HomeMy WebLinkAboutRetirement Committee - Minutes - 07/09/1998City of Fort Collins
Geri*l Employees Retirement Plan
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
JULY 9,1998 MEETING MINUTES
COUNCIL LIAISON: Mayor Ann Azari
COMMITTEE MEMBERS PRESENT:
Jim Hume, 221-6776
Susan Lehman, 221-6813
Alan Krcmarik, 221-6788
Kevin Westhuis, 224-6156
Patti Teraoka, 221-6715
OTHERS PRESENT:
Russ Proctor, Watson Wyatt Worldwide, the City's actuarial firm
Jerry Huggins, ICMA Representative
Laurie Harvey & Gwen Feit (Staff Support - Human Resources)
Greg Tempel (Staff Support - Legal)
Bob Eichem (Staff Support - Investments)
Sue Wilcox (Staff Support - Secretary)
Kelley Gonzales, Plan Member
Beth Molenaar, Plan member
Bruce Michael, Plan Member
Rene Lee, Plan Member
ITEMS OF NOTE: Kevin welcomed Susan Lehman of Advance Planning as the new member of the
General Employees Retirement Committee. Susan replaces Dave Agee and her term runs till June 30,
2002.
CALL TO ORDER: Chairperson Kevin Westhuis called the meeting to order at 1:25 p.m. in the
Council Information Center of City Hall West,
APPROVAL OF MINUTES: Kevin moved that the minutes of the May 21, June 4, and June 16, 1998
meetings be approved as distributed. Jim Hume seconded the motion, which passed unanimously.
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 0 (970) 221-6788 • FAX (970) 221-6782
July 9, 1998 Page 2
DISCUSSION TOPICS:
1. GER PLAN MEMBER(S) COMMENTS - CITIZEN PARTICIPATION:
Beth Molenaar and Kelley Gonzales requested the GERC recalculate their MPP Opening Balance
amounts on the Personal Comparison Profile. They reduced the number of hours in their work weeks
within six months of the January 31, 1998 date used for the calculations and they suspect this reduced
their MPP Opening Balances. The women requested that their MPP Opening Balances be recalculated
using actual pay rates for their previous service. This issue is discussed more fully in item 4 below.
2. UPDATE ON DEFINED BENEFIT PLAN TO DEFINED CONTRIBUTION ACTIVITIES:
MAIN POINTS A. Members Who Did Not Attend Sessions. GERP members who had not
attended any information session were notified by email and a letter mailed to their work (or home) that
two more sessions had been made available for them via video and with Kevin attending to answer
questions. Laurie urged the Committee to document those who had not attended a session and get them
to sign a form acknowledging that they did not attend. She has received some of the election forms, but
thought that most would arrive the last week before the August 14 deadline.
Most of the feedback showed that the members:
• thought good information was provided;
• believed that if they leave the plan, their returns will be higher; and
• thought if they stayed in the Plan and then died, their beneficiary would only receive 50% of the
benefit.
Jim Hume received some comments that were critical of ICMA Retirement Corporation, and critical of
the City for not conducting a Request for Proposal (RFP) for this service. This feedback was the
opposite of input regarding ICMA Retirement Corporation that was received at the last meeting.
B. Calculation of Lump -Sums. Russ Proctor discussed the chart and formula which Kevin
distributed at the last meeting which would allow an individual to calculate the lump sum under GERP.
It was agreed that the availability of this information should be transmitted to the members. Russ will
draft a general notice outlining the procedure for calculating the lump -sum using the figures given on the
individual information sheet. This information will be distributed to the members via a departmental
distribution, as it is more effective than distribution with paychecks, and it will also be put out as a Q &
A item and on email.
C. Transferring GERP Funds to MPP. Greg Tempel distributed copies of his confidential memo
outlining the legal opinion from Stephen Weinstein. The GERC was advised that converting from
GERP to the ICMARC-administered MPP appeared to be legally permissible providing the GERC and
the City determine that the conversion will not adversely affect the GERP's ability to meet near -future
benefit obligations and providing that those Members of the GERP choosing to convert to the MPP will
be 100% vested in their account balances at the time of transfer. Russ Proctor confirmed that it has been
assumed that both of these contingencies would be fulfilled if the decision to allow the conversion is
• • July 9, 1998 Page 3
approved. Alan provided a letter from ICMARC dated July 9, 1998, which confirmed that it was
ICMARC's position that the current ICMARC administered MPP plan could legally receive the
transferred funds. Greg will have Stephen Weinstein review the ICMARC opinion to determine whether
or not he agrees that the ICMARC administered plan can accept rollovers from the GERP pursuant to
section 4.08(b) of the MPP. If the decision is made to allow the conversion, the changes to the GERP
and the MPP will be drafted by Greg for GERC and City Council consideration.
CONCLUSIONS/NEXT STEPS. As outlined in each section above.
3. ELIGIBILITY FOR BENEFITS OF DISABLED VESTED MEMBERS (Bruce Michael's
Application)
MAIN POINTS: Bruce Michael had requested that his GERP benefits begin in October when he turned
55 years old. It was suggested that he was not eligible to do this in October because he had received a
Workers Compensation lump -sum benefit, which carried service credit through May of 1999. It was
thought that he would then be eligible for retirement at that time. However, Greg advised the
Committee that this ignored the fact that as long as Mr. Michael continues to receive Social Security
disability benefits, which he currently is, he is not eligible for retirement benefits, as he will continue
earning service credit toward retirement. At some point, perhaps age 62, he will stop receiving Social
Security disability benefits, at which time he will become eligible to receive retirement benefits under
the GERP. Greg and Russ stated that the rationale behind this rule is that a person should not make
more on disability than they would make if they were not disabled, as that could serve as a disincentive
to recovery.
Greg reminded the members that on June 5, 1997, the GERC had denied pension benefits to another
person under similar circumstances, but had committed itself at that time to reconsider this provision of
the Plan at an unspecified future time. Laurie Harvey pointed out that if the Plan were changed, it would
not affect the actuarial value of the benefit, because the individual only accrues service credit, and no
additional Plan contributions are made for that individual. Contributions made for current employees
would pay for any additional cost to the Plan. She suggested that the Plan could be changed to allow a
disabled member to forego service credit accrual in favor of receiving a current benefit without
adversely impacting the Plan. Russ confirmed that such a plan amendment to allow for a disabled
person to stop receiving service credit and commence a retirement benefit would actually be less cost to
the GERP.
CONCLUSION/NEXT STEPS: It was suggested that this be considered on next month's agenda,
but because of other pressing items, suggested changes may be drafted for the September meeting.
Bruce Michael is to call Kevin to confirm that this is on the September agenda.
4. REQUESTS FOR RECALCULATION OF MPP OPENING BALANCE ON PERSONAL
COMPARISON PROFILE
MAIN POINTS: Beth Molenaar had addressed the Committee previously, explaining that she had
requested a reduction in work hours from full time to 80% just prior to the date chosen for the
July 9, 1998 Page 4
calculation of the MPP Opening Balance amount on the Personal Comparison profile. Since her lump -
sum was calculated based on the 80% salary, it didn't accurately reflect the amount contributed to the
GERP on her behalf. She had asked that the lump -sum amount be recalculated using actual pay rates.
Kelley Gonzales explained that she had encountered a similar situation, as she had reduced her work
week from 40 hours to 32 per week, with a similar reduction in pay in August, 1997, prior to the January
31, 1998 date used for the lump -sum calculations. Consequently, she feels the amount offered her may
be significantly less than one calculated using actual pay rates.
It was pointed out that both the MPP Opening Balance and the lump -sum amount were calculated for all
members and the larger of the two amounts was used on the individual sheets. The women were advised
that even if their request was granted, the results might be less than the amount given on the DB/DC
individual information sheet.
There was a great deal of discussion over two options:
1) Maintain present position and use current calculations or
2) Recalculate all of those who may have been affected by a change in position (reduced
hours, movement to a lower -paying position, etc.) and the consequences of each.
Greg advised the Committee that they could make such an "exception," providing they were
consistent in their criteria and the changes were supported by the Plan. Members expressed
concern about being as fair as possible, setting a precedent, and creating difficulties if exceptions
are made. Russ said that he felt it would be legally supportable using 5 years of data, which he
felt W W W had on tape, and he understood the rationale for such a change.
CONCLUSIONINEXT STEPS: The Committee agreed to try to determine the number of
employees affected by position or work hour changes in 1997 and 1998 and to calculate what
changes this would make in their MPP Opening Balance figures and in the Plan. Then the
GERC Chairperson and Vice Chairperson would meet with Russ and work out the details.
5. MEETING CONTINUED
MAIN POINTS: There were still a number of items on the agenda and it was proposed that
the Committee meet again later in the month. Alan moved and Jim seconded this motion to hold
an interim meeting on Tuesday, July 21 at 2:30 p.m. in the Hallway Conference Room
(downstairs in City Hall West). The motion passed unanimously.
AGENDA & SCHEDULE FOR NEXT MEETING
There will be an interim meeting on Tuesday, July 21 at 2:30 p.m. in the Hallway Conference Room
(downstairs in City Hall West). The next regular meeting will be Thursday, August 6 at 1:15 pm in
the Council Information Center (CIC) of City Hall West. The agenda will include:
1. Update on DB/DC Issues
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2. Discussion of Recalculation Requests
3. Eligibility for Benefits of Disabled Vested Members
4. Quarterly & Regular Investment Review
5. Other Business
ADJOURNMENT
The meeting was adjourned at 3:55 p.m.
WEB PAGE ADDRESS:
www.ci.fort-collins.co.us/CITY_HALLIBOARDS_COMMISSIONS/RETIREMENTlindex.htm
FUTURE MEETING SCHEDULE:
The General Employees Retirement Committee normally meets at 1:15 p.m. on the 1 st Thursday of each
month in the Council Information Center, City Hall West.
THURSDAY, AUGUST 6, 1998
THURSDAY, SEPTEMBER 3, 1998
THURSDAY, OCTOBER 1, 1998
THURSDAY, NOVEMBER 5, 1998
THURSDAY, DECEMBER 3, 1998