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HomeMy WebLinkAboutRetirement Committee - Minutes - 01/25/19910 GENERAL EMPLOYEE RETIREMENT COMMITTEE MEETING MINUTES JANUARY 25, 1990 MEMBERS PRESENT: MEMBERS ABSENT: Jerry Brown Mollie Mercer Alan Krcmarik Angelina Powell Dennis Sumner Sue Wilcox, Secretary Also present was Don Mazanec, actuary, from Mercer Meidinger Hansen. CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:20 p.m. APPROVAL OF MINUTES: Mollie noted that under Section 5-6 of the December 21st minutes, the parenthetic phrase at the end of the first paragraph should read "(as opposed to only a direct member of the family as outlined in the Plan)". Minutes of the December 21, 1989 meeting were approved as amended. ITEMS OF NOTE: The only items of note are those that will be discussed today for eventual presentation to Council for approval. DISCUSSION TOPICS - OPEN ITEMS MEETING WITH CHUCK MABRY Dennis and Alan had met with Chuck Mabry, our liaison to Council, concerning proposed changes to the retirement plan. Chuck felt the proposed changes had merit and could go directly to Council without a work session. He did feel that a dollar -amount should be attached to each proposal. He also felt that most of the items concerned only retirees or those who had left City employment, but that the 5-year vesting proposal would have an affect on present and future employees and suggested it be looked at in conjunction with the total compensation package. DISCUSSION ON CHANGES TO BE PROPOSED 1. PROVIDE A 3% PER YEAR COST -OF -LIVING ADJUSTMENT FOR CURRENT RETIRED EMPLOYEES. MAIN POINTS: It was noted that a few years ago a similar cost -of -living adjustment was made. This was intended to adjust retirement compensation to a parity level as of 1/1/84. Therefore the 3%/year cost -of -living adjustment would only apply from 1/1/84 to the present. Also it was noted that there were some errors in the calculation of retirement benefits for an early retirement program a few years ago. The 3% per year adjustment would apply to the retirement benefit employees should be receiving. Employees will then receive the bigger of (1) the new calculation or (2) what they have been receiving. This correction will reduce the incremental cost which has been paid by the departments. DECISIONS/CONCLUSIONS: It was agreed that the 3% cost -of -living adjustment would go back to 1/1/84 and gould apply for each full year of retirement, based on an effective date of 6/30/90. Employees in the early retirement program would be impacted as noted above. Those who retired in 1984 or before, receive 18% (for each full year they have been retired). Those who retired during 1985 will receive 15% 1986 will receive 12% 1987 will receive 9% 1988 will receive 6% 1989 will receive 3% Those who retired before 7-1-90 will receive 3% Those who retire after 6-30-90 will receive -0- Those who have been receiving an increased benefit will receive an increase ONLY if the cost -of -living adjustment (which is based on the amount of the standard benefit they SHOULD have been receiving) plus the standard benefit would be more than they are currently receiving. If that is the case, they would receive the difference between the two amounts as their increase. No retiree should be penalized because of the earlier error, but on the other hand, the GERC should not exacerbate the mistake. (The GERP would not lose or gain any funds, but the departments would be able to decrease the amount of the subsidy.) It was agreed that Council should be appraised of the original error and how this would be handled. Also Accounting and the retirees affected would be alerted to the change and the reasons for it. NEXT STEPS: Don Mazanec will prepare a draft resolution for this change. 2. PROVIDE DEATH BENEFITS TO THE ESTATES OF EMPLOYEES WHO WERE FULLY VESTED IN THE PLAN, BUT WHO DIE PRIOR TO RETIREMENT AND WHO WERE 55 YEARS OF AGE OR OLDER AT THE TIME OF THEIR DEATH. MAIN POINTS: This death benefit would pay the standard benefit as though the employee retired immediately before the employee's death. DECISIONS/CONCLUSIONS: The consensus was to proceed with this change. NEXT STEPS: Don Mazanec will prepare a draft resolution for this change. 3. MAKE CHANGES IN THE WORDING OF THE PLAN TO IMPROVE ITS READABILITY. MAIN POINTS: Mollie advised that Mary Crumbaker/Smith, Asst. City Attorney, suggested that changes made just to improve readability may have the affect of making unintended changes in the content of the plan. She suggested changing the wording only on specific sections as they are being re -written to change the plan. DECISIONS/CONCLUSIONS: The consensus was to follow Mary's suggestion. NEXT STEPS: No further action on this item is required. 0 • 4. REVISE THE DEFINITION OF BENEFICIARY AS CONTAINED IN THE PLAN TO PROVIDE MORE CHOICES TO EMPLOYEES. MAIN POINTS: The definition of a beneficiary, as contained in the plan, should be changed to provide more choices to employees to reflect the changes in lifestyles of the work force. Due to IRS guidelines and practical applications of the plan, there are some limits on flexibility here. Don Mazanec will take this into account in his re -write. DECISIONS/CONCLUSIONS: The consensus was to agree with the proposal. It was noted that if there is a living spouse, the consent of the spouse must be obtained before another person can be named beneficiary. NEXT STEPS: Prepare information for presentation to Council. Don Mazanec will prepare this wording. 5. REVISE THE PLAN TO PERMIT A BENEFICIARY TO CHANGE THE METHOD OF PAYMENT OF BENEFITS FROM MONTHLY TO QUARTERLY, YEARLY, OR LUMP SUM FOR BENEFITS NOT EXCEEDING $100 PER MONTH. MAIN POINTS: Don advised the Committee that the IRS guidelines permit this but the choice must be the beneficiary's. DECISIONS/CONCLUSIONS: The change will be proposed. NEXT STEPS: Don Mazanec will prepare a draft resolution for this change. 6. PROVIDE FOR THE LUMP -SUM PAYMENT OF RETIREMENT BENEFITS TO ANY RETIRING EMPLOYEE (OR OTHER VESTED EMPLOYEE UPON LEAVING EMPLOYMENT WITH THE CITY) PROVIDED THEIR BENEFITS DO NOT EXCEED $100 PER MONTH. MAIN POINTS: As in Item 5 above, the IRS requires this choice to be the employee's. DECISIONS/CONCLUSIONS: This change will be proposed. NEXT STEPS: Don Mazanec will draft the resolution. 7. CHANGE THE PLAN TO PROVIDE FULL VESTING AFTER FIVE YEARS OF EMPLOYMENT. MAIN POINTS: AS noted by Chuck Mabry this item involves current and future employees and not just present retirees. It was agreed to postpone any action on this item and suggest that it be considered as part of the total compensation package. Five-year vesting is now a requirement of private companies. It will be necessary to know the cost of this item. DECISIONS/CONCLUSIONS: Don will calculate the cost of this when he does Items 1-6. It is important to maintain contact with Jaime Mares of Employee Development as he works on the total compensation study. Having a GERC representative on the committee might be helpful. NEXT STEPS: Alan will discuss the concerns of the GERC in a staff meeting with Jaime Mares, etc. to make sure they are included in the total compensation study. Dennis will also contact Jaime. 8. OTHER CHANGES TO BE PROPOSED MAIN POINTS: It was noted there are a number of other minor changes which should be made in the plan at this time. Examples of these are: clearly stating that Emergency Services Dispatchers are not included in the plan, and noting Poudre Fire Authority clerical and technical personnel are part of the plan. DECISIONS/CONCLUSIONS: Don Mazanec will prepare documentation for these changes. NEXT STEPS: Don Mazanec will prepare a draft resolution for these changes. DISCUSSION ITEMS - ITEMS BEING CONSIDERED FOR TOTAL COMPENSATION STUDY MAIN POINTS: A number of items were discussed for inclusion in the total compensation study. DISCUSSION: No action can be taken on these items until total comp study is done. Five-year vesting will be added to this list. DECISION/CONCLUSIONS: The identified concerns to be addressed when the total comp study is done are: 1. Use of last three years salary to determine retirement benefit 2. Rule of 80 3. Medical benefits for retired employees. 4. Five-year vesting DISCUSSION TOPICS - NEW ITEMS 1. PENSION INVESTMENT CLASS: MAIN POINTS: Alan mentioned that GFOA will have a Pension Investment class Sept. 10-14 and perhaps we could send a member and Bob Eichem, Treasury Administrator, to the class. Alan will get the course description. Don Mazanec also mentioned classes provided by the International Foundation of Employee Benefit Plans - Public Sector Information as being a very good source of information and classes for members. DECISION/CONCLUSION: Committee members were interested in these suggestions. NEXT STEPS: Alan will get more information on the GFOA class. Don will send information on classes he mentioned. 2. DRAFT RESOLUTION MAIN POINTS: Don distributed a draft resolution for proposed changes in the retirement plan. This did not reflect the discussion from today's meeting. Mollie noted an evaluation had been done assuming 85% of our employees are married, although her records indicate 74% are married. She asked if this difference was a concern. Don advised his figures were based on 1983 actuarial tables, which are the most current available and are considered appropriate for this type of evaluation. DECISIONS/CONCLUSIONS: Don will revise this draft and submit it to the committee for review prior to our next meeting. Mollie will forward a copy to Mary Crumbaker/Smith for legal review. NEXT STEPS: The Committee will review the revised draft at our next meeting. OPEN ITEMS FROM PREVIOUS MEETINGS 1. Defined Contribution Study - Refer to 10/26/89 meeting. This is delayed until changes to the current plan have been studied and resolved. 2. Investment Market Class - Refer to minutes of 7/27/89 meeting. Pending hiring of new City Treasurer and his preparation of a presentation. AGENDA AND SCHEDULE FOR NEXT MEETING The next meeting will be Thursday, February 15th at 1:00 p.m. in the Finance Conference Room. The agenda will include: 1. Quarterly Investment Report 2. Review Don's revised resolution, which will have Mary's input. 3. Review an initial memo to Council advising them of proposed changes. (Using Don's new report, Alan will draft an initial memo to prepare Council for what is coming in late February or March.) MEETING REVIEW A significant amount of business was covered proposed changes. The meeting was adjourned at 3:15 p.m. Members are eager to get on with • 8. OTHER CHANGES TO BE PROPOSED MAIN POINTS: It was noted there are a number of other minor changes which should be made in the plan at this time. Examples of these are: clearly stating that Emergency Services Dispatchers are not included in the plan, and noting Poudre Fire Authority clerical and technical personnel are part of the plan. DECISIONS/CONCLUSIONS: Don Mazanec will prepare documentation for these changes. NEXT STEPS: Don Mazanec will prepare a draft resolution for these changes. DISCUSSION ITEMS - ITEMS BEING CONSIDERED FOR TOTAL COMPENSATION STUDY MAIN POINTS: A number of items were discussed for inclusion in the total compensation study. DISCUSSION: No action can be taken on these items until total comp study is done. Five-year vesting will be added to this list. DECISION/CONCLUSIONS: The identified concerns to be addressed when the total comp study is done are: 1. Use of last three years salary to determine retirement benefit • 2. Rule of 80 3. Medical benefits for retired employees. 4. Five-year vesting DISCUSSION TOPICS - NEW ITEMS 1. PENSION INVESTMENT CLASS: MAIN POINTS: Alan mentioned that GFOA will have a Pension Investment class Sept. 10-14 and perhaps we could send a member and Bob Eichem, Treasury Administrator, to the class. Alan will get the course description. Don Mazanec also mentioned classes provided by the International Foundation of Employee Benefit Plans - Public Sector Information as being a very good source of information and classes for members. DECISION/CONCLUSION: Committee members were interested in these suggestions. NEXT STEPS: Alan will get more information on the GFOA class. Don will send information on classes he mentioned. CJ 9 • • 1] • 2. DRAFT RESOLUTION MAIN POINTS: Don distributed a draft resolution for proposed changes in the retirement plan. This did not reflect the discussion from today's meeting. Mollie noted an evaluation had been done assuming 85% of our employees are married, although her records indicate 74% are married. She asked if this difference was a concern. Don advised his figures were based on 1983 actuarial tables, which are the most current available and are considered appropriate for this type of evaluation. DECISIONS/CONCLUSIONS: Don will revise this draft and submit it to the committee for review prior to our next meeting. Mollie will forward a copy to Mary Crumbaker/Smith for legal review. NEXT STEPS: The Committee will review the revised draft at our next meeting. OPEN ITEMS FROM PREVIOUS MEETINGS 1. Defined Contribution Study - Refer to 10/26/89 meeting. This is delayed until changes to the current plan have been studied and resolved. 2. Investment Market Class - Refer to minutes of 7/27/89 meeting. Pending hiring of new City Treasurer and his preparation of a presentation. AGENDA AND SCHEDULE FOR NEXT MEETING The next meeting will be Thursday, February 15th at 1:00 p.m. in the Finance Conference Room. The agenda will include: 1. Quarterly Investment Report 2. Review Don's revised resolution, which will have Mary's input. 3. Review an initial memo to Council advising them of proposed changes. (Using Don's new report, Alan will draft an initial memo to prepare Council for what is coming in late February or March.) MEETING REVIEW A significant amount of business was covered. Members are eager to get on with proposed changes. The meeting was adjourned at 3:15 p.m.