HomeMy WebLinkAboutRetirement Committee - Minutes - 05/07/1998City of Fort Collins
gees Retirement Plan 0 CQ9
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
MAY 7, 1998 MEETING MINUTES
COUNCIL LIAISON: Mayor Ann Azari
COMMITTEE MEMBERS PRESENT:
Tun Hume, 221-6776
Dave Agee, 221-6681
Alan Krcmarik, 221-6788
Kevin Westhuis, 224-6156
Patti Teraoka, 221-6715
OTHERS PRESENT:
Russ Proctor, Watson Wyatt Worldwide, the City's actuarial firm
Laurie Harvey (Staff Support - Human Resources)
Greg Tempel (Staff Support - Legal)
Bob Eichem (Staff Support - Investments)
Judi Pino (Staff Support - Visiting Secretary)
CALL TO ORDER: Chairperson Kevin Westhuis called the meeting to order at
1:20 p.m. in the Council Information Center of City Hall West
APPROVAL OF MINUTES: Kevin indicated the first item of business was
approval of the minutes of the April 2nd meeting. He noted they were sent out in
draft form by Sue Wilcox. Alan Krcmarik distributed final copies of the minutes.
Dave Agee asked if the other committee members had noticed that the Clerk's
office had changed the code. He explained that he understood the minutes do not
have to be filed with the Clerk's office until they have been approved by the
committee. Greg Tempel stated it was just the first reading of an ordinance so it
hadn't passed. Greg checked for the changes to the minutes he had requested
and determined they had been made. Alan moved for approval of the minutes as
distributed and Patti Teraoka seconded the motion which passed 5-0.
ADDITIONS TO AGENDA: Alan said he would be distributing the quarterly
investment report later and that he would need to leave about 3:45 but Bob
Eichem would be present to review the report.
DISCUSSION TOPICS:
1. GER PLAN MEMBER(S) COMMENTS/CITIZEN PARTICIPATION:
There were no plan members present for comment. Kevin has had feedback from
several individuals that they appreciate the minutes being sent out prior to the final
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
GERC Minutes - May 7, 195
copy. It gives them the opportunity to get a feel for the content of the meeting and
to stay more current with the actions of the Board. It was agreed that Sue should
continue to send the minutes in this fashion: she will complete the draft within a
week of the GERC meeting date; Alan Krcmarik will review the draft within the
following week; and Sue will distribute the revised minutes to GERC members and
support staff before making them available to all Plan members.
REPORT ON MEETING WITH CITY MANAGER & MAYOR ANN
AZARI:
MAIN POINTS Alan and Kevin met with the City Manager and the Mayor on
April 15th regarding the planned educational presentations for Plan participants,
and the COLA for retired members of the Plan. Council member Chuck Wanner
was also present for part of the discussion. To prepare for the meeting, Dave had
prepared a memo for the Committee to the City Manager outlining the
Committee's position and asking that he discuss this issue with the GERC. The
first item discussed was the conversion from Defined Benefit to Defined
Contribution choice and the Mayor was very pleased to hear it was being
addressed. The City Manager supported the idea of the education program and
asking plan members to choose.
They then moved on to the cost of living adjustment for retirees. The Mayor feels
this is a hot issue and wants an answer on how the Board plans to proceed. The
City Manager expressed concern about the option of using General Fund money to
pay for the inflationary adjustment. He asked if using General Fund money would
be legal. Kevin and Alan were assigned the task of reviewing the responses with
the Committee.
The first issue is legality. Greg Tempel said the expenditure from General Fund
would have to have a public purpose to be legal . Kevin stated that previous
COLAs that were funded out of GERP were done before pension contributions
were a part of total compensation. Alan indicated the last COLA was from
pension assets.
Greg Tempel said up until the employee retires, they are still an employee of the
City and the pension plan is really a contract of employment. Once an employee
leaves the employment of the City, they have no contractual right to any more
money. So to give them more, you must be able to justify that by finding a public
purpose for the cost of living increase. Dave pointed out that even though they are
retired, they are still Plan members. Dave requested legal advice on this subject.
Greg said he would need time to research this and get back to the Committee.
Dave said even though the City Manager said a COLA wouldn't come from
operating revenues, the City Council could opt for it. Alan reminded the
Committee that Council member Chuck Wanner was the one who questioned the
GERC Minutes - May $ 1998 •
legality of a COLA from the General Fund. The Committee needs to firm up its
position, whether its legal, and prepare a financial plan. Greg said that he would
attempt to provide the GERC with legal advice concerning this topic however, a
conflict of interest could arise if GERC took a position which was contrary to a
position which City management decided to take. Dave pointed out that the
position of the Committee was not necessarily in favor of the COLA, but more as
trustees trying to get the facts and present the information to the right parties to
make a decision.
CONCLUSIONS/NEXT STEPS Alan is to look into different ways of funding a
COLA. He stated that some retirees have been meeting on an informal but semi -
regular basis. They would like to discuss prospects of a cost of living raise. Tim
Hume touched on the impact such a group will have, especially as the number of
retirees continues to grow.
Dave asked what the committee's options would be for legal counsel in this matter.
Greg will prepare a legal memorandum concerning the legal issues surrounding
the provision of a COLA. If at some point, GERC determines that it needs
separate, independent legal counsel because there is a conflict of interest, Greg can
provide additional information concerning the possibility of hiring outside legal
counsel. Russ stated that Watson Wyatt cannot provide legal counsel to the
GERC.
LUMP SUM ISSUE (EXECUTIVE SESSION):
MAIN POINTS: Greg suggested the Committee go into executive session in
order to receive legal advice from him concerning strategy of implementing lump
sum amendments to the Plan. There being the required quorum of GERC
members present, Dave moved that the GERC go into executive session for the
purposes suggested by Greg and Tim Hume seconded. The motion passed
unanimously.
Following discussion of legal issues raised by Greg concerning the lump sum
benefit amendment of the Plan, Dave moved that the Committee adjourn the
executive session and return to open session. The motion passed unanimously.
Greg provided an overview of the suggested lump sum benefit amendment to the
Plan.
CONCLUSION/NEXT STEPS: Dave moved that the Committee recommend
the following Plan changes to City Council for adoption:
Create Retirement and severance lump -sum election at valuation interest rate for all current
and future employees.
Grandfather mandatory <$100 lump -sum retirement and severance provisions at the Pension
GERC Minutes - May 7, 1990
Benefit Guarantee Corporation rate, with future employees at valuation interest rate.
Grandfather all death benefit lump -sum options at 7.5% (giving effect to the 1995
amendment), with future employees at valuation interest rate.
Alan seconded the motion and the motion carried unanimously (5-0). Alan agreed to prepare the
information for presentation to Council. Note: Council considered the item on the May 19`h
meeting and it passed on the consent agenda.
Kevin suggested a 5-minute recess.
4. DISCUSSION ON MEMBER EDUCATION ON DEFINED BENEFIT/DEFINED
CONTRIBUTION CHOICES
MAIN POINTS:: Jeff Kraft presented a proposed communication plan for the Committee's review. T
dates scheduled for these meetings are:
June 3 at 4:00 p.m. and 6:30 p.m. in the Mini Theater at the
June 4 at 7:00 a.m. and 9:00 a.m. Lincoln Center
June 18 at 9:00 a.m. and 10:00 a.m.
One meeting is also scheduled in the Council Chambers on June 23 at 9:00 a.m.
Hopefully, these times would allow for various work schedules and for those employees whose spouses
want to attend.
The Committee discussed Jeff s presentation and requested the following modifications:
Under subheading - Situation, item four would read "Appropriate analysis of affirmative elections require
to go forward".
Statement of Purpose - "The GER Committee will provide information and education to assist GER Pla
participants to choose between continuing participation in the DB GER Plan or a DC Money Purchase
Retirement Plan."
A great deal of discussion followed regarding eligibility of employees, definition of plan member, break-in
service, new hires, etc. Greg reminded Committee members that "employment" as defined in the Plan may
not be what it seems in general everyday terminology. An employee for the GER Plan is defined in the Pl
documents. Also discussed was who would be allowed to participate in the vote to switch from a DB to
DC plan. An active employee in the Plan cannot take a distribution. Anyone who opted out of GER Pla
previously but left their vested benefit in the Plan would be able to remove their funds if they qualify unde
the proposed lump sum distribution criteria.
CONCLUSION/NEXT STEPS: One -on -One - Russ and Jeff will be present at all of the presentations.
They suggested that some of the Retirement Committee members be available for discussion or questions.
Alan asked if ICMA Retirement Corporation representatives should be there and Russ thought this would
be a good idea as long as the Committee is comfortable with it. Alan indicated that ICMA RC should hav
GERC Minutes - May A998
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the ability to produce personalized statements for individuals. Alan will request that ICMA RC participa
in the education program.
Russ said timely printing is an issue and Watson & Wyatt will use its sources for printing. Would ICMA
RC statements and worksheets be included in the packets? It was agreed the worksheet would be a usef
tool. Russ also asked if there could be a City E-mail address set up, or voice mail where people could ca
for information. Laurie said HR has a phone line that could be used for that purpose.
It was determined that Fort Notes is published quarterly so it probably wouldn't help, but a flyer could be
distributed with paychecks. The meeting schedules should probably go out in the next week.
The discussion moved on to the election form itself. Laurie said HR is set up for an election and could
handle administering the form. The forms should be prenumbered , with three copies: one for City, one f
participant, and one for the investment company. Laurie thinks a sign-up sheet would be important to
compare with the election forms. A spouse or friend cannot pick up an employee's election form. It will
necessary to have someone at the doors of each presentation to hand out packets. The packets will inclu
an individual ICMA statement, Election Form, and Presentation Booklet. It will be suggested, not
required, that people in a certain range of the alphabet attend a specific meeting to make that process mor
manageable.
If an employee doesn't make it to a presentation, can they still vote? The presentations should be
mandatory. Alan and Kevin will work with the ELT to encourage this. Note: Kevin attended the ELT
meeting on May 20t°.
Alan Krcmarik left at 3:45 due to a prior commitment.
The issue of administration and management of possible DC funds ensued. The Committee decided that,
given the current timetable, ICMA RC would be the money purchase plan provider.
S. MEETING CONTINUED
MAIN POINTS: Because there were still a number of items on the agenda, Kevin proposed that the
Board continue the meeting on 5/21/98. He will take all comments and consolidate the information. Gre
said this time table doesn't afford him time to get outside legal counsel to review the selection documents
however, Greg will probably seek outside legal counsel to review Plan amendment issues which are not a
time sensitive.
CONCLUSION/NEXT STEPS: Dave proposed and the Committee agreed that the remainder of the
agenda items be carried over to May 21 at 1:15 pm in the CIC. Kevin handed out a letter to be reviewed
for item #8 (rollover request from deferred vested member. Bob Eichem passed out the First Quarter
Investment Report, the April Investment Summary, and the one page Morningstar Mutual Fund recaps fo
all mutual funds held by the GERP. The meeting was adjourned at 4:25 p.m.
AGENDA & SCHEDULE FOR NEXT MEETING
GERC Minutes - May 7, 1998
The next meeting will be Thursday, June 4'h at 1:15 pm in the Council Information Center (CIC)
of City Hall West. The agenda will include:
1. QDROs Procedure & Forms Finalized
2. Rollover Request from Deferred Vested Member.
3. Watson Wyatt Fees & Contract Discussion
4. Use of Year -End Pay Rates on PRPS
5. Moving Future GERC Meeting Sites
6. Quarterly & Regular Investment Review
7. Other Business
ADJOURNMENT
The meeting was adjourned at 4:25 p.m.
GERC/GERP WEB PAGE ADDRESS:
www.ci.fort-coffins.co.us/CrrY_HALIJBOARDS CONMSSIONS/RETIREMENTfmdex.htm
FUTURE MEETING SCHEDULE:
The May 7te GERC Meeting was continued to May 21, 1998 at 1:15 pm in the Council Information
Center of City Hall West.
The General Employees Retirement Committee normally meets at 1:15 p.m. on the 1st Thursday of
each month in the Council Information Center, City Hall West.
THURSDAY, JUNE 4, 1998
THURSDAY, JULY 9, 1998"
THURSDAY, AUGUST 6, 1998
THURSDAY, SEPTEMBER 3, 1998
THURSDAY, OCTOBER 1, 1998
THURSDAY, NOVEMBER 5, 1998
THURSDAY, DECEMBER 3, 1998
"Because the July meeting falls so close to the
observance of Independence Day (on July
3rd), it was moved to the next Thursday,
July 9 Th., 1998