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HomeMy WebLinkAboutRetirement Committee - Minutes - 05/05/1994FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE NAY 5. 1994 MEETING MINUTES COUNCIL LIAISON: Ann Azari, Mayor COMMITTEE MEMBERS PRESENT: ABSENT: Jerry P. Brown Jackie Davis None Dennis Sumner Dave Meyer Alan Krcmarik (Member & Staff Support) OTHERS PRESENT: Mary Crumbaker (Staff Support - Legal & Pension Oversight/MAD Comm.) Dave Agee, Staff Pension Oversight Committee Sue Wilcox (Staff Support - Secretary) Ann Turnquist, Employee Development, JAD Committee Don Mazanec of William M. Mercer, Inc. the City's actuarial firm. Jacci Peterson, CIS Dept & GERC member applicant Bob Eichem, (Staff Support - Investments) CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:20 p.m. in the 2nd Floor Conference Room of City Hall West on May 5, 1994. APPROVAL OF MINUTES: Alan Krcmarik noted that on Page 3 of the April 7, 1994 minutes, in the "Conclusion" of Item 2, "complement" should be "compliment". He also noted that under Item 3, the minutes did not contain the discussion or motion regarding how the new vesting percentages would apply to former classified members of the Plan who had changed to non -classified status prior to January 1, 1994, the effective date for the changes in the plan vesting schedule. Dave Meyer moved and Jackie Davis seconded a motion to approve the correction of the homonym "compliment" and to add the following section to Item 3. The vote was unanimous in favor of the motion. C. Vested status of former classified members of the Plan who had changed to non -classified status prior to January 1, 1994. "MAIN POINTS: Employees still employed by the City in a non -classified status are frozen in the vesting schedule in effect prior to the change. If the new vesting schedule would apply to these employees, they would have higher vesting percentages and have a greater benefit at the time of their retirement. The GERC has been concerned about. the adequacy of the benefits provided by the Plan and this would provide a better retirement benefit for the currently -employed individual than if the vesting status is determined by the old plan. During the discussion of the issue, it was pointed out that employees deciding to leave the Plan did so at their own risk, and the rules in effect at the time of their decision are the ones that should be followed. They should not be able to receive future improved benefits from the Plan. They were not considered as part of the actuarial cost estimate that was provided before GERC members voted on the item. This situation was contrasted with an employee death. When an employee -I- dies with less than 100% vesting, it is assumed that if the employee had been given a choice, s/he would have chosen to stay employed till 100% vested." Other members of the Committee felt that employees who still work for the City should be given some consideration and receive the benefit of the improved vesting. Very few employees would be affected. It would seem more equitable to allow these individuals to receive the benefit of the improved vesting. CONCLUSION/NEXT STEPS: Jackie Davis moved to not extend the vesting benefit to employees who left the Plan before January 1, 1994, but who are still working for the City. Dave Meyer seconded the motion, which passed 3-2, with Meyer, Sumner, and Davis voting aye and Brown and Krcmarik voting nay. ITEMS OF NOTE: Dennis welcomed Jacci Peterson, who is a Plan member and who has applied to fill the position being vacated by Jackie Davis. Dave Meyer will be out of town for one week beginning Friday the 6th and will not be able to reply to any messages needing his input during that time. Dennis also noted that Don Mazanec would be excused later in this meeting during the discussion of the RFP for actuarial services, since it might be a conflict of interest. REVIEW OF DISCUSSION TOPICS: Sue asked to be added to the agenda to report on the responses to the lump -sum letters sent to retirees. DISCUSSION TOPICS: MEMBER COMMENTS: There were no member comments. 2. JAD COMMITTEE REPORT MAIN POINTS: Ann Turnquist presented the final draft of The Wyatt Company report and noted that two sections have been added: one section added some charts in addition to those in the draft report and the second section was a summary of the comments received by the Wyatt Company at the meetings with employees. Ann reported that 180 employees had attended the information sessions and some employees had called later to request copies of the handouts or to get clarification on items in the handouts. Option 4 (called the "457 versus MPP Choice") received the most favorable comments. Concern was expressed that there wasn't sufficient time to absorb and analyze the different options and that perhaps a chart showing a side -by -side comparison of the five options would be helpful. Ann felt this might be useful at future information sessions. Ann distributed and reviewed a draft of a timeline (see Attachment A), including 1) review of the report by the City Manager and Deputy City Manager, 2) meeting with the Executive Lead Team, and 3) review and discussion by the Pension Oversight Committee (POC) and the HAD (Mary, Ann, Dave) subcommittee of the POC. Ann asked what the GERC's feelings were about presenting information at a Council worksession in June as originally -2- planned. The members felt that this action could depend on the option that is chosen and whether it requires Council action. GERC members expressed general support for the "457 Versus MPP Choice". It was noted that this option seemed to be a good step in the right direction to address many of the concerns which have been expressed by Plan members. It was noted that this option does not make any change in the GERP (i.e. Rule of 80 or portability of GER Plan). It was also pointed out that some of the options would not simplify administration of the plans. Alan expressed concern that we not make changes that would end up limiting employee's options in the future. CONCLUSIONS/NEXT STEPS: Ann advised that she will be following up with discussions with the Pension Oversight Committee and City Manager. The GERC encouraged Ann to continue exploring the "457 Versus MPP Choice". Mary Crumbaker advised there may be relevant State laws that need to be reviewed for compliance. 3. RFP PROCESS FOR ACTUARIAL SERVICES MAIN POINTS: To avoid any potential conflict of interest, Don Mazanec left the meeting at this time. Dave Agee distributed a draft of an RFP for actuarial services. The Committee members reviewed the scope of services section, making suggestions for breaking out such things as the actuarial valuation report, attendance at monthly meeting, extra meetings, and costing out future suggested changes in the Plan. The GERC agreed that the City should make the actuarial assumptions it currently uses a part of the RFP and any other assumptions the bidders wish to use must be explained. Reports and drafts of changes should be received a week in advance of Committee consideration. Dave will inquire about the billing method Employee Development uses for miscellaneous questions posed by staff or committee members to their benefits consultant. Answering such questions would be a helpful service for inclusion in the RFP. The bid would be for one year, with annual renewals possible up to five years. CONCLUSION/NEXT STEPS: Dave asked the members to review the draft for further changes and to have them to him as soon as possible. He will coordinate these and any changes from Purchasing and attempt to finalize the document so it can go out to bid in June. On behalf of the Committee, Dennis thanked Dave for his work on the RFP. Don Mazanec returned to the meeting at this time. 4. PLAN CHANGES TO GO TO CITY COUNCIL MAIN POINTS: The members reviewed an agenda item prepared for City Council by the City Clerk's Office that clarifies requirements for GER Committee membership in order to make the Plan consistent with the City Code. A second agenda item prepared by Alan includes the corrections to the death benefit provisions outlined at the last meeting. Mary Crumbaker provided the -3- actual wording of the resolution. Some small changes were suggested. CONCLUSIONS/NEXT STEPS: It was moved and seconded to endorse the changes requested by the City Clerk's Office to make the Plan agree with the City Code. The vote was unanimous in favor of the motion. Alan moved that the GERC recommend that City Council approve the changes in the death benefit to create a more equitable death benefit to GERC members as of January 1, 1994. Jerry Brown seconded the motion and it was approved unanimously. Alan and Mary will make final changes to the Agenda Item Summary and the resolution for inclusion in the Council packets for the May 17th meeting. 5. 1993 ACTUARIAL REPORT, DRAFT OF BENEFICIARY DESIGNATION FORM, DRAFT OF REVISED PERSONAL RETIREMENT BENEFITS REPORT MAIN POINTS: Don Mazanec distributed copies of the 1993 Actuarial Report for Committee members to review. He noted that the City experienced very little turnover of employees during the last year. Don also distributed a beneficiary designation form and a slightly revised Personal Retirement Benefits Report form for Committee review. CONCLUSIONS/NEXT STEPS: The Actuarial Report will be reviewed at the June meeting. Suggested changes to the beneficiary designation form will be discussed at the June meeting. Don needs any changes to the Personal Retirement Benefits Report form by Monday, May 9th. 6. RETIREE RESPONSES TO LUMP -SUM OFFERS MAIN POINTS: Offers of actuarially equivalent lump -sum payments were made to 16 retirees whose monthly benefits were less than $100. Of these, one has requested no change; one has requested a partial lump -sum payment with the remainder rolled into an IRA; three requested the entire sum be rolled over to an IRA; nine will receive lump -sum payments; and two responses have not been received. CONCLUSIONS/NEXT STEPS: The deadline is May 15th and Sue will be contacting those who have not responded. Checks will be written or electronic transfers made the last week of May. On behalf of the Committee members, Jerry Brown thanked Sue and Alan for their time and effort in carrying out the work of the Committee. 7. OTHER BUSINESS Dennis reported that progress is being made on exploring an Early Retirement Program. Legal and other opinions are being sought. Some information may be available next month. Alan reported that a Colorado State University professor has conducted a study of defined contribution and defined benefit plans which showed that employees with defined benefit plans were more attached to their employers. He plans to obtain a copy of the study for the Committee's information. -4- • Alan announced that ICMA-RC (International City Managers Association - Retirement Corporation), administrators for the City's 457 deferred compensation plan, no longer is charging an administration fee. The City is the largest ICMA account in the region and the City's requests to eliminate the fee were granted. ITEMS FOR FUTURE DISCUSSION 1. Possible seminars or workshops to increase GER Committee members' knowledge of their roles and responsibilities. 2. GERP / Workers Comp / Disability Proposal to E-Team 3. GERC Standing Rules - August/September AGENDA i SCHEDULE FOR NEXT MEETING The next meeting will be June 2 at 1:15 p.m. in the Finance Conference Room. The agenda will include: 1. Plan member comments 2. JAD Update - POC Feedback 3. Actuarial Services RFP 4. Beneficiary Designation Form (Death before Age 55) 5. Quarterly Investment Report/Method of Reporting "blended" yields ADJOURNMENT The meeting was adjourned at 3:25 p.m. MEETING SCHEDULE: The General Employees Retirement Committee meetings are normally held at 1:15 p.m. on the 1st Thursday of each month in the 2nd Floor Conference Room, City Hall West. Any change from that will be noted. THURSDAY, JUNE 2, 1994 THURSDAY, JULY 7, 1994 THURSDAY, SEPTEMBER 1, 1994 THURSDAY, NOVEMBER 3, 1994 -5- THURSDAY, AUGUST 4, 1994 THURSDAY, OCTOBER 6, 1994 THURSDAY, DECEMBER 1, 1994 ATTACHMENT A Pension Project Timeline May 5, 1"4 May 5 Meet with GERC members to review employee feedback and consultant recommendations. May 6 Meet with City Manager/Deputy City Manager for project update. May ?? Meet with POC/MAD to evaluate recommendations and discuss options and work plan. May ?? Meet with Executive Lead Team to update on process and recommendations. June 28 Council worksession on proposed changes, employee feedback. Tentative: May be accomplished through written update. June/July Meet with employees to present recommended changes. Explain options, impacts. Meet with Unclassified Management employees to review employee contribution levels. July Begin bid process for MPP and 457 administration. August Draft plan document changes. August Review of plan design changes by outside legal counsel. September Employee election of which plan they will participate in (MPP v. 457 option) September Actuarial test on employee elections (i.e. Non-discrimination testing) September Interview potential plan administrators. Select administrator. October Develop transition plan for change (if any) in plan administrators. November Benefits Open Enrollment January 1 If elections result in passing tests: Implementation If elections result in failing tests: Re -design option to ensure compliance. Postpone implementation; repeat process. Unresolved issues: • Compliance with State laws regarding contributions, etc. • Establishing a pension committee for MPP plans. • GERP change options listed in report.