HomeMy WebLinkAboutRetirement Committee - Minutes - 06/16/1998City of Fort Collins
Retirement Plan 40
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMIMTITEE
JUNE 16, 1998 INTERIM MEETING MINUTES
COUNCIL LIAISON: Mayor Ann Azari
COMMITTEE MEMBERS PRESENT:
Jim Hume, 221-6776
Dave Agee, 221-6681
Alan Krcmarik, 221-6788
Kevin Westhuis, 224-6156
Patti Teraoka, 221-6715
OTHERS PRESENT:
Laurie Harvey (Staff Support - Human Resources)
Greg Tempel (Staff Support - Legal)
Bob Eichem (Staff Support - Investments)
Sue Wilcox (Staff Support - Secretary)
Beth Molenaar, Plan Member from Water Resources
Tim Sagen, Plan Member from Light and Power
CALL TO ORDER: Chairperson Kevin Westhuis called the meeting to order at 1:35 p.m. in the
Training Room at Light and Power, 700 Wood Street.
APPROVAL OF MINUTES: Because this is an interim meeting, no minutes were presented for
approval.
ADDITIONS TO AGENDA: Several items were added under Other Business.
DISCUSSION TOPICS:
1. GER PLAN MEMBER(S) COMMENTS/CITIZEN PARTICIPATION: Kevin informed
the members that Dennis Sumner, former GERC Chairperson commended the Committee for the
work they are doing in bringing the DC/DB choice to the members and in making the lump -sum
option available. Plan member Tim Sagen strongly urged the members to use caution in any
actions that involved putting the current 401(a) MPP or the 457 Plan (both of which are currently
handled through ICMA Retirement Corporation) out for bid. He felt that this is "employee's
money", the current plans provide a large number of investment options, and that the ICMA
Corporation is doing a good job and should be maintained. He also felt that if the management of
these plans should be put to a bid at some time, present members should at least have the option
of staying with the current plan provider. This seemed like a good opportunity to move to the
agenda item dealing with the bid question.
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
GERC Minutes - June 16, 1998
2. POSSIBLE BID PROCESS TO DETERMINE THE MPP PROVIDER
MAIN POINTS Alan Krcmarik, Laurie Harvey, Kevin Westhuis, and Greg Tempel met with
Tim O'Neill, Director of Purchasing to discuss this topic before a decision is made on creating a
new money purchase plan (MPP). Alan outlined the following facts: A) the ICMA Retirement
Corporation has never competed through a selection process for the administration of either the
MPP or the deferred compensation plan. B) the City has a fiduciary responsibility for the funds
in these plans, and C) both the State and City codes require bidding of these types of services. In
addition he noted that just going through the bidding process does not guarantee that a new
provider will be chosen, but it may mean that the same provider will make a combination of
additional enhancements available and/or reduce costs for existing provisions.
Laurie Harvey also noted that there are employees who strongly desire a more competitive entity,
more services, and lower costs. The value of the client assets from City MPP, the Police Plan, the
management plans, and deferred compensation plans is over $100 million, which is a sizable
bargaining chip. It was pointed out that the GERC does not have the authority to make this
decision. City staff is currently working to determine the feasibility of setting up a pension board
for the Police officers' plan, which could make this type of decision for the Police plan. Such a
pension board could also be a prototype for a replacement money purchase plan. Any decision
regarding a competitive process for a plan provider will require additional GERC and staff work.
Member input will be sought.
CONCLUSIONS/NEXT STEPS Research and legal advice will be necessary before a decision
can be made on this topic. The GERC will not pursue this any further at this time.
3. MEMBER REQUEST FOR CHANGE IN ROLLOVER CALCULATION
MAIN POINTS: Beth Molenaar of the Water Resources Department asked that her rollover
amount be recalculated using her actual income, rather than her pay rate on January 31, 1998.
She explained that up until December 31, 1997 she was a full-time City employee, but that
effective January 1, 1998, she had elected to reduce her position to 80% of full-time. Because the
calculations were based on salaries in effect on January 31, 1999, this meant that her rollover
amount was based on 80% of her actual salary. When this is compounded using the 4.5% salary
increase and 7.5% interest earnings, the total is at least $1000 less than it would be based on her
actual earnings. Had she known that these events would occur, she would have delayed her
decision to reduce her hours.
The Committee members explained how the calculations were done, and that the January 31,
1998, date was chosen to meet the implementation schedule with no intent to either enhance or
degrade anyone's rollover amount. However, some employee rollover amounts may be enhanced
or harmed by the decision. There was discussion of other employees who were in some way
affected by the decision, for example, through acting pay, timing of pay increases, etc. Bob
Eichem expressed concern that making some exceptions might cast a hardship on the those
remaining in the GER Plan. Concern was expressed that making an exception would set a
precedent for others seeking a change. It was also pointed out that the Committee might benefit
from some legal advice.
GERC Minutes - June 16, 1998 •
CONCLUSION/NEXT STEPS: Kevin Westhuis moved that an executive session be called in
order to receive legal advice, since a quorum was present. Jim Hume seconded the motion, which
was approved unanimously. At the end of the executive session Dave Agee moved that the
Committee return to open session. Jim Hume seconded the motion, which passed unanimously.
The Committee was not inclined to make an exception at this time, but did ask Laurie and Russ
Proctor of Watson Wyatt (actuarial firm) to prepare a list of employees who moved from full-time
to part-time positions in 1998. Also included should be any employees whose pay raise was
effective in January, 1998, but which was not reflected on the payroll tape of January 31, 1998.
This issue will be reviewed further at the regular July 9th meeting.
4. CONSIDER DELAYING JULY 31 SELECTION DEADLINE
MAIN POINTS: At its June 4' meeting, the GERC considered delaying the current July 31,
1998 deadline for making the DB/DC selection. This was discussed because some Plan members
were concerned that potential changes due to the Compensation and Classification Study, which
are expected in August, could affect their future income and thus their conversion from the GERP
to the replacement money purchase plan decisions. At that time the GERC chose to stay with the
July 31 date.
It is expected that the City Council will consider the pay and classification changes on first reading
at their August 4`" meeting. There was discussion of the expected course of events leading up to
Council consideration and these points made on June 4'" were reiterated: 1) no connection exists
between the timing of the conversion option selection and finalizing the Compensation and
Classification Study; 2) there is no guarantee of future raises for anyone (relating to fears about
frozen salaries); and 3) if salaries are frozen, no one knows how long the freeze will last, as that
depends on the job market. The major concern with delaying the selection deadline is
compressing the time available to make the necessary administrative changes before January 1,
1999. Other considerations include delaying implementation to March, 1999 and the
implementation schedule for the payroll portion of the new financial system.
CONCLUSION/NEXT STEPS: After discussion, Kevin moved and Patti Teraoka seconded
his motion to change the conversion selection deadline from July 31" to Friday, August 14, 1998
at 5:00 p.m., with all ballots being received in the Human Resources Office by that time. The
motion carried on a vote of 4-1, with Tim Hume dissenting.
5. PRESENT VALUE OF THE ACTUARY'S GERP VALUATION
MAIN POINTS: Kevin had requested information from the actuary (Watson Wyatt) on how to
calculate the present value of the GERP lump sum at a future date in the following situation: a
member opted to stay in the GERP, worked four more years, and then separated from the GER
Plan. It was noted that the personal statements did include calculations at 5 year increments from
the present.
CONCLUSION/NEXT STEPS: Mark Sanford of Watson Wyatt was able to supply a formula
to complete this calculation for an employee at any age. Within 60 days, Laurie will also receive a
revised software program that will allow her to give preliminary calculations of lump -sum
amounts.
GERC Minutes -June 16, i.d8
6. GENERAL PLAN CONVERSION OPTION DISCUSSIONS
MAIN POINTS: There was discussion of the remaining presentations:
Thursday, June 18'h at 7 am and 10 am at Lincoln Center Mini -Theater
Tuesday, June 23'a at 9 am and 10:30 am at City Council Chambers
and two additional presentations which are open to anyone:
Thursday, June 25`s at 10:30 am and 1:30 p.m. Transfort, 6570 Portner Road
Laurie and Sue received a request from the Library Director for a special presentation for her
personnel who are unable to attend one of the regular sessions. Since additional presentations are
$750 each, the members suggested that library staff be provided with the schedule of remaining
presentations, along with an offer to show the videotaped presentation and have a GERC member
or staff person to answer questions at a time convenient for them. Sue will contact Ms Cares.
Bob explained the process of liquidating GERP investments before they are moved to the
replacement MPP accounts. If a new MPP Plan is required, there may be a lockout period of 30-
35 days when these assets would be in a fixed income investment and not accessible by individuals
for designation to specific types of investments. If it is determined that the GERP funds can be
rolled over to the existing ICMA Retirement Corporaton MPP, then this holding period may not
be necessary.
Alan received a reply from ICMA Retirement Corporation which stated that they believe it is
possible to have one money purchase plan (MPP) with different contribution rates and having
contributions from two distinct sources. However, they advised the GERC to have this confirmed
by its own outside legal counsel. The City Attorney's Office is in the process of securing
confirmation from a pension attorney specialist.
Russ Proctor and Mark Sanford will provide a copy of the rollover projection software to Laurie,
Kevin and Bob. When it is received, Tim Hume will send this information to plan members via
email.
The GERC discussed the situation of employees who do not participate in the 3% City matching
program who, therefore, do not have a 401 MPP account.
Laurie presented a list prepared by Watson Wyatt showing that there may be more than 100 Plan
members whose present value of their accrued benefit is larger than (or almost as large as) the
theoretical account transfer balance. It appears that these are mostly longer -term employees who
are 40 years old or older. Kevin will ask Russ if it's possible to show dollar amounts for these
individuals and to ask Russ how this occurred. This may be a topic for future discussion.
CONCLUSION/NEXT STEPS: As defined above.
7. DEFERRED VESTED PLAN MEMBERS AND UNCLASSIFIED MANAGERS
MAIN POINTS: Laurie explained that there is a small group of unclassified managers who have
a deferred vested benefit. Because they have a deferred vested benefit, they are eligible for the
lump -sum provision of the Plan. Although they are still City employees, they currently participate
GERC Minutes - JuneR, 1998
is
in a different retirement plan. While they are welcome to attend any of the conversion option
information meetings, they are not eligible to vote or roll over their GERP benefit.
CONCLUSION/NEXT STEPS: Russ will be asked to do the lump -sum calculations for these
individuals and they will receive the same information and choices as the other deferred vested
employees and former employees. Laurie will send them an email message providing some
information and letting them know that a detailed letter will be forthcoming. Kevin provided a
draft of the letter and Laurie and Greg provided some editing. Kevin and Sue will work on
sending out the letter by July IUh. Laurie Harvey will be in touch with Joyce Clifton to work out
the details of her lump sum/transfer request.
AGENDA & SCHEDULE FOR NEXT MEETING
The next meeting will be Thursday, July 9th at 1:15 pm in the Council Information Center
(CIC) of City Hall West. The agenda will include:
I. Plan Member Comments/Citizen Participation
2. Update of DC/DB Program activities - Followup with those who didn't attend.
3. Eligibility for Benefits of Disabled Vested members/Bruce Michael's Application
4. QDROs procedure and forms finalized
5. W W W contract discussion
6. Use of year-end pay rates on PRPS
7. Varying future GERC meeting sites
8. Beth Molenaar's request for recalculation
9. Regular Investment Review
10. Other Business
ADJOURNMENT
The meeting was adjourned at 4:04 p.m.
GERC/GERP WEB PAGE ADDRESS:
www. ci.fort-collins.co.us/CITY_HALL/BOARDS_COMMISSIONS/RETUtEMENT, mdex.htm
GERC M'mutes - June 16, i;.48
FUTURE MEETING SCHEDULE:
The General Employees Retirement Committee normally meets at 1:15 p.m. on the I st Thursday
of each month in the Council Information Center, City Hall West.
THURSDAY, JULY 9, 1998"
THURSDAY, AUGUST 6 1998
THURSDAY, SEPTEMBER 3, 1998
THURSDAY, OCTOBER 1, 1998
THURSDAY, NOVEMBER 5, 1998
THURSDAY, DECEMBER 3, 1998