HomeMy WebLinkAboutRetirement Committee - Minutes - 04/29/1993E
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
APRIL 29, 1993 MEETING MINUTES
COUNCIL LIAISON: Ann Azari, Mayor
MEMBERS PRESENT: MEMBERS ABSENT:
Jerry P. Brown Jackie Davis
Dennis Sumner Dave Meyer
Alan Krcmarik (Member & Staff Support)
OTHERS PRESENT:
Ann Azari, City Council Liaison
Claudia Haack -Benedict, Planning Department (Plan Member)
Bob Eichem (Staff Support - Investment Officer)
Sue Wilcox (Staff Support - Secretary)
Amy Coffern of William M.Mercer, Inc. actuarial firm
Don Mazanec of William M. Mercer, Inc., the City's actuarial firm.
CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:15
p.m. in the Finance Conference Room on April 29, 1993. On behalf of the
Committee he greeted Mayor Azari, who is the new liaison with City Council.
Ann said she appreciated being the Council Liaison to the Committee and
explained her style of participation. Ms. Azari plans to be present (barring
other commitments) at the beginning of each meeting to provide an opportunity
for communication between the Committee members and her. She personally
would like to do as much as possible to further the work of the Committee,
but will not normally stay for the whole meeting in case her presence would
inhibit discussion or decision -making. The Committee members, staff, and
visitors introduced themselves and explained their roles.
APPROVAL OF MINUTES: The minutes of the April 1st meeting were reviewed and
Sue expressed her regret that they had not been distributed electronically as
they normally would be. There was concern expressed that part of the
information on the chart in Item #3 "REPORT ON 401(a) AND DEFERRED
CONTRIBUTION PLANS" was incomplete. Alan asked that the information be
checked and corrected, if necessary. (See Post Note #1 for corrected chart.)
The title of Item #3 was also corrected to read as above. Alan Krcmarik
moved and Dave Meyer seconded a motion to approve the minutes as revised.
The motion carried unanimously.
ITEMS OF NOTE: Dennis sent a letter to former Council Liaison Loren Maxey,
which he signed for the Committee, thanking Loren for his advice, assistance,
and support of the Committee's work.
REVIEW OF DISCUSSION TOPICS: Amy Coffern suggested that item #8, "Personal
Retirement Benefits Reports" (which Mercer Inc. creates for employees each
year) be considered after the discussion of the survey results so she could
be present for both.
Be
DISCUSSION TOPICS:
1. QUARTERLY INVESTMENT REPORT
MAIN POINTS: Finance Treasury Administrator Bob Eichem, who in that capacity
also acts as investment officer for the retirement plan, reported that
traditionally the City's pension funds have been invested in bonds. However,
since the bulk of retirements are still 12-20 years away, he has attempted to
diversify the investments and work towards giving the funds a greater long-
term return on investment by purchasing mutual funds. History has shown that
stocks outperform bonds by 3% per year. The mutual funds were carefully
selected for their history, rate of return, and fees (no-load).
Since the GERC has several new members, Bob suggested that it might be time
to have another information session on investing. He also commented that
when the amount of money invested in mutual funds reaches E2 million, he
would like to discuss making international investments with the Committee.
The $2 million figure is 10% of total investments which, he pointed out, is
very low for a pension plan.
Bob reported that the rate of return for this year so far is 8.55%. He bases
his rates of return on comparisons with similar investments, i.e. 5 year
treasury bills. In answer to a question, Bob stated that the 3.553%
contributed to the GER Plan is a part of Amendment 1 funds. However, neither
the pension fund earnings nor the pension payments are covered by Amendment
1 provisions.
CONCLUSIONS/NEXT STEPS: Jerry Brown moved and Alan Krcmarik seconded the
motion to accept the report as presented.
PENSION EDUCATION PROGRAM
A. Fort Notes Articles
MAIN POINTS: Angelina Powell designated the topics and members who will
draft each article in Fort Notes. Dave distributed his draft of the next
article and asked for comments by May 10th, as his deadline is the 12th.
CONCLUSIONS/NEXT STEPS: Dennis is to draft the July FortNotes article and
Jerry will do the August one..
B. Survey Report
MAIN POINTS: The GERC members had received copies of the summary report of
the survey data. Amy noted that the number of GER Plan members should read
706, which would change the percentage of members who responded to the survey
to 50%. Amy pointed out that this was a very good response rate. This does
not change the other percentages in the tabulation, which are based on the
number of surveys returned. Amy had grouped related questions together in
her report to make better comparisons. The final comments were grouped in a
separate section. It appeared some comments were missing. Amy will check to
see if this is the case.
-2-
• 0
At this point in the meeting, Ann Azari and Bob Eichem left.
CONCLUSIONS/NEXT STEPS: Some of the survey results brought questions, and
Amy agreed to run some additional data -sorts to provide more information.
The summary pages of the report and the breakdowns of raw data (Appendix B)
will be copied for each Committee member and made available to anyone who
would like to see them. Because of confidentiality, the comments in Appendix
A will not be made available for general review. However, Committee members
will have access to the full text of lengthy comments if they wish to read
them. Jerry Brown will draft a concise summary of the survey's results to be
printed and included with the May FortNotes. Jerry will route the draft to
Committee members for their review. It is expected that the survey results
will generate much discussion and will direct future Committee action.
4. AUTHORIZATION TO PAY SURVEY COSTS
MAIN POINTS: Sue presented information on funds spent to date on the various
parts of the Education Program and requested approval to extend the present
William M. Mercer, Inc purchase order by $1300 to cover the additional costs
of the survey work. The survey costs were greater than estimated for three
reasons: The survey asked more questions than were anticipated, more than
the anticipated number of drafts were required before the survey was
finalized, and the good response to the survey (50% of 706 surveys) was
greater than estimated and required more time to keypunch.
CONCLUSIONS/DECISIONS• The costs for the program have been within the
original estimates up to this point and the additional work required for the
survey justify the additional costs. Jerry Brown moved and Alan Krcmarik
seconded the motion to authorize the additional charges be paid for the
reasons noted above. The vote was unanimous in favor of the motion.
5. PERSONAL BENEFIT REPORT FORMS
MAIN POINTS: William M. Mercer, Inc. normally prints the Personal Benefit
Report Forms in June. These are the statements active GER Plan members
receive showing what their projected retirement benefit will be when they are
eligible to retire. In past years the forms have been pre-printed with the
basic Plan information and are then over -printed with the individual's
personal benefit information.
CONCLUSION/NEXT ST P5- There was discussion of revising the format, but it
was agreed that by moving some over -printed information to another position
and adding another line, the information would be clearer and more useful to
employees. Also this year, employees who have incurred breaks in service
will now receive information that combines their periods of service and
benefit accrual. In addition, the back of the sheet will be pre-printed with
a retirement planning worksheet and a gold card will be attached explaining
the assumptions used in calculating the Social Security benefit. It is
estimated that William M. Mercer has enough pre-printed paper for this year's
reports and next year's. When the forms are re -printed, the letterhead will
be changed.
-3-
6. REQUEST FOR LUMP -SUM PAYMENTS TO RETIREES
MAIN POINTS: The GERC received a suggestion from Rita Welch and Linda Brown
in Accounting and Payroll, that those retirees who are receiving benefits of
less than $100 a month or are paid benefits on a quarterly basis, be given an
opportunity to receive their benefits as a lump -sum, similar to the offer
made to eligible former employees. They pointed out that not only does the
number of pensioners increase each year, but that the City could achieve
overall savings in the costs of maintaining computer records, issuing and
mailing checks, preparing 1099-R IRS forms, and reduced tax reporting if
these pensioners received lump -sum payments. The quarterly payments are
particularly difficult to prepare with the new accounting system and no new
quarterly payments will be accepted in the future. Accounting calculated
that the payments amount to under $1200 per month.
However, Don Mazanec calculated that the funds involved for lump -sum payments
to these individuals, including loss of principal and future interest on
these funds, would amount to over $100,000 over the projected lifetimes of
the individuals involved. Members also noted that the pensioners might also
lose any future benefit increases.
CONCLUSIONS/NEXT STEPS: The Committee appreciates the Staff's interest in
helping control costs to the Plan and noted that because of recent Plan
changes, there will be no new pensioners with monthly benefits of less than
$100. The Committee members did not endorse the suggestion because of the
loss of possible future cost -of -living adjustments for the pensioners, and
the projected loss of principal and interest income to the Plan. However,
since the quarterly payments are a particularly thorny problem for the new
Finance system, the Committee would be willing to offer these individuals the
option of receiving yearly or monthly payments to simplify the process.
7. MAYOR'S REQUEST FOR BUDGET INPUT
MAIN POINTS: Mayor Azari had requested that all boards and commissions
advise City Council of any budgetary requests they might have so that they
could be included in the 1994 budget process. Since the future activities of
the Committee will depend on the survey results and Plan members wishes, no
specific requests were apparent at this time.
CONCLUSIONS/NEXT STEPS: The Committee concluded there were no special
funding requests it could identify for the 1994 budget at this time. The
committee asked Dennis to send a copy of the 1993 GERC Work Plan to City
Council, with reference to the survey results.
8. CHANGE IN MEETING TIME
MAIN POINTS: Because of schedule conflicts, the suggestion was made to
change the time of the July 1 meeting to 8:30 a.m.
CONCLUSIONS/NEXT STEPS: Sue will check with Alan, who had left the meeting,
to make sure that the new time would be convenient and then confirm it with
the members. (See Post Note N2.)
-4-
(Chart revised 5/25/93)
ee - Employee Contribution er - Employer Contribution
EMPLOYEE GROUP RFTTRFMFMT uIeuc
GENERAL
EMPLOYEE
EMPLOYEES
401(a)'
457'
GROUP
RET. PLAN
PLAN
PLAN
FICA3
CITY MANAGER4
None
3%ee 5%er
Voluntary
ee 8%er**
6.2%ee/
6.2%er
SERVICE
6.2%ee/
DIRECTORS
None
0%ee 10%er
3%ee 3%er*
6.2%er
UNCLASSIFIED
DEPARTMENT &
Voluntary
DIVISION HEADS s
ee/
6.2%ee/
A) Most individuals
None
4%ee/3%er
4.5%er**
6.2%er
0%ee/
Not
6.2%ee/
B) 11 individuals
3.553%er
Available
3%ee/3%er*
6.2%er
0%ee/
Voluntary
6.2%ee/
C 5 individuals
3.553%er I
4%ee 3%er I
ee 0%er**
6.2%er
CLASSIFIED
0%ee/
Not
6.2%ee/
EMPLOYEES
3.553%er
Available
3%ee 3%er*
6.2%er
POLICE
None
8%ee 8%er
3%ee/3%er*
None
1401(a) Plans have set amounts for employer and employee contributions and
are not individually adjustable. Can be rolled over.
2457 Plan - Cannot be rolled over.
*City matches up to 3%. Combined contributions cannot exceed the
lesser of $7,500 or 25% of income.
**City contributes as stated; individual's contribution is
voluntary. Combined contributions cannot exceed the lesser of
$7,500 or 25% of income.
3An additional 1.45% is paid by employee and employer for Medicare. All
new hire police officers are subject to 1.45% for Medicare also.
4Negotiated with City Council.
5Unclassified Department & Division Heads Categories:
A) Only option available to new City hires and employees who move from
classified positions. The 4.5% is firm; employee's contribution is
voluntary. Combined contributions cannot exceed the lesser of $7,500
or 25% of income.
B) Only available to employees who move from classified positions.
C) Individuals chose these options at the time positions were made
unclassified. Option no longer available.
-5-
POST NOTE #2: Alan agreed to moving the meeting time on July 1, 1993 to 8:30
a.m. Sue confirmed this with the members, staff support, and Mercer, Inc.
representatives.
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. Legal update on retirement issues.
4. Monitor progress by staff Pension Review Group
5. Investment class for members.
AGENDA 8 SCHEDULE FOR NEXT MEETING
The next meeting will be June 3 at 1:15 p.m. in the Finance Conference Room.
The agenda will include:
1. Pension Education Program
2. Employee Survey
3. Staff Committee in Pension Activities
4. Report on E.L. Team consideration of GERP/Workers Comp/Disability
proposal.
5. Committee response to member survey
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, JUNE 3, 1993 THURSDAY, JULY 1, 1993 at 8:30 a.m.
THURSDAY, AUGUST 5, 1993 THURSDAY, SEPTEMBER 2, 1993