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HomeMy WebLinkAboutRetirement Committee - Minutes - 10/26/1989GENERAL EMPLOYEE RETIREMENT COMMITTEE MEETING MINUTES OCTOBER 26, 1989, 1:00 P.M. MEMBERS PRESENT: MEMBERS ABSENT: Jerry Brown Mollie Mercer Angelina Powell Alan Krcmarik Dennis Sumner Sue Wilcox, Secretary CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:10 p.m. APPROVAL OF MINUTES: Minutes of the September 13, 14, and 21 meetings were approved as written. ITEMS OF NOTE: The members agreed to defer further work on the Defined Benefit Study until after considering individual modifications to the present plan because of the length of time involved to complete the study. Also taken into consideration were the uncertainty of employee's benefits at this time and Council's reactions. AGENDA REVIEW: It was agreed to rearrange the order of the Open Items to move the lengthier items to last. The Quarterly Investment Report was added to New Items. DISCUSSION TOPICS - OPEN ITEMS 1. MEDICAL BENEFITS FOR RETIREES/DISABLED EMPLOYEES MAIN POINTS: Mollie reported that the Committee is essentially on "hold" because the topic has been referred to the Executive Team, Jaime Mares, Pam Stultz, and the consultants, who are putting together a plan of action for Council on all medical benefits. Many options are being explored. DECISIONS/CONCLUSIONS: None at this time NEXT STEPS: Keep informed of progress of E-Team activities in this area. 2. POLICY DECISION REGARDING BENEFICIARY CHANGING METHOD OF PAYMENT MAIN POINTS: This was the formal wording of the policy change which had been discussed and approved in July. It allows the beneficiary to change the method of payment from monthly to quarterly, yearly or lump -sum. It also makes provision for beneficiary being responsible for any extra costs associated with the change. DECISIONS/CONCLUSIONS: Mollie Mercer moved and Jerry Brown seconded a motion to approve this wording. The vote was unanimous in favor of the motion. NEXT STEPS: The secretary will finalize the form and it will be placed in each member's notebook. This proposed change will be submitted to the City Council when a complete package of proposed changes has been developed. 3. POLICY DECISION REGARDING "BUYING OUT" INDIVIDUALS WHOSE BENEFIT WOULD BE LESS THAN $100/MONTH. MAIN POINTS: During the meeting with Don Mazanec (9-13-89) the suggestion was made to "buy out" any retiree (they have the option to refuse) who is now receiving less than $100 per month in benefits and also to "buy out" any vested member who leaves the City's employment and who would be entitled to a monthly benefit of less than $100 per month. DECISIONS/CONCLUSIONS: Since this has already been approved, only the actual wording was discussed and approved. NEXT STEPS: The wording will be finalized and this information will be filed under Proposed Changes also. 4. INVESTMENT MARKETING CLASS 5 MAIN POINTS: Alan announced that Bob Eichem had been hired as Treasury Administrator for the City and had been to a money management class in Kansas City. He is anxious to work with the financial investments and will be doing the next quarterly investment reports. DECISIONS/CONCLUSIONS: It was agreed Marketing Class at the February 15th that time, if necessary, so that the subject. to ask Bob to conduct the Investment and also to defer other business at group can concentrate on only that NEXT STEPS: Alan will ask Bob to conduct an investment class for the Committee at the February meeting and determine how much time he will need. COST -OF -LIVING ADJUSTMENT FOR RETIREES MAIN POINTS: There has been no cost -of -living adjustment for retirees since 1982. Don Mazanec suggested a raise of 5-15% on a sliding scale, depending on the year they began receiving retirement benefits. Dennis handed out a copy of Mazanec's memo of November 3, 1988 for review. DECISIONS/CONCLUSIONS: Mazanec will be asked to present us with a proposal for cost -of -living raises to include three alternatives (low, middle and high range) of 1, 2, and 3% per year increases (depending on how long the individual has been retired). The Committee also requested that Mazanec provide data on the costs of making the death benefit payable to dependents (other than the spouse) for a given period of time, i.e. 48 months. Don will be asked to provide this information by November 30th, and a tentative date of December 7th was set for meet with Don to discuss this information. NEXT STEPS: Alan and the secretary will compose the letter and keep the members informed of the reply. 6. FIVE-YEAR VESTING MAIN POINTS: Private pension funds employee has worked for five years. members would like to look at this would have on the retirement fund. are required to allow vesting after an Government is not required to, but the option and the financial affects it DECISIONS/CONCLUSIONS: It was agreed to ask Don Mazanec to provide these figures also. NEXT STEPS: This request is to be included in the letter to Mr. Mazanec. G: 6-A. DISCOUNTED BENEFIT FOR THOSE RETIRING BEFORE AGE 65. MAIN POINTS: The question arose of whether 65 is still considered the "normal" retirement age. Is retirement still mandatory at 65 or does Social Security allow people to work longer? Should our plan be reevaluated in light of this or should Mercer Meidinger Hansen remind us to change it in our plan? DECISIONS/CONCLUSIONS: It was agreed to ask Don Mazanec to provide information and costs on this topic also. NEXT STEPS: This request is to be included in the letter to Mr. Mazanec. 6-B. "RULE OF 80" MAIN POINTS: In our 9-13-89 meeting with Don Mazanec, he suggested the GERC consider adopting a "rule of 80"-type concept. The rule of 80 is a process which uses the person's age and years of service to determine retirement age (age plus years of service = 80). Don had noted the present system penalizes the employee who retires before age 55. This would address this concern and would reward longevity. DECISIONS/CONCLUSIONS: It was agreed to ask Don Mazanec to provide information and costs on this method. NEXT STEPS: This request is to be included in the letter to Mr. Mazanec. 7. OPTIONS FOR BENEFIT TRANSFER TO AN ESTATE MAIN POINTS: At the present time, if an employee dies before retiring, there are no benefits paid to spouse or beneficiary. Question raised was: what are the financial impacts to the plan if we would allow payment of pension benefits to an estate (which would mean the fund would not accumulate any funds from members who die before retirement)?. DECISIONS/CONCLUSIONS: It was agreed to ask Don Mazanec to provide information on how often this occurs and the cost if benefits could be paid to estates for employees dying before retirement. NEXT STEPS: This request is to be included in the letter to Mr. Mazanec. The letter should be transmitted electronically to Mr. Mazanec as soon as possible. DISCUSSION TOPICS - NEW ITEMS 1. APPOINTMENT OF GERC MEMBER FROM OUTSIDE THE CITY MAIN POINTS: The City Clerk's office conducted a review of various provisions of the GERC and asked if the provision allowing someone not connected to the City to be a member of the Board should be repealed since it is not adhered to. DECISIONS/CONCLUSIONS: After reviewing the wording of the Article II, Section 1, it was agreed that this allows the appointment of a such a person, but does not require it and should be left as it is as there is no reason to change it. NEXT STEPS: Rita Knoll will be informed of the Board's decision. The information that a non -City employee may be a member of the Committee may be included the next time they advertise for a new member if Rita feels this would be appropriate. 2. CONFLICT OF INTEREST MAIN POINTS: The question of whether any employee serving on the Committee has an inherent conflict of interest, since they will one day be receiving retirement benefits was submitted to the City Clerk's Office by Chairman Sumner. The committee members saw this not as a conflict of interest, but rather as an incentive to keep the plan healthy and solvent. They felt that it was in line with the qualifications required for other boards and commissions. Also, the Committee can act in an advisory capacity only and City Council must make the decisions. DECISIONS/CONCLUSIONS• It was the conclusion of the Committee that there was no conflict of interest problem. Further, since no reply had yet been received from the City Clerk's Office, it was concluded there was no basis f or assuming this to be a problem. NEXT STEPS: Rita Knoll will be advised of this discussion and the Committee's conclusion. She will be asked to advise us if there is any problem in this area. 3. QUARTERLY INVESTMENT REPORT MAIN POINTS: The Investment Report for the third quarter showed an excellent 9.79% return on the fund's money. The Actuarial Report prepared by MMH is based on a 7.5% return on investment funds. It is expected that Bob Eichem will continue this profitable record. Requests for Proposals (RFP's) will be accepted in December for the services of a firm to do financial advising. DECISIONS & CONCLUSIONS: Commend Gwyn Strand for the results he has obtained. NEXT STEPS: The fourth quarter investment report will be presented in February. NEXT MEETING The next meeting will be a combined meeting with the Personnel Board at Poudre Fire Authority Conference Room, 102 Remington, on November 21st. This is a luncheon meeting at noon. The next regular meeting is tentatively set for December 7th at 1:00 p.m. in the Finance Conference Room with Don Mazanec to discuss many of the topics covered at today's meeting. ADJOURNMENT The meeting was adjourned at approximately 3:10 p.m.