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HomeMy WebLinkAboutRetirement Committee - Minutes - 05/20/1991M FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE MAY 20, 1991 MEETING MINUTES MEMBERS PRESENT: MEMBERS ABSENT: Jerry Brown Dennis Sumner, Chairperson Alan Krcmarik Angelina Powell Mollie Mercer Sue Wilcox, Secretary Visitors included new City Council liaison Loren Maxey, Don Mazanec of William M. Mercer, Inc., Mary Crumbaker-Smith, asst. city attorney, Jaime Mares and Pam Stultz of Employee Development, and Bob Eichem of Finance Treasury Division. CALL TO ORDER: Chairperson Sumner called the meeting to order at 1:15 p.m. APPROVAL OF MINUTES: Mollie stated that the date in item #1 under Future Plan Revisions should read "See minutes of 11-1-90 meeting". Angelina Powell moved that the minutes be approved as corrected. Jerry Brown seconded the motion and they were approved. M ITEMS OF NOTE: Dennis welcomed Councilmember and new GERC liaison Loren Maxey to the Committee and made introductions. REVIEW OF DISCUSSION TOPICS: To efficiently utilize the time of our visitors, the order of the agenda items was revised. DISCUSSION TOPICS: Open Items 1. LONG-TERM DISABILITY VS WORKERS' COMP COVERAGE MAIN POINTS: This is a continuation of the issue raised by Mary Crumbaker-Smith pointing out an inconsistency in the plan which gives retirement accrual benefits to employees receiving long-term disability (LTD) but not to disabled employees who are receiving Workers Compensation. Also the Plan booklet dated January 1, 1985 is inconsistent with the retirement plan document stating that both disabilities are covered by the same accrual benefits. An issue not addressed is that of retirement accrual benefits for partially disabled workers.'; There was extensive discussion on this issue and review of a proposal prepared by Don Mazanec to address the issue. CONCLUSIONS/DEC ISIONS: It was concluded that Don Mazanec, Mary Crumbaker- Smith, Pam Stultz, and Stewart Ellenberg of Risk Management Division need to determine a plan which would be acceptable from their various perspectives. That plan should then be reviewed by the Retirement Committee. NEXT STEPS: Mary agreed to review the drafts prepared to date and develop a proposed plan amendment to incorporate the conclusions drawn by Pam and Stewart. This will settle the equity concern so that all employees with comparable disabilities will receive the same accrual benefits. -1- 2. LUMP -SUM PAYMENTS AND LETTERS MAIN POINTS: Mollie met twice with Sue Wilcox and accountant Edna Hoernicke to review and compare the information the City and William M. Mercer, Inc. have on vested terminated employees to make sure all parties had accurate information before the offer of lump -sum payments is made. A draft of the letter offering the lump -sum option was reviewed and revised. Sue will make the suggested changes and distribute it for review. Also included with the letter will be a form asking the participants to indicate their preference and to provide a current address. It was agreed that copies of the individual's original benefits information calculated by the actuary would be included with the letter also. The information provided by Wm. M. Mercer, Inc., regarding tax consequences of the lump -sum payment will be revised to make it more specific to our situation and "friendly". CONCLUSIONS/DECISIONS: The target date for making the payments will be October 1, 1991, with the letters to be sent out approximately mid -August. NEXT STEPS: Don will supply a final list of those eligible to receive a lump -sum payment and revise the notice on tax information. Sue will revise the letter and form and distribute them for review by the committee and Don. She will also begin assembling an address list. DISCUSSION TOPICS: New Items 1. ESTABLISHMENT OF NEW RETIREMENT COMMITTEE MAIN POINTS: Mary Crumbaker-Smith explained that there had been a meeting of all the people from Employee Development and Finance who are directly involved in administering all the pension plans (police, several fire plans, and the GERC). Police and Fire pension plans were recently converted to money purchase plans and those involved (Alan, Jaime, Pete Dallow, Pam, Mary C-S and accountant Rita DeCourcey) felt.the process was confusing and unnecessarily cumbersome. Things were further complicated by the fact that there are no longer functioning pension committees for Police and Fire. The employees from the two departments are trying to create systems for directing pension plan administration. This should be a help to the GERC if it should convert to a defined benefit plan. CONCLUSIONS/DECISIONS: Because the GERC is the only retirement committee still functioning, it will not be as involved in the work of the two - department group. However, Pam will keep the GERC informed of progress. NEXT STEPS: Keep this topic on the "Items for Future Discussion" list. 2. FIRST QUARTER, 1991 INVESTMENT REPORT MAIN POINTS: Bob reported that he had anticipated a drop in the market for short-term securities during the 1st quarter and therefore sold off a -2- • number of these investments and turned instead to longer -term securities, which did not drop as much in value. This resulted in maintaining a good rate of return (8.93%) for the quarter, compared to the target rate of 7.5% used in the actuarial report. Bob answered some questions about individual investments. CONCLUSIONS/DECISIONS: The members were pleased with the rate of return and thanked Bob for his report. NEXT STEPS: Bob will continue to monitor the market and plans to remain flexible to change in response to market changes. 3. BUDGET REVIEW COMMITTEE DISCUSSIONS ON ICMA MAIN POINTS: An item in the Administrative Services quarterly report referred to changes in the ICMA plan being discussed by the Budget Review Committee (E-Team and staff members). There was concern that this could affect the benefit where the City matches up to 3% of the funds that individuals contribute to ICMA. Alan said that about 70% of employees currently take advantage of this benefit and the Budget Review Cdlhmittee discussion centered on what the cost would be if all employees were enrolled in the program. Currently the budget does not include funding for full participation by employees. Based on budgetary limitations and actual experience, this practice will be continued. CONCLUSIONS/DECISIONS: Alan assured the Committee members that no plans were discussed to dismantle or alter this benefit. NEXT STEPS: None required. 4. TOTAL COMPENSATION UPDATE MAIN POINTS: Jaime was concerned that the GERC not be confused about the status of the Total Compensation (Total Comp) Program. He reminded the Committee that this is the basis for determining employee salaries and benefits. Retirement is one of those benefits and its cost added to the cost of the total package. CONCLUSIONS/DECISIONS: Committee members thanked Jaime for his concern and assured him they understood the total compensation concept. Although the Committee would like to see some enhancements in the retirement package, members understand any additional costs must fit the total compensation program. NEXT STEPS: Jaime told the committee he would keep the GERC advised on the total comp package as competitive data is gathered and analyzed. 5. PROPOSED CHANGES TO THE PLAN MAIN POINTS: Don distributed copies of proposed changes to the GER Plan. These included 1. expanding the definition of disability; -3- 2. provision for former employees who return to the City to repay the Fund and restore prior credit; 3. revision of the Disability Retirement dates related to the expanded disability definition, changing the Plan to reflect the practice of paying retirement benefits in arrears; 4. Revising plan to reflect the current practice of paying benefits on the last day of the month. 5. requiring spousal consent on some optional benefits; 6. partial payment in the month of death of retired member; 7. allowing lump -sum benefit payment one year after termination; and 8. allowing payment of a (Qualified Domestic Relations Order) QDRO for child support only. The default benefit, in case the participant does not make an election, will be added also. Don gave further details on item #2 above. First he noted this change is being proposed to make the Plan compatible with the requirements of private -sector employers. With respect to re-establishing retirement credit, he offered the following details: 1. If a non -vested employee leaves the City and returns to City employment in less than five years, his prior service towards retirement and funds are restored; 2. A vested member with a benefit of less than $100/month who leaves and takes a lump -sum payment, can return to the plan and retain all previous service credit towards retirement by repaying the funds with interest if he returns to City employment within 5 years; and 3. A vested employee with benefits greater than $100/month who leaves City employment and returns within five years, can pick up the service credit towards retirement and funds where they left off. CONCLUSIONS/DECISIONS: Members concluded the proposed changes were appropriate. In was further requested that the Plan be modified to provide a "default" option of 50% Joint and Survivor Benefit (refer to minutes of 12-6-90 meeting). NEXT STEPS: Don will make the requested addition and changes to the proposed amendments of the plan for the next meeting. 6. PROBLEM STATEMENTS & TIME LINES FOR ITEMS FOR FUTURE DISCUSSION MAIN POINTS: Alan suggested that the GERC should develop problem statements and time lines for the items which have been carried forward under the heading of "Items for Future Discussion". This should help the Committee get on with these tasks. CONCLUSIONS/DECISIONS: It was concluded this would be addressed at the next meeting. NEXT STEPS: This topic will be placed on the agenda for the next meeting. CtC 0 0 ITEMS FOR FUTURE DISCUSSION 1. Pension Investment Seminar/Public Benefit Plans Workshop 2. Evaluate competitiveness of the GER Plan, based on Total Comp Study. 3. Defined contribution study. (Refer to 10/26/89 meeting minutes.) Delayed until changes to the current plan have been studied and resolved. (Refer to 1/25/90 minutes.) 4. Possible involvement of GER Plan in the 401(a) deferred compensation plan. 5. Plan improvements to be considered. (Review in June. See October 29th letter from Don Mazanec for costs.) 6. Resolve retirement benefit questions related to employees injured during employment with the City, i.e. Sehestedt and Hattan. AGENDA 6 SCHEDULE FOR NEXT MEETING The next meeting will be Monday, July 29th, at 1:15 p.m. in the Finance Conference Room. The agenda will include: 1. Workers Comp VS LTD - Mary Crumbaker-Smith 2. Second Quarter 1991 Investment Report (if available). 3. Update on lump -sum payments and letter. 4. Amendments to the Plan 5. Recognize Council appointment to the Committee and vote on leadership. 6. Defined Benefit Plan Problem Statement ADJOURNMENT Angie moved and Alan seconded the motion to adjourn at 3:38 p.m. %V