In Item 3, section C, the second sentence in CONCLUSION/NEXT STEPS should say "See Item 7..." On Page 4, Item 5, the first sentence of the 2nd paragraph should be reworded to make it clear what was returned. Kevin moved that the November 51h minutes be approved as revised and Jim Hume seconded his motion. The motion passed unanimously. Filename: GMIN1203.doc 300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 General Employees Retirement Committee December 3, 1998, Minutes Page 2 of 6 ADDITIONS TO AGENDA/ITEMS FOR NEXT AGENDA: No changes. DISCUSSION TOPICS: 1. GERC PLAN MEMBER(S) COMMENTS/CITIZEN PARTICIPATION: There were no Plan member or citizen comments. 2. DISCUSSION OF COST OF LIVING ADJUSTMENTS WITH MAYOR & RETIREES MAIN POINTS: On November 18, Kevin Westhuis met with Mayor Azari and a group of retirees who are receiving monthly benefits from the General Employees Retirement Plan. The retirees have requested a Cost of Living Adjustment (COLA), noting that the last one was given in 1991. (Note: the year of the last COLA was 1990.) They desired to know how to proceed with the request. Kevin provided the attendees with copies of the minutes from previous GERC meetings when the Committee discussed this topic and GERC correspondence recommending a COLA to the City Manager as part of the budget process. The difficulty in responding to the request has been identifying an appropriate funding source for a COLA. The 1990 increase was funded from the GER Plan at a time prior to the use of the Total Compensation method to calculate employee salaries. The Plan had a small surplus in the amount being contributed to the GER Plan for all employees. Since that time, the Council implemented the Total Compensation Method to determine employees' wages and benefits. This Method means that any benefit increase for retirees would now come from current employee compensation. CONCLUSION/NEXT STEPS: Kevin assured Mayor Azari and the retirees that the Committee would keep the item on the Work Plan for 1999. He encouraged retirees to come to the GERC meetings so they know what is going on and have greater access to the minutes of the meetings. Fred Garth will be attending meetings to act as an unofficial representative for the retirees from Light and Power and the GERP. 3. GENERAL EMPLOYEES RETIREMENT COMMITTEE MEMBERSHIP MAIN POINTS: During the meeting, the Committee discussed whether the retirees could act as advisors to the GER Committee. The question was raised whether a retiree could be appointed to the GERC. Greg Tempel provided copies of Article XI of the Plan document which explains GER Committee member eligibility provisions. According to the Plan document only one of the four appointed members can be a non -Plan member. He said that under the present Plan provisions, a retiree could serve on the Committee as a tax -paying elector of the City. General Aoyees Retirement Committee December 3, 1998, Minutes Page 3 of 6 The Council could amend the Plan by resolution and a change in City Code to include provisions for one or more retirees to serve on the Committee. Greg noted that if the planned conversion from the Plan by 369 employees takes place, the Plan would become a "closed" plan allowing no new members. The proportion of retirees to active members would be much higher. Providing the retirees a more active role on the Committee may be something for the Committee and Council to consider. The Committee will also consider Committee membership eligibility in the event the conversion goes forward. Both Kevin Westhuis and Patti Teraoka have completed the requirements for converting their GERP benefits to the 401(a) Money Purchase Plan, assuming it proceeds as planned. Thus, two of the four appointed Committee members would then be non -Plan members. Patti confirmed her intention to resign as a GERC member, assuming the successful conversion of GERC members to the Money Purchase Plan. In the past, the Committee discussed the possibility the GERC having a role as an oversight committee for the GER Plan, the 401(a) Money Purchase Plan, and the 457 Deferred Compensation Plan. This may be an item for further discussion in 1999. CONCLUSION/NEXT STEPS: Kevin will inform Karla Smith in the City Clerk's Office of Patti's intention to resign, so that she can begin planning the recruitment of candidates for the Committee position. Greg requested that Restatement of the GER Plan Document be added to the 1999 Work Plan for the Committee. The amendments to the Plan have made it cumbersome to use and they need to be incorporated into the document itself. Any anticipated changes to the Plan document should be made before restatement occurs. 4. DB/DC CHOICE PROCESS MAIN POINTS: The GERP members who voted to convert to the 401(a) MPP were asked to complete a form for ICMA to indicate the allocation of the transfer funds. Recent reminders to those converting has greatly increased the number of allocation forms returned. Gwen Feit provided a list of those who haven't responded and various Committee and staff members agreed to contact them. Gwen explained that a few of the unclassified managers who stayed in the GER Plan now want to convert to the 401(a) money purchase plan. Gwen explained the complicating factors created by differing contribution rates and where the current 4.5% GERP contribution would go. General Employe. s Retirement Committee December 3, 1998, Minutes Page 4 of 6 UNCLASSIFIED MANAGERS (who are not in GER Plan) City Contribution Employee Contribution 457 Plan 4.5% Voluntary Only 401(a) 3% 6% UNCLASSIFIED MANAGERS (who are also in GER Plan) City Contribution Employee Contribution GERP 4.5% -0- 457 Plan -0- Voluntary Only 401(a) 3% 6% Possible options include hiring a pension attorney to look at this issue, or in 1999 for the GER Committee to consider suggesting that the 401(a) money purchase plan be amended. City Council approved on first reading the resolution to move the conversion date to December 31, 1998 (from January 1) and a supplemental appropriation of $500,000 for the single sum conversions through December 31, 1998. The monthly analyses of the feasibility of the conversion which Russ Proctor has been providing (and Ken Jamison provided at this meeting), have shown that the conversion can take place with no harm to those members remaining in the Plan. If all conditions remain static, 369 employees will convert to the ICMA 401(a) Money Purchase Plan on December 31, 1998, transferring approximately $9,045,000. CONCLUSION/NEXT STEPS: A preliminary list of the names, Social Security numbers, and expected transfer balances for individual accounts will be sent to ICMA on December 15`h to be reconciled with their records. The General Employees Retirement Committee will meet on Thursday, December 17`h to determine that it is still feasible to transfer the funds without harming those members remaining in the Plan, and authorizing staff to proceed with the conversion. Ken Jamison will also verify with Russ that he will run a final analysis on December 15`h for the meeting on the 17`h, and provide the Committee with a letter from Watson Wyatt confirming the feasibility of the conversion. There will be a meeting with Theresa Myers, ICMA representative, to discuss the issues related to the unclassified managers who stayed in the GER Plan, and who now want to roll their funds to the 401(a) MPP. General Oloyees Retirement Committee December 3, 1998, Minutes Page 5 of 6 5. 1999 WORK PLAN MAIN POINTS: Kevin had distributed a draft of the 1999 GERC Work Plan via email. Greg Tempel suggested adding the restatement of the GER Plan Document, so that recent amendments could be added in the appropriate sections and deleted wording could be eliminated. CONCLUSION/NEXT STEPS: Alan Krcmarik moved that Restatement of the GER Plan Document be included in the proposed Work Plan and that the 1999 Work Plan as amended, be approved. Susan Lehman seconded the motion, which passed unanimously. Sue will see that the final version is sent to the City Clerk's office. Kevin will prepare a draft Annual Report for the meeting on the 171h, although the final figures on the transfer will be added in January. 6. REGULAR INVESTMENT REVIEW MAIN POINTS: Alan reported that some of the mutual funds were sold in order to have the cash available for transfer to ICMA for the Defined Contribution Plan. The returns realized in November were very positive, especially compared with the drop in the stock market included in last month's report. CONCLUSION/NEXT STEPS: No action is necessary at this time. 7. 1998 VALUATION REPORT MAIN POINTS: The actuary has not yet provided the final 1998 Valuation Report to the GERC. CONCLUSION/NEXT STEPS: Ken Jamison will check with Russ Proctor about presenting it at the December 17`h meeting. SPECIAL MEETING: A special meeting will be held Thursday, December 17, 1998 at 4 p.m. in the Council Information Center (CIC) of City Hall West. The agenda will include: 1. Consideration of a resolution allowing the conversion from the GER Plan to the Defined Contribution Plan. 2. Review of the 1998 annual report SCHEDULE FOR NEXT REGULAR MEETING: The next regular meeting will be Thursday, January 7, 1999 at 1:15 p.m. in the Council Information Center (CIC) of City Hall West. The agenda will include: 1. Citizen Participation / Plan Member Comments General Employ -us Retirement Committee December 3, 1998, Minutes Page 6 of 6 2. Consider approving the December 3 and December 17, 1998 minutes 3. Results of DB/DC Conversion 4. Committee Membership Issues 5. Prioritize Work Plan Items 6. Regular Investment Review 7. Other Business ADJOURNMENT The meeting was adjourned at 2:40 p.m. GERC/GERP WEB PAGE ADDRESS: www.ci.fart-collins.co.us/CITY HALLBOARDS COMMISSIONS/RETIREMENT/index.htm FUTURE MEETING SCHEDULE: The General Employees Retirement Committee normally meets at 1:15 p.m. on the I" Thursday of each month in the Council Information Center, City Hall West. THURSDAY, JANUARY 7, 1999 THURSDAY, FEBRUARY 4, 1999 THURSDAY, MARCH 4, 1999 THURSDAY, APRIL 1, 1999 THURSDAY, MAY 6, 1999 THURSDAY, JUNE 3, 1999