HomeMy WebLinkAboutRetirement Committee - Minutes - 11/05/1998Retirement Plan
City of Fort Collins
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
NOVEMBER 5,1998, MEETING MINUTES
Approved December 3, 1998, 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:
Russ Proctor, Watson Wyatt Worldwide, the City's actuarial firm
Jerry Huggins, Fidelity Investments
Deb Weedman, (Staff Support — Human Resources)
Greg Tempel, (Staff Support — Legal)
Julie Depperman, (Staff Support — Investments)
Sue Wilcox, (Staff Support — Clerical)
CALL TO ORDER: Chairperson Kevin Westhuis called the meeting to order at 1:22 p.m.
ITEMS OF NOTE: (1) Alan Krcmarik introduced Jerry Huggins, formerly with ICMA RC and
now with Fidelity Investments, who is interested in the progress of the DB/DC conversion
process.
(2) Debbie Weedman will be consulting with Russ Proctor of Watson Wyatt as part of her
training to assume Laurie Harvey's responsibilities. She asked if the GERP could share the cost
of this training with Human Resources. Alan replied that he remembered a memo from then
assistant City Attorney Mary Crumbaker, which was fairly restrictive of the administrative costs
that could come from the Plan. Russ will submit an estimate of the cost of this training time.
Finance Administration staff will look for a copy of the memo for Greg to review, as he did not
recall such a memo in the files he has reviewed.
It was noted that because of the increased value of the GERP fund, the impact of such
administrative costs would be much smaller now than 8 or 9 years ago when the memo was
written. It was agreed to reconsider this issue at the December meeting.
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
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(3) Russ also noted that he will be working from home on Mondays and Tuesdays, but will be
checking his e-mail regularly. He will be in the office the other days unless he is traveling.
Mark Sanford will still be in the office as usual.
APPROVAL OF MINUTES: Alan distributed copies of the minutes for September 3 and
September 17, 1998. Susan Lehman moved the approval of the September 3, 1998, minutes as
distributed. Jim Hume seconded the motion, which passed unanimously. Kevin Westhuis
moved the approval of the September 17, 1998, minutes as amended and Susan Lehman
seconded the motion, which passed unanimously.
ADDITIONS TO AGENDA: No changes.
DISCUSSION TOPICS:
1. GERC PLAN MEMBER(S) COMMENTS/CITIZEN PARTICIPATION:
(A) Two former employees who terminated due to disability have received preliminary benefit
calculations for a disability lump -sum distribution. Their wages and years of service were
similar, but there was about a 40% difference in their lump -sum distribution amounts and they
asked why this was so. Russ explained that the difference in their ages of five years resulted in
this value difference. He suggested that with the new calculation program Debbie will have, she
can create projections using such variables as age to show these differences. If the member
wants a more technical explanation, they can be referred to Russ. It was suggested that if
members really need financial or tax advice they might contact the financial advisor who is
available to employees during open enrollment.
(B) A current retiree asked if retirees who are currently receiving monthly benefits could be
eligible for a single -sum benefit. The Plan doesn't currently allow this and to make this change
to the Plan would increase the cost of the Plan. Currently, the prospective retiree chooses the
desired benefit 30 days before they expect to receive the first payment. After the first payment,
the Plan does not provide for a change in benefit.
2. 1999 WORK PLAN
MAIN POINTS: The following topics were suggested for the 1999 Work Plan:
A. QDROs
B. Plan enhancements
C. DB/DC Conversion for employees hired in 1998
D. Calculation of benefits for employees switching from full-time to part-time (or reverse)
E. Review/revision of GERP Philosophy
F. Education of Plan members
G. COLA for retirees
H. Review of policies
I. Review of actuarial assumptions
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J. Personal Retirement Planning Statements — April 1
K. Evaluate actuarial consultants
L. Review standing rules
CONCLUSION/NEXT STEPS: Jim moved that Kevin prepare a Work Plan and send it
electronically to GERC and staff members for consideration at the December meeting and Sue
will send a copy of the preliminary Work Plan to the Clerk's Office before the deadline. The
GERC will consider approving the Work Plan at the December meeting. Alan Krcmarik
seconded the motion, which passed unanimously.
3. DB/DC CONVERSION DISCUSSION & TRANSITION ISSUES
MAIN POINTS:
A. ICMA RC personnel received from Watson Wyatt the Excel test file of those wishing to
convert to the ICMA RC 401(a) plan. There were a few problems, but changes were made and
the difficulties worked out.
CONCLUSION/NEXT STEPS: On November 9th, staff will send a second test file. Russ will
check on five individuals who showed different plan numbers. Anything that is transferred to
ICMA RC as an MS Word or Excel file should be saved as a lower version first.
B. Deb Weedman has only received 42 forms (indicating how they wish to distribute the
conversion amount within ICMA) from those making the conversion. Many members may be
waiting for the information sessions that will be held in conjunction with annual benefit open
enrollment later this month.
CONCLUSION/NEXT STEPS: The Committee agreed that around the 24th of November, the
list of those who have not replied will be tallied, and if necessary, the names may be divided
among GERC members for personal phone calls.
C. Russ provided an analysis of the GERP Fund and stated that even with the recent drop in the
stock market, the transfer will not actuarially harm members remaining in the GERP. Alan
reported that there is currently $21 million in mutual funds, which will be reduced to $16 million
after the conversion.
Portions of mutual fund holdings will be selected and sold to balance losses with gains. In this
manner the GER Plan will not show a major decline in value overall. This will also allow
remaining invested funds to stay close to the asset allocations provided for in the investment
policy. ICMA RC has assured the City that should funds be transferred on behalf of a member
that chooses to leave the City before January 1st, the transferred amount will be returned to the
Plan during the second week in January.
CONCLUSION/NEXT STEPS: Between December 14th and 3lst there needs to be a special
GERC meeting for a final vote to authorize the transfer on December 31st. (See Item 7 at the end
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of these minutes.) Greg will draft a Resolution and Alan will prepare the agenda item summary
authorizing the transfer on December 31 rather than the 4`h of January.
4. DISCUSSION OF A COLA FOR RETIREES AT MAYOR'S BREAKFAST
MAIN POINTS: Kevin Westhuis has been asked to attend the Mayor's Breakfast on November
19th, along with some of the retirees, to discuss the question of a COLA (cost of living
adjustment) for current retirees. The Committee reviewed the steps it had taken in proposing this
plan enhancement before, and the difficulties encountered relating to the Total Compensation
policy.
CONCLUSION/NEXT STEPS: Kevin requested copies of correspondence and minutes of the
GERC meetings where COLAs were discussed, along with some history of the last COLA that
was given in 1991. Russ Proctor will also provide several cost scenarios and funding options for
Kevin.
5. SINGLE -SUM BENEFITS FOR DISABLED AND DEFERRED VESTED MEMBERS
MAIN POINTS: City Council approved the resolution in October to allow single -sum benefit
options for approximately 20 disabled vested members. Debbie Weedman now has the software
to enable her to calculate the benefit projections.
Of the 184 deferred vested members who received single -sum calculations prepared by Watson
Wyatt, about one-third have returned their benefit election form. Of these, 62 have received
single -sum payments or rollovers (or both) totaling $575,000. This figure includes some
members who were eligible for the under $100 single -sum benefit.
CONCLUSION/NEXT STEPS: Alan has prepared an appropriation ordinance to cover these
and anticipated payment requests through December.
6. 3an QUARTER,1998 INVESTMENT REVIEW
MAIN POINTS: Alan Krcmarik presented the 3'd Quarter Investment Report through
September, 1998, in which the GER fund showed an increase in market value of $1 million for
the year. This is despite the dramatic market decline in late summer. The next quarterly report
for the year will be available in February and at that time it may be necessary to consider
changes in the fund allocations to meet the target amounts.
CONCLUSION/NEXT STEPS: No action required at this time.
7. ADDITIONAL MEETING SCHEDULED
MAIN POINTS: Assuming that the DB/DC conversion will continue on track, it will be
necessary to hold a short meeting in mid -December to analyze the financial feasibility of the
conversion and to authorize the transaction if it is feasible.
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CONCLUSION/NEXT STEPS: Kevin moved that the Committee meet at 4:00 pm on
Thursday, December 17"' in the CIC. Alan seconded the motion, which passed unanimously.
AGENDA AND SCHEDULE FOR NEXT MEETINGS
The next meeting will be Thursday, December 3, 1998 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
2. Consider approving October 15 and November 5, 1998 minutes
3. Progress on the DB/DC Conversion
4. Consider approving 1999 Work Plan
5. Discussion of COLA with Mayor and City Manager
6. Regular investment review
ADJOURNMENT
The meeting was adjourned at 3:30 p.m.
GERC/GERP WEB PAGE ADDRESS:
www.ci.fort-collins.co.us/CITY HALL/BOARDS COMMISSIONS/RETIREMENT/index.htm
FUTURE MEETING SCHEDULE:
The General Employees Retirement Committee normally meets at 1:15 p.m. on the lst Thursday
of each month in the Council Information Center, City Hall West.
THURSDAY, DECEMBER 3, 1998
THURSDAY, JANUARY 7, 1999
THURSDAY, FEBRUARY 4, 1999
THURSDAY, MARCH 4, 1999
THURSDAY, APRIL 1, 1999 (at 700 Wood Street)
THURSDAY, MAY 6, 1999
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