HomeMy WebLinkAboutRetirement Committee - Minutes - 12/02/1999gees Retirement Plan
City of Fort Collins
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
December 2, 1999, MEETING MINUTES
COUNCIL LIAISON: Mayor Ray Martinez Approved January 6, 2000
COMMITTEE MEMBERS PRESENT: ABSENT:
Jim Hume, 221-6776 Terry Van Cleave, 221-6321
Alan Krcmarik, 221-6788
Susan Lehman, 221-6813 One Committee position vacant due
Dottie Nazarenus, 484-7592 to Kevin Westhuis' resignation
OTHERS PRESENT:
Mark Sanford, Watson Wyatt Worldwide, the Plan's actuarial firm
Deb Weedman, Vincent Pascale (Staff Support — Human Resources)
Greg Tempel, (Staff Support — Legal)
Julie Depperman, (Staff Support — Investments)
Sue Wilcox, (Staff Support — Clerical)
Fred Garth, Retiree
Michele Hays -Johnson, Utilities Employee (WTP)
Stephen E. Johnson, spouse of Michele Hays -Johnson
CALL TO ORDER: Chairperson Jim Hume called the meeting to order at 1:20 PM.
ITEMS OF NOTE: With the four members attending, a quorum was present. Jim Hume
thanked Mark Sanford of Watson Wyatt for the luncheon which occurred prior to the meeting.
He also welcomed Fred Garth, a retiree from the plan, and Michele Hays -Johnson, an active
member, from the Utilities Department and her husband, Stephen.
APPROVAL OF MINUTES: Alan Krcmarik distributed copies of the minutes of the November
4, 1999 meeting. Greg noted that Kevin Westhuis' resignation of November 4, 1999, was
effective at the end of the meeting held that day. Alan Krcmarik moved that the minutes be
adopted as corrected. Susan Lehman seconded the motion, which passed unanimously 4-0.
ADDITIONS OR CHANGES TO AGENDA: There were no changes.
DISCUSSION TOPICS:
1. GERC PLAN MEMBER (S) COMMENTS AND CITIZEN PARTICIPATION: Michele Hays -
Johnson of the Utilities Department, who works at the Water Treatment Facility, said she had
been following the discussions in the minutes regarding the Full-time employee - Part-time
employee equity issue. Michele was very concerned that a change in the method of calculating
the benefit would cause her to lose the full-time benefit she had earned during her full-time
years. Michele stated that she thought the pension plan should be consistent with the City's
policy for full-time employment definition. Under the City's policies regarding employment, the
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
GERC Meeting Minutes
December 2, 1999
Page 2 of 5
benefits that go along with part-time employment vary. Part-time (20 hours) is not the same as
three-quarter time (32 hours), and is not the same as full-time (40 hours) employment. She
stated that for purposes of benefits, City policy has been that anyone working 30 hours or more
was considered full-time.
NOTE: After the meeting, Vincent Pascale provided the following: The definition of full-time
employment is found in the City's "Personnel Policies and Procedures" at page 2-1 ("Categories
of Employment/Classified Positions", 2nd paragraph):
"Classified positions may be full-time, in which the employee works the equivalent of a
forty -hour work week, or part-time in which the employee works the equivalent of a
minimum of twenty and a maximum of thirty-nine hours per work week."
With regard to benefits, the same paragraph states:
"...the benefit package for part-time classified employees is prorated based on
scheduled work hours."
2. DISCUSSION OF FULL -TIME —PART-TIME EQUITY ISSUE
MAIN POINTS: Mark Sanford of Watson Wyatt, the Committee's actuarial consultant, was
introduced to discuss how the retirement benefit is calculated. Mark had difficulty explaining the
salary base on which the City contributes on behalf of employees covered by the Plan. Greg
Tempel was asked to look up the definition provided in the Plan. The City contributes 4.5% of
the employee's salary to the GER Plan. According the the Plan's definition of compensation,
the 4.5% is not contributed for overtime worked or other types of additional pay, but only for the
employee's base pay. Part-time employees who work more than their set hours in a week, are
paid regular time up to 40 hours.
For the actuarial report, Watson Wyatt's calculations are based on the "new" pay plan figures
which are implemented every January. If an employee receives another pay increase during
the year, the actuarial calculation does not reflect that increase until January 1 of the following
year.
Mark explained a method of benefit calculation that more equitably reflects the actual time
worked by the employee. The first chart in his handout showed the retirement benefits
according the Plan for a "generic" employee who works full-time for 25 years compared to two
other scenarios. One scenario showed the effects if the employee switched to full-time
employment from part-time. The other showed moving to part-time after working full-time. In
both cases there is an inequity, either to the employee or to the Plan.
Mark also presented a chart comparing those three scenarios (25 years at full-time, moving
from full-time to part-time, and moving from part-time to full-time) using the proposed method of
calculating benefits. The proposed calculation (copies attached) uses the sum of the following
two formulas:
(1) Old Plan Benefit — At the implementation of a New Plan Benefit, the Old Plan Benefit would
be calculated for each Plan member using the current formula. When the employee
terminates City employment, that Old Plan Benefit would be multiplied by the ratio of the
rate of pay at termination to the rate of pay at implementation of the New calculation
r
• • GERC Meeting Minutes
December 2, 1999
Page 3 of 5
method. This is done in order not to impact the benefit of the employee(s) who remain full-
time employees throughout their city employment.
(2) New Plan Benefit — The New Plan Benefit (from implementation date forward) would be
1.5% of final average compensation multiplied by years of credited service (where credited
service is a calendar year in which the employee works at least 2,000 hours [full-time], with
a partial year credited for less than 2,000 hours).
The results of combining these two calculations are that the benefits in all three cases reflect
the total hours worked in a year. The employee would receive the money contributed to the
Plan for them, not more or less. Jim noted that the actuarial analysis did not include the
variations the Committee discussed when it determined to have Watson Wyatt do this exercise.
The Committee members will be looking at this proposal further and seeking Plan member
comments.
CONCLUSION AND NEXT STEPS: Alan suggested that it was important to review and
document that the current method of calculating the benefits is as the Plan's states. He
indicated that Finance staff would work with Human Resources and provide a summary at the
next meeting. The next steps could include presenting these alternate calculation methods to
Plan members in an education forum in order to receive feedback and direction from them.
3. COLA FOR RETIRED PLAN MEMBERS
MAIN POINTS: Alan advised that City Council approved the proposed Cost of Living
Adjustment (COLA) for current retirees as a one-time increase. The amount approved was
about $755,000, based on Watson Wyatt estimates prepared by Russ Proctor using the CPI
less 1 %. The actual amount is still to be determined. The calculation of the previous COLA is
outlined in the Plan document.
Greg Tempel distributed copies of a draft resolution to amend the Plan to include the
implementation plan for the COLA. Alan questioned whether those who currently have a
deferred vested retirement benefit should be entitled to receive the COLA also. Their monthly
benefit at retirement age was set when they terminated, but the lump sum equivalent would
change as they approach retirement age. For the two other COLAs, the deferred vested
members of the Plan did not receive an increase.
COLAs only included those whose benefit payments commenced before the end of 1998. This
wording will be added to the resolution Greg has drafted. Those who received a lump sum and
left the Plan would not be eligible for a COLA.
CONCLUSION AND NEXT STEPS: Alan Krcmarik moved that the draft resolution be approved
substantially as presented by Greg Tempel with the addition of the schedule of year to year
inflation that he had provided and to include the provisions related to those currently receiving
retirement benefits. Jim Hume seconded the motion, which passed unanimously 4-0.
4. ANNUAL REPORT FOR 1999
MAIN POINTS: Jim Hume had electronically circulated a draft Annual Report for 1999, which
had received input from GERC Members and staff. There were some small changes suggested
to the second draft.
GERC Meeting Minutes
December 2, 1999
Page 4 of 5
CONCLUSION AND NEXT STEPS: Alan Krcmarik moved to accept the 1999 Annual Report
substantially as written and to forward it to the City Clerk's Office. Susan Lehman seconded the
motion, which passed unanimously (4-0).
5. EVALUATION OF ACTUARY AND RFP FOR ACTUARIAL SERVICES
MAIN POINTS: Alan reported that he had drafted a letter to Alf Gimble, Managing Consultant
for Watson Wyatt, the City's current actuarial consultant, outlining the Committee's concerns.
Alan asked the Committee to review the letter and forward any additional comments to him.
Watson Wyatt has completed five years of service to the Committee, which was stipulated in
the contract. An RFP could be completed in late January if the Committee wishes. Alan has
copies of sample RFP packages from other pension plans which are available for Committee
and staff to review. Jim Hume suggested that the current contract be extended on a month -to -
month basis until the 2000 valuation process is completed and the PRPS statements are
issued.
CONCLUSION AND NEXT STEPS: It was the consensus of the members present to continue
on a month -to -month basis with Watson Wyatt under the current contract terms and conditions.
Mark Sanford said this would be agreeable to the firm.
NOTE: At this point (2:45 p.m.) in the meeting Alan explained that he had to leave for another
commitment. He distributed a draft letter to be sent to a small group of GERP members whose
pension contributions from the City would indicate that they had changed from full-time to part-
time positions in the last five or more years. After Alan left, a quorum was no longer present
and no official action of the Committee could take place. However, information sharing was
continued with the remaining members and staff.
6. REGULAR INVESTMENT REPORT
MAIN POINTS: Julie Depperman distributed the GERP investment report for November, noting
that the annualized rate of return of 17.74 % was due to a rally in the stock market during
November. The GERP portfolio totals nearly $33 million. There was no selling or buying since
the last meeting, but there may be opportunities to sell IAI and Nicholas during December. Alan
as been utilizing a seasonality model developed by The Institute for Econometric Research that
identifies favorable dates on which to buy or sell holdings.
CONCLUSION AND NEXT STEPS: No action is necessary.
7. OTHER BUSINESS:
Greg Tempel had distributed electronically a revision to the Domestic Relations Order
procedure which he had planned to discuss at this meeting.
CONCLUSION AND NEXT STEPS: However, since there was no longer a quorum present, he
will defer this item to the January meeting
• • GERC Meeting Minutes
December 2, 1999
Page 5 of 5
SCHEDULE FOR NEXT REGULAR MEETING: The next regular meeting will be Thursday,
January 6, 2000 at 1:15 PM in the Council Information Center (CIC) of City Hall West. The
agenda will include:
1. Citizen Participation and Plan Member Comments
2. Consider approving the December 2, 1999, minutes
3. Review of Updated/Revised Plan Document
4. Plan of Action for Full-time — Part-time Issue
5. Revision of Domestic Relations Order procedure
6. COLA Implementation Update
7. Preliminary 1999 Investment Report
8. Other Business
ADJOURNMENT. The meeting was adjourned at 2:50 PM.
GERC AND GERP WEB PAGE ADDRESS:
htti)://www.ci.fort-collins.co.us/CITY HALL/BOARDS COMMISSIONS/RETIREMENT/index.htm
FUTURE MEETING SCHEDULE:
The General Employees Retirement Committee normally meets at 1:15 p.m. on the first
Thursday of each month in the Council Information Center, City Hall West. The next regularly
scheduled meeting will be Thursday, January 6, 2000 at 1:15 PM. Remaining meetings for
2000 will be held as shown below:
THURSDAY, FEBRUARY 3, 2000
THURSDAY, MARCH 2, 2000
THURSDAY, APRIL 6, 2000
THURSDAY, MAY 4, 2000
THURSDAY, JUNE 1, 2000
THURSDAY, JULY 6, 2000
THURSDAY, AUGUST 3, 2000
THURSDAY, SEPTEMBER 7, 2000
THURSDAY, OCTOBER 5, 2000
THURSDAY, NOVEMBER 2, 2000
THURSDAY, DECEMBER 7, 2000
City of Fort Collins
General Employees Retirement Plan
Change in Contribution if All Part Time Employees
Became Full Time Employees
Actual
01/01/1999
01/01/1999
After
Results
Description
Changes
Restated
resent Value of
nefits
S35,221,500
S35,683,964
ctuarial Value of
ets
$27,956,716
S27,956,716
.V. Future Normal
oat
S7,264,784
S7,727,248
.V. Future
ompensation
S165,410,300
S169,121,700
ormal Cost
ercentage
4.3920%
4.5690%,
ompensadon
$19,911,157
S19,360,151
Ormal Cost as of
January 1
S830,578
S884,565
Expense Load
$61,252
S61,252
Contribution as of
January 1
$891,830
S945,817
Contribution as a
ercent of Pay
4.7159%
4.8854%.
City of Fort Collins
General Employees Retirement Plan
Y=
199C
1991
199:
1M
199�
199:
199E
199"
1991
199!
2001
200
200:
200
200.,
200
200
200
200
200
201
201
201
201
201
Current
Plan
Full Time
Emoloyee
Part Time
i3X
to Full Time
Hours Service
Full Time
U
to Part
Hours
Time
Service
Hours Service
$
26,043
2000
1.0
$
13,022
1000
1.0
$
26,043
2000
1.0
$
26,824
2000
1.0
$
13,412
1000
1.0
$
26,824
2000
1.0
$
27,629
2000
1.0
$
13,815
1000
1.0
$
27,629
2000
1.0
$
28,458
2000
1.0
$
14,229
1000
1.0
$
28,458
2000
1.0
$
29,312
2000
1.0
$
14,656
1000
1.0
$
29,312
2000
1.0
$
30,191
2000
1.0
$
15,096
1000
1.0
$
30,191
2000
1.0
$
31,097
2000
1.0
$
15,549
1000
1.0
$
31,097
2000
1.0
$
32,030
2000
1.0
$
16,015
1000
1.0
$
32,030
2000
1.0
1 $
32,991
2000
1.0
$
16,496
1000
1.0
$
32,991
2000
1.0
1 $
33,981
2000
1.0
$
16,991
1000
1.0
$
33,981
2000
1.0
$
35,000
2000
1.0
$
17,500
1000
1.0
$
35,000
2000
1.0
$
36,050
2000
1.0
$
18,025
1000
1.0
$
36,050
2000
1.0
$
37,132
2000
1.0
$
18,566
1000
1.0
$
37,132
2000
1.0
3 $
38,246
2000
1.0
$
19,123
1000
1.0
$
38,246
2000
1.0
I $
39,393
2000
1.0
$
19,697
1000
1.0
$
39,393
2000
1.0
i $
40,575
2000
1.0
$
20,288
1000
1.0
$
20,288
1000
1.0
3 $
41,792
2000
1.0
$
20,896
1000
1.0
$
20,896
1000
1.0
7 $
43,046
2000
1.0
$
21,523
1000
1.0
$
21,523
1000
1.0
3 $
44,337
2000
1.0
$
22,169
1000
1.0
$
22,169
1000
1.0
3 $
45,667
2000
1.0
$
22,834
1000
1.0
$
22,834
1000
1.0
7 $
47,037
2000
1.0
$
47,037
2000
1.0
$
23,519
1000
1.0
1 $
48,448
2000
1.0
$
48,448
2000
1.0
$
24,224
1000
1.0
2 $
49,901
2000
1.0
$
49,901
2000
1.0
$
24,951
1000
1.0
3 $
51,398
2000
1.0
$
51,398
2000
1.0
$
25,699
1000
1.0
4 $
52,940
2000
1.0
$
52,940
2000
1.0
$
26,470
1000
1.0
Credited Service 25.0 25.0 25.0
Final Ave. Comp $ 49,945 $ 49,945 $ 24,973
Accrued Annual Benefit $ 18,729 $ 18,729 $ 9,365
As Percent of Full Time Employee 100% 50%
Service - one year if employed for 12 months, regardless of hours.
Final Average Compensation - use actual earnings during last ten years.
k:\15233\partfull.xls 11/05/1999 Watson Wyatt Comw
0 0
City of Fort Collins
General Employees Reirement Plan
Current Plan formula
Plan Benefit — 1.5% of Final Average Compensation times Years of Credited Service.
Where
Final Average Compensation is the highest five consecutive year average of
compensation out of the last ten years.
Year of Credited Service is 12 months of employement.
Alternative Plan formula
Sum of
Old Plan Benefit - January 1, 2000 accrued benefit times ratio of rate of pay at
termination to rate of pay at January 1, 2000 (but not allowed to reduce the
January 1, 2000 accrued benefit).
Uor-1
New Plan Benefit — 1.5% of Final Average Compensation after January 1, 2000
times Years of Credited Service after January 1, 2000.
Where
Final Average Compensation is the highest five consecutive year average of
annualized calendar year compensation earned after December 31, 1999 out of the last
ten years. Annualized compensation is actual compensation times the ratio of 2000 to
actual hours earned in the year (but not allowed to reduce the actual compensation)
Year of Credited Service is a calendar year in which the employee works at least 2000
hours with a partial year credited for less than 2000 hours.
W
City of Fort Collins
General Employees Retirement Plan
Year
1990
1991
1992
1993
1994
1995
199
199
7
199
8
199
9
Alternative PlanTi
Full Time Emolovee Part me to Full Time Full Time to Part Time
Fay Hours Service Pay Hours Service � Hours Service
$ 26,043 2000 1.0 $ 13,022 1000 1.0 $ 26,043 2000 1.0
$ 26,824 2000 1.0 $ 13,412 1000 1.0 $ 26,824 2000 1.0
$ 27,629 2000 1.0 $ 13,815 1000 1.0 $ 27,629 2000 1.0
$ 28,458 2000 1.0 $ 14,229 1000 1.0 $ 28,458 2000 1.0
$ 29,312 2000 1.0 $ 14,656 1000 1.0 $ 29,312 2000 1.0
$ 30,191 2000 1.0 $ 15,096 1000 1.0 $ 30,191 2000 1.0
6 $ 31,097 2000 1.0 $ 15,549 1000 1.0 $ 31,097 2000 1.0
$ 32,030 2000 1.0 $ 16,015 1000 1.0 $ 32,030 2000 1.0
$ 32,991 2000 1.0 $ 16,496 1000 1.0 $ 32,991 2000 1.0
$ 33,981 2000 1.0 $ 16,991 1000 1.0 $ 33,981 2000 1.0
Credited Service 10.0
Final Ave. Comp $ 32,058
Old Pla Bne fit at 1/1/2000 $ 4 809
2000
2001
2002
2003
2004
2005
2006
200
7
200
8
200
9
201
0
2011
201
2
201
3
201
4
$ 16,029
4 9 4n4
$ 32,058
$ 4,809
n e,
$ 35,000 2000 1.0 $ 17,500 1000 0.5 $ 35,000 2000 1.0
$ 36,050 2000 1.0 $ 18,025 1000 0.5 $ 36,050 2000 1.0
$ 37,132 2000 1.0 $ 18,566 1000 0.5 $ 37,132 2000 1.0
$ 38,246 2000 1.0 $ 19,123 1000 0.5 $ 38,246 2000 1.0
$ 39,393 2000 1.0 $ 19,697 1000 0.5 $ 39,393 2000 1.0
$ 40,575 2000 1.0 $ 20,288 1000 0.5 $ 20,288 1000 0.5
$ 41,792 2000 1.0 $ 20,896 1000 0.5 $ 20,896 1000 0.5
$ 43,046 2000 1.0 $ 21,523 1000 0.5 $ 21,523 1000 0.5
$ 44,337 2000 1.0 $ 22,169 1000 0.5 $ 22,169 1000 0.5
$ 45,667 2000 1.0 $ 22,834 1000 0.5 $ 22,834 1000 0.5
$ 47,037 2000 1.0 $ 47,037 2000 1.0 $ 23,519 1000 0.5
$ 48,448 2000 1.0 $ 48,448 2000 1.0 $ 24,224 1000 0.5
$ 49,901 2000 1.0 $ 49,901 2000 1.0 $ 24,951 1000 0.5
$ 51,398 2000 1.0 $ 51,398 2000 1.0 $ 25,699 1000 0.5
$ 52,940 2000 1.0 $ 52,940 2000 1.0 $ 26,470 1000 0.5
.. in n
Credited Service I O.0
Final Ave. Comp $ 49,945 $ 49,945 $ 49,945
New Plan Benefit $ 11,238 $ 7,492 $ 7,492
Adjusted Old Plan Benefit $ 7,492 $ 3,745 $ 7,492
Accrued Annual Benefit $ 18,730 $ 11,237 $ 14,984
As Percent of Full Time Employee 60% 80%
Service - one year if work 2000 hours reduced prorata for less than 2000 hours.
Final Average Compensation - use annualized earnings during last ten years.
kA15233\partfull.xls 11/05/1999 Watson Wyatt COmW
Credited Service 10.0
Final Ave. Comp $ 32,058
Old Pla Bne fit at 1/1/2000 $ 4 809
2000
2001
2002
2003
2004
2005
2006
200
$ 16,029
4 9 4n4
$ 32,058
$ 4,809
7
200
8
200
9
201
0
2011
201
2
201
3
201
4
$ 16,029
4 9 4n4
$ 32,058
$ 4,809
n e,
$ 35,000 2000 1.0 $ 17,500 1000 0.5 $ 35,000 2000 1.0
$ 36,050 2000 1.0 $ 18,025 1000 0.5 $ 36,050 2000 1.0
$ 37,132 2000 1.0 $ 18,566 1000 0.5 $ 37,132 2000 1.0
$ 38,246 2000 1.0 $ 19,123 1000 0.5 $ 38,246 2000 1.0
$ 39,393 2000 1.0 $ 19,697 1000 0.5 $ 39,393 2000 1.0
$ 40,575 2000 1.0 $ 20,288 1000 0.5 $ 20,288 1000 0.5
$ 41,792 2000 1.0 $ 20,896 1000 0.5 $ 20,896 1000 0.5
$ 43,046 2000 1.0 $ 21,523 1000 0.5 $ 21,523 1000 0.5
$ 44,337 2000 1.0 $ 22,169 1000 0.5 $ 22,169 1000 0.5
$ 45,667 2000 1.0 $ 22,834 1000 0.5 $ 22,834 1000 0.5
$ 47,037 2000 1.0 $ 47,037 2000 1.0 $ 23,519 1000 0.5
$ 48,448 2000 1.0 $ 48,448 2000 1.0 $ 24,224 1000 0.5
$ 49,901 2000 1.0 $ 49,901 2000 1.0 $ 24,951 1000 0.5
$ 51,398 2000 1.0 $ 51,398 2000 1.0 $ 25,699 1000 0.5
$ 52,940 2000 1.0 $ 52,940 2000 1.0 $ 26,470 1000 0.5
.. in n
Credited Service I O.0
Final Ave. Comp $ 49,945 $ 49,945 $ 49,945
New Plan Benefit $ 11,238 $ 7,492 $ 7,492
Adjusted Old Plan Benefit $ 7,492 $ 3,745 $ 7,492
Accrued Annual Benefit $ 18,730 $ 11,237 $ 14,984
As Percent of Full Time Employee 60% 80%
Service - one year if work 2000 hours reduced prorata for less than 2000 hours.
Final Average Compensation - use annualized earnings during last ten years.
kA15233\partfull.xls 11/05/1999 Watson Wyatt COmW
Credited Service I O.0
Final Ave. Comp $ 49,945 $ 49,945 $ 49,945
New Plan Benefit $ 11,238 $ 7,492 $ 7,492
Adjusted Old Plan Benefit $ 7,492 $ 3,745 $ 7,492
Accrued Annual Benefit $ 18,730 $ 11,237 $ 14,984
As Percent of Full Time Employee 60% 80%
Service - one year if work 2000 hours reduced prorata for less than 2000 hours.
Final Average Compensation - use annualized earnings during last ten years.
kA15233\partfull.xls 11/05/1999 Watson Wyatt COmW
Service - one year if work 2000 hours reduced prorata for less than 2000 hours.
Final Average Compensation - use annualized earnings during last ten years.
kA15233\partfull.xls 11/05/1999 Watson Wyatt COmW