HomeMy WebLinkAboutRetirement Committee - Minutes - 09/14/1989•
GENERAL EMPLOYEES RETIREMENT
MEETING MINUTES
SEPTEMBER 14, 1989
2:00 P.M.
MEMBERS PRESENT:
Jerry Brown Mollie Mercer
Alan Krchmarik Angelina Powell
Dennis Sumner Sue Wilcox, Secretary
GUESTS: Mike Powers, Pam Stultz, Pete Dallow, and
Jaime Mares
CALL TO ORDER:
Chairperson Dennis Sumner called the meeting to order at 2:00
P.M.
APPROVAL OF MINUTES:
No minutes were available from the September 13th meeting.
ITEMS OF NOTE:
GERC members thanked our guests for joining this meeting to
discuss the potential of a defined contribution plan for the
general employees retirement plan.
AGENDA REVIEW:
It was noted the purpose of this meeting was to discuss the
defined contribution concept. Other business of the GERC will be
discussed at a separate meeting.
DISCUSSION TOPICS - OPEN ITEMS
1. CONSIDERATION OF A DEFINED CONTRIBUTION PLAN FOR THE GERC.
MAIN POINTS:
A. The differences between a defined benefit plan and
defined contribution plan were noted. In short the defined
benefit, as in place at this time, guarantees employees a
defined benefit. A defined contribution plan guarantees
employees an amount of money is contributed to an account in
the employee's name. This account is managed like the ICMA
accounts many employees currently have and the employee's
retirement income is based on the success of their
investments. A defined contribution plan tends to be more
favorable for a shorter term employee and gives the employee
a benefit which can be transferred to an estate. The
defined benefit plan tends to benefit the long term employee
and the retired employee who lives longer than normal
expectancy after retirement.
• B. Police are not members of social security and do
contribute to their retirement fund and therefore, a
substantially higher percentage of their salaries is
involved with this aspect of their retirement planning. In
the police retirement fund there were excess funds of
approximately $2 million and negotiating the distribution of
these funds took alot of time. A 2/3 vote of the members
was required in order to change from the defined benefit to
the defined contribution plan. Some of employees wanted to
stay with the defined benefit plan. That option is being
maintained for a limited number of employees through an
annuity arrangement. The police were offered the choice
between the present value of the defined benefit plan vs the
value of their contribution. The final details of the
transition to the defined contribution plan are still being
resolved.
•
•
C. There was general discussion about which type of plan
would best benefit a given individual. In the short term,
the defined contribution plan tends to generate more value
than the defined benefit plan. Amounts earned on invested
funds in a retirement plan and salary growth over the course
of employment can have notable impacts on the relative
benefit to a given employee of one plan compared to another.
It was concluded that there is no clear and universal
benefit associated with one plan vs the other.
D. It can be argued that the current general employees
retirement plan provides an artificial encouragement for
employees to stay employed with the City in the latter years
of their work life. This may be desireable and serve the
organization's best interest. On the other hand the
artificial incentive may encourage an employee who is not
providing optimum performance to remain with the City. It
was concluded that the City's position on this question
would be neutral since there were both advantages and
benefits to both sides of the issue.
E. It was pointed out that the GERC is only one piece of
the general employees retirement package. ICMA offers the
employee total choice with defined contributions. Social
Security is intended to provide a minimum level of benefit
or safety net. The GERC general employees retirement plan
functions as a retirement provision between these two
extremes.
F. It was noted that in a spring meeting
Council Liaison to GERC, he suggested the
the City Council with respect to change in
plan concerns the total cost of the plan.
discussed now, provided it serves the best
with Chuck Mabry,
biggest concern to
the retirement
A change as being
interest of the
• City and employees, should not be a problem for the City
Council. Chuck also suggested that when information is
brought to the City Council, it is more helpful to the City
Council for a complete package to be presented as opposed to
a number of piece -meal decisions.
•
DECISIONS/CONCLUSIONS:
The group concluded that consideration of a defined contribution
plan was worthy of further consideration. In order to develop
some type of means of attacking this question a "to do" list was
generated. This list was not prioritized or put in chronological
order:
1. Clarify issues, possibly an employee survey.
2. Educate employees.
3. Get financial counseling for each employee.
4. Develop an actuarial study showing the dollars for
5.
6.
7.
8.
9.
10
11
12.
13.
14.
15.
16.
17.
employee.
each
Vote or decide in an interactive process (shadow votes).
Keep City Council posted.
City Council final approval.
In-house computer work on the dollar amounts.
Explore employee contributions to the plan.
In-house test runs (of different rates of return).
Options and modifications -- review with other
municipalities, the PD, etc.
Survey employees.
Deal with vested/terminated people.
Deal with retirees.
How to administer plan.
Determine priorities
Set up a cut-off date for use in actuarial projections.
Set other assumptions also.
Pete Dallow offered to serve as a liaison person with the E-team
for the GERC in this project.
Guests at this GERC meeting who participated in this discussion
agreed to act as resources for direction and guidance in the
evaluation of a change in the retirement plan. A tentative time
frame for completing a change in the retirement plan (if it is
determined to be appropriate) was January, 1991.
NEXT STEPS: The GERC will use the "to do" list developed above
to develop a more detailed work plan. The work plan will be put
in sequential order and in some type of a framework to approach
this question.
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DISCUSSION TOPICS - NEW ITEMS:
• 1. DISTRIBUTION OF GERC MINUTES:
MAIN POINTS•
It was noted GERC minutes have not been distributed to
the E-team or City Council. It was suggested minutes
be distributed to these groups.
DECISIONS/CONCLUSIONS:
It was concluded minutes would be distributed as
suggested.
NEXT STEPS:
Sue Wilcox will make sure GERC minutes are distributed
to the E-team and City Council.
AGENDA & SCHEDULE FOR NEXT MEETING:
The agenda of next GERC meeting will be to continue the
discussion of the Defined Contribution Plan and other normal
committee business.
ADJOURNED: The meeting was adjourned at 4:15 P.M.
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