HomeMy WebLinkAboutRetirement Committee - Minutes - 07/01/1993•
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
JULY 1, 1993 MEETING MINUTES
COUNCIL LIAISON: Ann Azari, Mayor
MEMBERS PRESENT:
Ann Azari, Council Liaison MEMBERS ABSENT:
Jerry P. Brown Jackie Davis
Dennis Sumner Dave Meyer
Alan Krcmarik (Member & Staff Support)
OTHERS,PRESENT:
Sue Wilcox (Staff Support - Secretary)
Amy Coffern of William M. Mercer, Inc. the City's actuarial firm.
Plan Members:
ACCOUNTING:
Kim Driese
CPES ADMIN:
PLANNING
Ted Shepard
CITY CLERK:
NATURAL RESOURCES:
ENGINEERING:
Rita DeCourcey
Linda Brown
Claudia Haack -Benedict
Kari Henderson
Bruce Biggi
Rita Harris
Susie Gordon
Kerrie Ashbeck
Brenda Traut
Rita Welch
Janet Meisel
Kirsten Whetstone
CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:15
p.m. in the Second Floor Conference Room of City Hall West on July 1, 1993.
APPROVAL OF MINUTES: The minutes of the June 3rd meeting were reviewed and
it was noted that "department" should be "Service Area". Dave Meyer moved
and Jackie Davis seconded a motion to approve the minutes as revised. The
motion carried unanimously.
ITEMS OF NOTE: Dennis welcomed the 14 Plan members from several departments
and service areas. The Committee members received letters from Claudia
Haack -Benedict, Janet Meisel, Julie Wittmeier, and Kari Henderson expressing
their concerns about the pension plan and the survey. (Copies of the letters
are available from the Committee staff secretary, Sue Wilcox.)
Sue had prepared and distributed to Committee members a report containing the
complete comments from the surveys, including copies of the multi -page
comments. (Some written comments contained in the original report of survey
results prepared by William M. Mercer, Inc. were incomplete because the size
of the data entry field for "comments" was limited to eight lines.)
She had also distributed to the members a compilation and tabulation of the
written comments from the Education Program survey. Comments about a certain
topic were grouped together and a notation made of how many people, out of
351 Plan members who responded to the survey, had made written comments on
that topic. The Committee members asked that this summary of responses be
added to these minutes when they are distributed. (See Appendix A.)
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REVIEW OF DISCUSSION TOPICS: Although the Actuarial Valuation Report was
distributed to the members, Don Mazanec of Wm. M. Mercer, Inc was not able to
be present, so the discussion will be postponed until the next meeting. It
was agreed to move Item #4 on the agenda to #1, since many of the visitors
wished to address it.
DISCUSSION TOPICS:
1. SURVEY RESULTS l COMMENTS
MAIN POINTS: One or more of the members attending expressed concern for the
following topics:
1. Earlier vesting (9 comments/affirmations)
2 ""Portability (10 comments/affirmation)
3."'Equity among all employee groups, including same choice of plans as
other groups have, equity among administration/employees, female/male, short-
term/long-term workers, classified/unclassified. (9 comments/affirmations)
4.""Need greater employee participation on the Committee. Committee
members have divided loyalties: members. are appointed by Council, but
administering benefits for employees. (5 comments/affirmations)
5.--No survivor benefits before age 55 (7 comments/affirmations)
6.""Vulnerability of the 457 plan, since the funds are an asset of the
City and can be used elsewhere (1 comment)
7.'"Education program should have included the defined contribution
plan. (1 comment)
8. Need to hire an independent consultant. (1 comment)
9. Survey was premature. Committee must decide what it wants and how
to get there. (1 comment)
10. City should be on the leading edge of this issue,as it is on many
other issues. (1 comment)
11. GERP is only a savings program and Social Security can't be
counted on. (1 comment)
12. Regarding Rule of 80 with retirement only at age 55: It's
possible for employee to work for City for 37 years before reaching age 55.
If employee retired at that point, would receive only 1/2 the benefit they
are entitled to if they retire at age 65. (1 comment)
13. It was noted that in 1986 the department and division heads were
given an opportunity to roll their GERP funds into the 401(a) plan. When
this option was chosen by a number of individuals, the funds did not come
from the GER Plan, but from the General Fund or other funds. (1 comment)
Several visitors suggested that the survey conducted after the education
program was biased or skewed towards a defined benefit plan and a Rule of 80
and gave little consideration to a defined contribution plan. They felt that
bias made the survey results invalid.
Amy Coffern explained that through the survey the Committee was attempting to
find out how much the members knew about their Plan, whether those attending
the classes understood how the Plan works, and a sense of what members were
looking for in the way of Plan improvements. The comparison with the ICMA
457 Plan was used in the literature because 1) It is the only other City
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alternative available to all employees for saving towards retirement, and 2)
based on the results of the Focus Groups, it was found that most City
employees were familiar with how ICMA works.
Committee members also commented that although there are many GER Plan
members who want a defined contribution plan, there is also a large body of
Plan members who "don't want anyone tampering with their retirement plan".
The Committee has a fiduciary responsibility to all Plan members. There was
debate over revising the current Plan and/or having a choice of plans.
CONCLUSIONS/NEXT STEPS: Dennis noted that the charge of the General
Employees Retirement Committee is to "administer and manage the GER Plan".
City Council actually makes any changes. In previous conversations with
Council members, the Committee was encouraged to improve the plan, keep the
total compensation plan in mind, and not to make everyone angry. Dave
suggested that it would be possible to make some changes to the current Plan
and at the same time investigate other plans for possible implementation at
a later date. He pointed out that the Committee has not set a deadline for
this work. The current effort actually started about 2 years ago and is an
ongoing process.
Dennis invited all members to attend the meetings, which are generally held
the first Thursday of each month in the Finance Conference Room at 1:15 p.m.
The members suggested that meeting notices and minutes be available on the
Notice Board and this will be done.
2. REQUEST FOR LUMP -SUM PAYMENTS
MAIN POINTS: Linda Brown and Rita Welch of the Payroll Division had
previously requested that some current retirees, whose benefits were less
than $100 per month, be given the option of receiving a lump -sum payment.
Mercer calculated that the financial impact on the GER Plan would be close to
$100,000. After reviewing the issue, the Committee members did not act on
the request because 1) this action might deny retirees cost -of -living
increases and 2) the funds would be a significant loss for the Retirement
Plan fund.
Rita and Linda submitted a revised request to offer six retirees the option
of a lump sum payment, since their benefits were less than $50 per month.
The total loss to the fund would be less than $20,000.
The Committee members noted that the Council Finance Committee members would
like to review a number of pension -related issues, including more regular
cost -of -living increases.
CONCLUSIONS/NEXT STEPS: The Committee members elected to defer taking any
action on Payroll's request until the Finance Committee has a chance to
discuss the issues and make recommendations. This item will be carried on
the "Items for Future Discussion" list by the GERC.
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3. QUESTIONS FROM EX -EMPLOYEE PLAN MEMBERS
MAIN POINTS: Several questions have been received from ex -employees who are
Plan members, regarding naming of a beneficiary and the possible early
withdrawal and use of GER Plan benefits.
CONCLUSIONS/NEXT STEPS: There are no provisions in the Plan for rolling over
any Plan benefits to another pension, IRA, or deferred compensation plan.
There are also no provisions for withdrawing funds from the Plan for "good
Cause", i.e. down payment on a house, etc. There is no provision in the Plan
which would deny an unmarried Plan member the right to name a beneficiary.
No Plan member can name a beneficiary until they are 55 years old, but
marital status is not a restriction. Sue will communicate these conclusions
to the Plan members.
4. FORT NOTES ARTICLES
MAIN POINTS: Dennis's article on GERP death benefits will appear in the July
FortNotes, and Jerry will distribute his draft of the August article.
CONCLUSIONS/NEXT STEPS: Members will review it and comment before the
deadline for publication.
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
3. Lump sum Payments for Some Pensioners
4. Monitor progress by Staff Pension Review Group
AGENDA i SCHEDULE FOR NEXT MEETING
NOTE: Because of schedule conflicts, the next meeting will be moved to
Thursday, August 19th at 1:15 p.m. in the Finance Conference Room. The
agenda will include:
1. Plan Member Comments
2. Second Quarter Investment Report
3. Actuarial Report
4. Action Plan to Explore Plan Changes
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ADJOURNMENT
The meeting was adjourned at 3:40 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 Finance Conference Room. Any
change from that will be noted.-
THURSDAY, AUGUST 19, 1993
THURSDAY, OCTOBER 7, 1993
THURSDAY, DECEMBER 2, 1993
THURSDAY, SEPTEMBER 2, 1993
THURSDAY, NOVEMBER 4, 1993
Appendix A - SUMMARY OF COMMENTS
JUNE, 1993
706 surveys distributed, with 351 surveys returned. 106 Written comments
(some covering multiple topics).
MAJOR CONCERNS: CHOICES & EQUITY
EQUITY (13 responses): Wanted equity in the plans in relation to classified
& unclassified, male/female (i.e. the better plans are male dominated ones),
police/fire, 401/457. It's not fair to ask Plan members to contribute when
neither police nor fire had to.
CHOICES:
1. WANT CHOICE OF OPTING OUT OF GERC.
2. MEDICAL: (13 responses) supplemental insurance for Medicare at nominal
cost or option to pre -pay; if two city employees married, option to move
one's medical benefit $ to retirement plan; group medical for retiree to buy;
keep medical benefits separate from basic Plan so they won't bankrupt the
Plan; can't count on future medical care; how would medical coverage work;
one was unconcerned as husband's retirement benefits will include medical.
3. WANT RULE OF SO: (8 responses) references to worker's comp costs,
especially in Labor/Trades group; how did the group of early retirees done
several years ago work out; not wanted if minimum age is 55 --- use only age
plus years of service.
4. IMPROVE EARLY RETIREMENT BENEFITS: (5 responses) willing to pay for
better early retirement benefits; it would save on disability payments (4).
5. WANT SURVIVOR BENEFITS BEFORE 55: (6 responses) Want more flexibility
in naming of beneficiary (pre -retirement and at retirement).
6. VESTING: MORE GENEROUS (11 responses) - allow partial credit for
contractual employees, parttime and hourly; reduce the years for vesting;
!&•T
start vesting after 6 months probation period; optionally allow voluntary
contributions before 6 years; enhance the benefits for longer -term employees
before making vesting more generous; allow vesting from beginning of service
if employee goes from unclassified (perhaps they mean hourly?) to classified;
discourages older applicants for administrative positions because would not
be vested for 10 years; how does GERP vesting compare with other funds; keep
vesting consistent among all City plans.
LESS GENEROUS (2 responses) - increase vesting to 15 or 20 years; use
contributions for those who leave to increase the benefits for others.
8. NO BENEFICIARY FOR SINGLE PEOPLE (2 responses) Two people say it is
unfair that single people cannot name a beneficiary. (THIS INFORMATION IS
INCORRECT.)
9. WANT CHOICE OF PLANS: 10 wanted 401 or 457 plans, 6 wanted ICMA, 3 wanted
GERP & 401 combined, 4 want choice of plan if paying for it.
10. WANT INVESTMENTS MANAGED BY OTHER THAN CITY PERSON (3 responses); STAY
WITH CITY DOING INVESTING (1 response) Questions about internal investing (1
response).
11. WANT MORE PERSONAL INPUT/CONTROL IN THE PLAN: (2 response)
12. SATISFIED WITH PRESENT PLAN/SYSTEM: (13 responses) Let those not
satisfied look for a job elsewhere; likes stability; fine the way it is;
likes guaranteed benefit; satisfied, but ok to pay for more benefit; provides
very well for long-term employees in traditional family.
13. COST - NO CHANGE: (7 responses) Too much deducted from paycheck
already; no change if there is a cost; exceptional retirement plan great, but
at what cost; won't pay cost for earlier vesting of other employees.
ADDITIONAL COST TO MEMBER: 6 willing to pay extra cost if they can choose
own plan; Cafeteria -type retirement plan where "extras" could be applied to
these changes in Plan; share cost of changes evenly with City; willingness to
pay tied to amount of pay increase Council gives.
OTHER CHANGES OR SUGGESTIONS: (1 response each unless noted)
14. EDUCATION PROGRAM: (13 responses) thanks, good job, thorough
questionnaire; survey too complicated; make classes ongoing, survey
premature.
15. Wants savings bonds offered.
16. "Guaranteed" benefit challenged: (3 responses) cited two references in
booklets that say "City Council can change GER Plan at will".
17. Consider 3 year FAMP
18. Need cost -of -living adjustments.
19. Wants more information and interactive workshops.
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20. Who is asking for another ICMA Plan and why; investigate ICMA---
investment options poor, reporting terrible and track record questionable;
providing ICMA-type plans should be bid. (3 comments)
21. Social Security estimates too high ---wants realistic figure.
22. Substitute life insurance for survivor benefits before age 55.
23. Questioned validity of survey results.
24. Change employee representation on the Board (2 Responses).
25. Hire unbiased consultant.
26. Hire investment manager.
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