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HomeMy WebLinkAboutRetirement Committee - Minutes - 12/07/1996FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE DECEMBER 7, 1996 MEETING MINUTES COUNCIL LIAISON: Ann Azari, Mayor COMMITTEE MEMBERS PRESENT: Jerry P. Brown Jacci Peterson Dave Meyer ABSENT: Gary Ellis (illness) Alan Krcmarik, Member/Staff Support OTHERS PRESENT: Sue Wilcox (Staff Support - Secretary) Dave Agee (Staff Support - Controller) Russ Proctor & Mark Sanford - The Watson Wyatt Company, the City's actuarial firm Bobbie Burnette (Staff Support - Assistant City Attorney) Bob Eichem (Staff Support - Investments) CALL TO ORDER: Chairperson Jerry P. Brown called the meeting to order at 1:20 p.m. in the 2nd Floor Conference Room of City Hall West on December 7, 1995. ITEMS OF NOTE: 1. Member Gary Ellis is recovering from surgery. Jerry read a card from Gary thanking the Committee for the plant and card it sent. 2. Alan Krcmarik and Laurie Harvey are out of town, but the members present constitute a quorum. 3. Mayor Azari, Committee liaison from City Council, has scheduled one of her periodic meetings with Jerry on December 11th to discuss the Committee's activities. 4. On behalf of the Committee members and staff, Jerry thanked Russ Proctor and Mark Sanford for providing lunch. APPROVAL OF MINUTES: Russ Proctor noted that in item 8A on page 4 of the November 2, 1995 minutes, Mark's last name should be Sanford. Dave Meyer moved and Jacci Peterson seconded his motion to approve the November 2, 1995 minutes with that correction. The motion passed unanimously. DISCUSSION TOPICS: I. PLAN MEMBER/CITIZEN COMMENTS 2. UPDATE ON 'RULE OF 80" ISSUES There were no member or citizen comments. MAIN POINTS• There was extensive discussion of the pros and cons (which Russ provided) of a "Rule of 80". Most characteristics mentioned had both a "pro" -1- and a "con" aspect, or else they could be both supported and opposed by a significant percentage of GERP members. For example, although many employees may support a "Rule of 80", a potential group of GERP members could also oppose it because it would reduce their paychecks. Likewise, implementing a "Rule of 80" could encourage employee turnover, thus bringing "new blood" to the organization and lowering salary costs. At the same time, it could remove a large pool of experienced employees from the organization, which might reduce efficiency due to inexperience, training time required, etc. Many concerns centered around equity for all employees, as the cost of a "Rule of 80" will be borne for a much longer time by younger employees who remain with the City. CONCLUSIONS/NEXT STEPS: Russ will provide a chart for the January meeting showing the pros and cons of a "Rule of 80" and one showing the comparative costs for employees of different ages, with different numbers of years worked. It was stressed that there needs to be an education program for Plan members about the "Rule of 80". There was also expressed the strong need for support from management if a decision is made to implement a "Rule of 80". An opportunity for management to discuss this may be available in 1996 in relation to Total Compensation. Bob Eichem will check on potential when utility deregulation issues, as this may have some bearing on discussions. 3. UPDATE ON ASSUMPTIONS FOR THE VALUATION REPORT MAIN POINTS: The actuarial consultant each year provides the GERC with a report of the financial condition of the GER Fund. In order to calculate the future costs of providing retirement benefits, certain assumptions must be made. For example, contributions to the GER Plan are based on assumptions of future salary increases and an assumed rate of return that GER Plan investments will earn. Some of the costs to the Plan are based on the number of people who terminate their employment with the City each year and the rate of inflation for the economy in general. If any of these assumptions are too far from actual historical figures, it tends to give an unrealistic projection of the Fund's future growth and future liabilities. Russ Proctor reported that in the past a fairly high rate of terminations was used, when the actual number is relatively low. Low turnover means that employees stay "aboard" longer, increasing the costs the Fund is committed to provide for eventual retirement benefits. Russ has been working with Human Resources and Finance to determine the City's "history" of terminations and salary increases in order to make the assumptions for the 1-1-96 valuation as close to actual figures as possible. CONCLUSION/NEXT STEPS: Dave Agee will FAX a copy of the latest cumulative rate of return for investments in 1995 to Russ. Russ will bring the final assumptions to the GERC at the January meeting. 4. DRAFT WORDING FOR •PERSONAL RETIREMENT BENEFIT REPORT FORMS" MAIN POINTS: Russ prepared a draft of the wording for the "Personal Retirement Benefit Report" forms which are distributed to all GER Plan members in late spring. These traditionally have contained an estimate of -2- the GER Plan benefit the individual has earned and an estimate of their Social Security benefit at retirement. The statements distributed in 1996 will also contain information about the individual's ICMA contributions and benefits from the 457 Plan and Money Purchase Plan (MPP). The Committee reviewed the form and made a number of suggestions for changes. CONCLUSIONS/NEXT STEPS: The forms will be retitled "PERSONAL RETIREMENT PLANNING STATEMENTS" and Russ will send a revised draft before the January meeting. These will be printed on City letterhead. Sue will check on the availability of special forms used to request a statement of benefits earned from Social Security. If there are enough of these forms available, they could be included with the new "Personal Retirement Planning Statements" next year. Because of confidentiality concerns, the new forms will be distributed in window envelopes. Watson Wyatt will sort the forms according to location codes for easy distribution with paychecks. 5. UPDATE OF 'PLANNING FOR YOUR RETIREMENT" BOOKLET MAIN POINTS: The "Planning for Your Retirement" booklet was created during the education program in 1992, but has some inaccuracies now due to changes in the Plan benefits. The latest draft was presented, but could not be reviewed in the time available. CONCLUSION/NEXT STEPS: Jacci Peterson, Laurie Harvey, and Sue Wilcox will meet and provide a nearly final draft for the January 4, 1996 meeting. Any suggested changes should be returned to Sue as soon as possible. 6. INVESTMENT POLICY CHANGES UPDATE MAIN POINTS: In Alan's absence, Bob Eichem reported that the Investment Policy changes are being sent to the Council Finance Committee this week for review. A more complete analysis should be available in January. CONCLUSIONS/NEXT STEPS: This item will be on the January agenda. 7. OTHER BUSINESS A. Bob Eichem distributed and explained a condensed analysis of the six domestic mutual funds which are a part of the GER Plan's investments. He is also preparing a list of the pros and cons of contracting for the services of a money manager. The work of a money manager would still have to be supervised by someone in the City. B. Jacci Peterson proposed, and the GERC endorsed, the purchase of 1,000 copies of the brochure called "Top 10 Ways to Beat the Clock and Prepare for Retirement" for $50. These could be handed out with paychecks or with the new "Personal Retirement Planning Statements". C. Alan had provided a brochure for a conference in January that seemed to address a number of concerns the GERC has been discussing. Funds are budgeted each year for this type of educational conference, but most programs are not as closely tied to governmental entities as this one. At least one -3- member expressed interest in attending. D. Dave Agee reported that legislation is being considered that could affect changes in the 457 plans and possibly the 401(k) plans. He and Russ will continue to monitor developments and report to the GERC. AGENDA t SCHEDULE FOR NEXT MEETING The next meeting will be January 4, 1996 at 1:15 p.m. in the 2nd Floor Conference Room of City Hall West. The agenda will include: 1. Plan Member/Citizen Comments 2. Update on "Rule of 80" Issues (Including Potential Education Program) A. Pros and Cons of Offering a "Rule of 80" B. Illustration of Costs for Four "Sample Employees" C. Legal Questions vis-a-vis Partial Offering 3. Discussion on COLA's and Trends in Retirement 4. Input for 1995 GERC Annual Report (Due January 31) 5. Investment Policy Changes 6. Final Draft of "Personal Retirement Planning Statement" 7. Nearly Final Draft of "Planning For Your Retirement" booklet 8. Update on Assumptions for the Valuation Report ADJOURNMENT The meeting was adjourned at 3:50 p.m. FUTURE MEETING SCHEDULE: The General Employees Retirement Committee normally meets at 1:15 p.m. on the 1st Thursday of each month in the 2nd Floor Conference Room, City Hall West. THURSDAY, JANUARY 4, 1996 THURSDAY, MARCH 7, 1996 THURSDAY, MAY 2, 1996 THURSDAY, JULY 11, 1996** THURSDAY, SEPTEMBER 5, 1996 THURSDAY, NOVEMBER 7, 1996 **Rescheduled because of holiday THURSDAY, FEBRUARY 1, 1996 THURSDAY, APRIL 4, 1996 THURSDAY, JUNE 6, 1996 THURSDAY, AUGUST 1, 1996 THURSDAY, OCTOBER 3, 1996 THURSDAY, DECEMBER 5, 1996 ATTACHMENT: 1996 General Employees Work Plan and Meeting Schedule -4- 0 GENERAL EMPLOYEES RETIREMENT COMMITTEE 1996 WORK PLAN & MEETING SCHEDULE Regular meetings of the General Employees Retirement Committee (GERC) are normally scheduled for the first Thursday of every month in the 2nd Floor Conference Room of City Hall West at 1:15 p.m. The 1996 Meeting Schedule is as follows: January 4 April 4 July ll** October 3 February 1 May 2 August 1 November 7 March 7 June 6 September 5 December 5 ** - Rescheduled because of July 4th holiday 1996 GERC Work Plan, Discussion/Action Items, and Issues -------------------------------------------------------- - Prepare 1995 GERC Annual Report prior to the January 31 deadline - Monitor potential bid/RFP for the management of MPP and 457 plans - Monitor the issues associated with Workers Compensation/Disability/Medical Insurance/Productivity as they relate to the GER Plan - Determine the feasibility of a 1.) "Rule of 8011, 2.) Defined Contribution Option, and 3.) potential Cost of Living (COLA's) adjustments for retirees - Review potential Plan enhancements/changes (membership requirements) - Review Quarterly Investment Reports - Attend possible seminars or workshops to increase GERC Member's knowledge of trends in retirement and of our roles and responsibilities - Implement possible educational opportunities for GER Plan Members - Review legislative updates with our Actuarial Consultant - Distribute expanded "Personal Retirement Benefit Report Forms" to GER Plan Members in April and monitor feedback on changes - Printing and distribution of the revised "General Employees Retirement Plan Summary" booklet (formerly called "Planning For Your Retirement") - Explore continuing to revise/improve the Annual Actuarial Valuation Report document and revise Assumptions no later than April 1, and review of the Report in May - Explore the possibility of a 401(h) for medical benefits/tax savings - Continue to review the percentage of our investments in equities - Election of Officers and review of GERC Standing Rules in September - Prepare 1997 GERC Work Plan & Meeting Schedule by the December 1 deadline