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HomeMy WebLinkAboutRetirement Committee - Minutes - 09/20/1990FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE MEETING MINUTES SEPTEMBER 20, 1990 MEMBERS PRESENT: MEMBERS ABSENT: Jerry Brown Mollie Mercer Alan Krcmarik Angelina Powell Dennis Sumner Sue Wilcox, Secretary (due to illness) Visitors included Don Mazanec, actuary from William R. Mercer, Inc; Mary Crumbaker-Smith, assistant city attorney; and Jaime Mares, head of Employee Development. CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:15 p.m. APPROVAL OF MINUTES: Jerry Brown moved that the minutes of the July 12, 1990 meeting be approved as written. Mollie seconded the motion and the vote was unanimous to approve them. ITEMS OF NOTE: Dennis welcomed the visitors and noted the Committee's appreciation for their participation. REVIEW OF DISCUSSION TOPICS: The agenda was divided between Open Items and New Items, but in the interest of efficiency and for the convenience of our visitors, the items were discussed in a different order. DISCUSSION TOPICS: Open Items 1. SPOUSAL CONSENT FORM MAIN POINTS: A spousal consent form is needed if someone other than a spouse is named as a beneficiary. Mollie suggested that the benefit option form should also have a place for a notarized spouse's signature, as the benefit chosen often has a direct affect on the spouse's income at a later date. The suggestion was made that counseling or information should be provided to the retiree and spouse to acquaint them with how the various options work and to suggest situations where one option might be more desirable than another. The City currently offers a class on planning for retirement, but those' closest to retirement age do not usually attend. Various ways to present this information were discussed. CONCLUSIONS/DECISIONS: A booklet or handout should be created that would offer general information about options without making any recommendations. NEXT STEPS: Mollie will create an information handout outlining the various options the Plan offers, the pros and cons of each, and some examples of situations where each option might work well. Retirees will be reminded it is their responsibility to pick the option they feel best meets their needs. This would be given to anyone who makes initial contact with Employee Development or Finance about retiring. 2. BENEFIT COMMENCEMENT & PAYMENT DATES MAIN POINTS: The Plan currently states that retirees will receive their benefit payments on the first day of the month. However, being consistent with its policy of paying employees at the end of the period worked, the City pays Plan benefits at the end of the month. Both methods appear to have advantages and disadvantages. Options reviewed were: 1. Continue existing practice and amend the Plan. 2. Follow the Plan outline and begin paying at the first of the month. (This will require double payments for one month to existing retirees and there might be a question about computing and paying interest from the date of the first payment.) CONCLUSIONS/DECISIONS: A decision was deferred until the next meeting. NEXT STEPS: Alan will review the options and make a recommendation. 3. TOTAL COMPENSATION STUDY & NEXT PHASE OF GERC WORK PLAN MAIN POINTS: The Committee wants to look at possible additions to the retirement plan, but that has been on "hold" until the Total Compensation Study was completed. City Council recently approved a total comp plan based on a formula of salary plus all benefits, with the total compensation to be paid in the 70th percentile when compared to similar positions in other Front Range cities and businesses. Currently the 70th percentile of various aspects of benefits has not been identified (i.e. what is the 70th percentile benefit for retirement and how does Fort Collins compare?). Given the anxiety associated with the Total Comp approach and the unknowns with respect to the retirement benefit, no action can be taken at this time. CONCLUSIONS/DECISIONS: This will be discussed further at the next meeting. NEXT STEPS: Jaime will review the total compensation date he has and "pull out" the retirement cost portion of that for the Committee's review. Don will determine the cost for implementing the "Rule of 80" option, which has been under consideration. DISCUSSION TOPICS: New Items DISABILITY COVERAGE ISSUE MAIN POINTS: Mary Crumbaker-Smith stated that the General Employees Retirement Plan includes employees covered under the City's long-term disability insurance (LTD). However, the terms of the plan exclude employees covered under Workers' Compensation (Workers' Comp). It appears from the booklet summarizing the plan for employees, that the City intended the plan to cover employees on LTD and Workers' Comp in a substantially equal manner. Mollie stated that LTD coverage extends only to total disability, but that Workers' Comp has coverages for partial as well as total disability. She expressed a concern that any changes to the Plan address these differences to be sure the coverage offered to disabled employees (whether disabled in the workplace and receiving Workers' Comp or disabled elsewhere and receiving LTD) treats them equally according to the degree of disability. In other words, if all employees on LTD are covered, only those employees receiving Workers' Comp who would have been eligible for LTD if injured off the job should be covered. DECISIONS/CONCLUSIONS: Further clarification on this problem is needed. NEXT STEPS: Jaime will get a clarification concerning -whether LTD does, in fact, provide less coverage to employees injured off the job than that employee would receive under Workers' Comp if injured on the job. If there is a "gap", he will see whether the City might increase its LTD coverage to match Workers' Comp. Jaime. will report on these subjects at the next GERC meeting. APPROVING BENEFIT SELECTION MAIN POINTS: Don advised that the IRS has determined that the GERC can neither approve nor deny the benefit selection made by a retiree due to discrimination -related concerns in the IRS Code. The members, however, expressed a desire to still be advised of the options a retiree is entitled to and what his or her choice is. The new wording of the "NOTE" attached to the bottom of the benefit choice form was introduced. This "NOTE" spells out the "order of succession" for beneficiaries and delineates when a "spousal consent form" is needed: NOTE: "The designated beneficiary for optional benefits may be the spouse of the member or vested member, if living at the time the optional retirement benefit is elected. If a married member wishes to designate someone other than his spouse to be his beneficiary, such designation will not be effective unless his spouse (if his spouse can be located) consents in writing to such designation, such consent acknowledges the effect of such designation and such consent and acknowledgement is witnessed by a Plan representative or notary public. If the member does not designate a beneficiary dies prior to the due retirement benefits under the Plan alternate or secondary beneficiary has Committee is empowered to designate a the following list, in the order listed: beneficiary or the designated date of the first payment of and no new beneficiary or no been designated, the Retirement beneficiary for the member from (a) retiree's spouse, or if none; (b) retiree's children and children of deceased children, but right of representation, or if none; (c) retiree's parents, or if none; (d) retiree's brothers and sisters and nephews and nieces who are children of deceased brothers and sisters, by right of representation, or if none; (e) retiree's estate." There were no objections to the new wording. CONCLUSION/DECISION: The group will follow the IRS guideline and legal requirements in these matters. NEXT STEPS: The secretary will continue to send the members copies of retiree's options and the choice made, but will not solicit members' approval of the choice. The new wording of the "NOTE" was implemented with the last retiree. 3. LUMP -SUM PAYMENTS TO VESTED EMPLOYEES MAIN POINTS: With the approval of the Plan changes, lump -sum payments will be made to both: 1. vested employees who have withdrawn from the Plan and 2. vested former employees whose monthly benefit is less than $100. Don noted former employees who receive these "pay-offs" will also receive information explaining how they can re -invest this retirement money in their own accounts and some insight into the tax aspects of their options. CONCLUSIONS/DECISIONS: The Committee concluded implementation should take place. NEXT STEPS: Don's firm has the information to compute the payments for those eligible. Don will transmit that information to Mollie, who will begin the payment process. This may require an additional appropriation from City Council. Future employees who withdraw from the plan or leave City employment will receive an estimate of their payment from Mollie and the funds will be disbursed within 90 days of termination. 4. BID PROPOSALS FOR THE 401(A) & 457 PLANS. MAIN POINTS: The City has received 21 bids for providing the 401(a) and 457deferred compensation plans and they are being evaluated. It would be valuable to have someone from the GERC or a general employee review the bids and evaluate them. Various options were discussed. CONCLUSIONS/DECISIONS: The members felt that they did not have the expertise or the time to evaluate them, nor did they feel they validly represent the general employee, since they were appointed by City Council. They suggested asking the service directors for employee representatives. The members concurred in their support of the people who are currently evaluating the bids. NEXT STEPS: As this issue is not under the purview of the GERC, the evaluation of the proposals will proceed as others decide. The GERC thanked Jaime and Alan for keeping them informed (since this issue is retirement related) and asked that they continue to do so. 5. QUARTERLY INVESTMENT REPORT Due to time constraints, this item was deferred until the next meeting. ITEMS FOR FUTURE DISCUSSION 1. Pension investment seminar/public benefit plans workshop. 2. Evaluation of 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.) AGENDA & SCHEDULE FOR NEXT MEETING The next meeting is scheduled for Thursday, November 1 at 1:15 p.m. in the Finance Conference Room. Agenda topics: 1. Update on 401(a) and 457 bids - Alan Krcmarik 2. Total comp. contribution information from other employers - Jaime. 3. Second & Third (if available) Quarter Reports - Bob Eichem 4. LTD & Workers Comp Information - Jaime ADJOURNMENT: The meeting was adjourned at 3:40 p.m.