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HomeMy WebLinkAboutRetirement Committee - Minutes - 12/19/1991• 1] FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE DECEMBER 19, 1991 MEETING MINUTES MEMBERS PRESENT: Jerry Brown Dennis Sumner Alan Krcmarik Mollie Mercer Angelina Powell (Member & Staff Support) Sue Wilcox, (Staff support -secretary) MEMBERS ABSENT: None COUNCIL LIAISON: Loren Maxey Visitors included Mary Crumbaker-Smith, Assistant City Attorney; and Don Mazanec of William M. Mercer, Inc. CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:15 p.m. on Thursday, December 19, 1991. APPROVAL OF MINUTES: Angelina Powell moved that the wording of the second and third paragraphs of Item 6 "Defined Benefits versus Defined Contribution Plans" be changed to more accurately reflect the tone of the discussions. She would delete the last sentence of paragraph #2 and all of paragraph #3. Her replacement paragraphs would read as follows: Don offered to provide information from governmental agencies currently considering a change to a defined contribution plan --- their process, their obstacles, their results. He warned that employee education was primary. Employees need to understand the differences between defined benefit and defined contribution and how a change might individually impact them now and at retirement. With voting for such a change in the City of Arvada falling pretty much along demographic lines, Don cautioned the need for planning (annuities?) for long-time, retirement age employees. Depending on the demographics, they may be the minority. She also included adding the following to the NEXT STEPS portion of Item 6: Follow up with Don Mazanec on information available about other agencies exploring the move to defined contribution plans. Mollie Mercer seconded the motion and the minutes of October 21, 1991 were approved as corrected. ITEMS OF NOTE: Dennis Sumner read a letter from Mayor Susan Kirkpatrick announcing that the chairpersons of boards and commissions may address the Council at their meetings, providing the staff liaison person transmits their request to speak in the agenda process. He also announced that the annual boards and commissions breakfast with Council members is on January 23rd at 7:30 a.m. Dennis plans to attend as the GERC's representative. • DISCUSSION TOPICS: Open Items -1- • 1. LUMP SUM PAYMENTS UPDATE MAIN POINTS: Sue reported that 48 lump -sum payments totaling $64,835.99 had been made to vested former employees, but she was unable to locate two people. Two others did not respond and it is assumed that they will retain their small monthly payment upon reaching retirement age. CONCLUSIONS/DECISIONS: None were required. NEXT STEPS: Sue said that she and Mollie will work this year on contacting other vested former City employees to verify or correct their current addresses, so that they can be reached when they attain retirement age. Don Mazanec suggested an effort be made at regular intervals to maintain current addresses for vested employees. 2. REVIEW OF PROPOSED ADMINISTRATIVE AMENDMENTS: General Information MAIN POINTS: Mary Crumbaker-Smith reviewed the proposed GER Plan amendments she has worked on since the last meeting. CONCLUSIONS/DECISIONS: See below. NEXT STEPS: Mary will revise the amendments as noted below and provide drafts for Jaime Mares of Employee Development and Stewart Ellenberg of • Risk Management. Amendment 1. LONG-TERM DISABILITY VS WORKERS COMPENSATION QUESTIONS MAIN POINTS: This defines temporary total disability and partial permanent disability. How does the Plan handle service credit for these disability types? CONCLUSIONS/DECISIONS: More clarification is needed. NEXT STEPS: Mary will move the definitions to various sections. In the area of credited service, she will remove the "under age 65" on pages 2 and 3. Don will review Article 9, Section 1 on Severance benefits and apply them to disability. Amendment 2. CLARIFICATION OF MEMBERSHIP EXCEPTIONS MAIN POINTS: Several years ago a number of employees were moved to "unclassified" positions, but elected to remain in the GER Plan. That group of employees needs to be considered in the language when amending the Plan. CONCLUSION/DECISIONS: They need to be referenced in the plan. NEXT STEPS: Mary will draft wording to include the 18 (+ or -) employees • who elected to remain in the GER Plan despite their move to "unclassified" -2- • positions, but she will need a list of the individuals. Mary may move this reference to another part of the plan. Amendment 3 CHANGE IN BREAK IN SERVICE MAIN POINTS: Angelina Powell withdrew from discussion at this point, as her situation could reflect a conflict of interest. Mollie's research revealed that there were 34 employees who had experienced a break in service (left City employment and returned as an employee within 5 years). CONCLUSIONS/DECISIONS: Before the Committee recommends whether service of less than five years should be given service credit for a prior employment term, they would like to know the financial impact. NEXT STEPS: Mollie will complete her list and Don will calculate the impact to the Plan if service credit is given to employees with breaks in service of less than five years. Amendment 4 PAYMENT DATE FOR MONTHLY BENEFIT MAIN POINTS: No change from October 21, 1991 minutes. CONCLUSIONS/DECISIONS• NEXT STEPS: • Amendment 5 SPOUSAL CONSENT REQUIREMENT MAIN POINTS: No change from October 21, 1991 minutes. CONCLUSIONS/DECISIONS: NEXT STEPS: Amendment 6 ONE-YEAR DELAY FOR LUMP -SUM PAYOFFS MAIN POINTS: No change from October 21, 1991 minutes. CONCLUSIONS/DECISIONS• NEXT STEPS: Amendment 7 ELIMINATE AUTHORITY TO ACCEPT QDRO MAIN POINTS: No change from October 21, 1991 minutes. CONCLUSIONS/DECISIONS• NEXT STEPS: • -3- • Amendment 8 STATEMENT OF GOVERNMENT PLAN MAIN POINTS: The Plan does not specify that it is a government plan. This omission may create difficulties. CONCLUSIONS/DECISIONS: The fact that this is a government plan needs to be specifically stated. NEXT STEPS: Mary will include this statement. 3. REVIEW OF PROPOSED ENHANCEMENT AMENDMENTS MAIN POINTS: To amend the Plan to include 5-year vesting, use of three- year salary averaging for benefits, and implementation of the "Rule of 80" may be possible with employee contributions. Dennis proposed that we include in the work plan for 1992 a program to educate employees about retirement. Don has information and a slide presentation used for a similar program in another City. CONCLUSIONS/DECISIONS: The employees need to understand their pension benefits and the members need to know what employees would like to see in the way of changes or improvements. NEXT STEPS: Employee education and soliciting employee feedback will be included in the 1992 Work Plan. • DISCUSSION TOPICS: New Items 1. 1992 WORK PLAN MAIN POINTS: A number of items were discussed for inclusion in the 1992 Work Plan for the General Employees Retirement Committee. CONCLUSIONS/DECISIONS: The following items were considered for inclusion in the 1992 Work Plan: 1. Review Plan for compliance with new non-discrimination regulations of the IRS (Mary). 2. Employee education (perhaps through an open house) about the GER Plan. 3. Communication with employees and feedback from them about the three enhancements the Committee would like to implement and also Defined Benefits VS Defined Contributions. 4. Locating vested former employees. 5. Increased awareness of GERC activities and GER Plan provisions via Fort Notes and an insert about the Annual Report, Work Plan, etc. The GERC minutes can be posted as departments request distribution copies. NEXT STEPS: Put this on the agenda for January 9, 1992. is -4- • 2. CONTINUED PARTICIPATION AFTER END OF MEMBER'S TERM & EX-OFFICIO MEMBERS MAIN POINTS: Angelina Powell's term as a member of the GERC will expire in July, but she would like to work as a volunteer for 1992 Work Plan items. There was also mention of making the position of Assistant City Attorney who works with pensions an ex-officio position on the Committee. Likewise, the Treasury Administrator is in charge of investing Retirement Plan funds and could be considered an ex-officio member. CONCLUSIONS/DECISIONS: These items should be discussed further. NEXT STEPS: Add to the January 9th agenda. ITEMS FOR FUTURE DISCUSSION 1. Pension Investment Seminar/Public Benefit Plans Workshop 2. Evaluation of competitiveness of 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 a 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. 7. Discussion of "equities" with Bob Eichem. AGENDA & SCHEDULE FOR NEXT MEETING The next meeting will be Thursday, January 9, 1992 in the Finance Conference Room. The agenda will include: I. Work Plan for 1992 & Annual Report for 1991 2. Communication with and from employees regarding the GER Plan 3. Greater breakdown of participation in 457 Plan (ICMA) - Alan 4. Employee education about the Deferred Comp and Deferred Benefit plans and the three enhancements the GERC would like to implement. 5. Ex-officio members and former -member volunteers. ADJOURNMENT The meeting was adjourned at 3:20 p.m. 0 -5- • • Rocky Mountain News Sat., Dec. 14, 190 Proposed state cutback in pension fund rankles By John Sanko Rocky Mountain News Capitol &&eau State budget writers ran into a storm of protest Friday when they recommended Colorado dig out of a fiscal crisis by cutting $65.9 million from next year's contribu- tion to the state employee retire- mentfund. Despite assurances that the 18.4% cutback won't endanger benefits for thousands of state, school, municipal and court em- ployees, representatives of the workers pledged stiff opposition. The total loss to the fund in the 1992-93 fiscal year would be near- ly $86.2 million, including $5.2 million paid by municipalities into the retirement fund and $53.7 mil- lion by schools for the state's teachers. "I can say positively our people are going to go crazy when they hear about this," said Pete Peter- son, executive director of the Col- orado Association of Public Em- ployees, or CAPE. "There will be a fight, I promise. I guess the retirement fund is looked upon by the JBC (joint Budget Committee) as a honey pot." Don Schaefer, spokesman for the Public Employees Retirement Association, called it another slap in the face of government work- ers. PERA represents 166,000 working or retired government employees. "This takes the public employee and says, 'No, you're not as good as everybody ease, we're not going to have a pension plan like every- body else, we're going to make sure there cannot be any more improvements or changes in the benefit structure," Schaefer said. "I think what it says is, 'You're not worth as much as a private em- ployee.' " The opposition came as no sur- prise to members of the Joint Bud- get Committee, which voted 5-1 Thursday to recommend the cut- back to the full legislature when it meets in 1992. The committee earlier had vot- ed to support Gov. Roy Romer's suggested 1% cutback of the state's share into the pension pro- gram in the current fiscal year at a savings of $5.5 million. The proposal would cut the state's rate payment to the retire- ment fund in 1992-93 from 11.62% of salary to 9.48%. Schools would drop from 12.2% to 8.85%, municipalities from 10% to 7.58% and the judicial branch from 15% to 11.65%. "It won't hurt anybody," said Sen. Mike Bird, R-Colorado Springs, vice chairman of the bud- get committee. It does mean they won't get additional benefits they might like to have, but the commit- tee's feeling was we shouldn't be giving benefits at a time when we're cutting back programs and laying off workers." Some states have actually taken money from their pension funds. . "Basically, it puts the fund in a status that most experts recom- mend," said Sen. James Rizzuto, D-Swink, who offered the motion. "PERA is at a point now, especial- ly in the schools, that is too conser- vative. We need the money, and this is a way to find it without hurting anybody." Rob Gray, director of govern- mental relations for PERA, said the proposal would drop the state's contribution far below the nationwide* average for private employers. The average employer contributes 11.85% of, salary for Social Security and private pen- sion plans. The average employer contribution for the 25 largest public pension funds in the country is 15.73%. "I think this is one of the wake- up calls for state employees in Colorado," said CAPE spokesman Joe Evanoski. .