HomeMy WebLinkAboutRetirement Committee - Minutes - 10/07/1999fees Retirement Plan
City of Fort Collins
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
October 7, 1999, MEETING MINUTES
COUNCIL LIAISON: Mayor Ray Martinez
COMMITTEE MEMBERS PRESENT:
Jim Hume, 221-6776
Alan Krcmarik, 221-6788
Susan Lehman, 221-6813
Dottie Nazarenus, 484-7592
Terry Van Cleave, 221-6321
Approved, As Amended, November 8, 1999
ABSENT:
Kevin Westhuis, 224-6156
OTHERS PRESENT:
Ken Jamison, Watson Wyatt Worldwide, the Plan's actuarial firm
Deb Weedman, (Staff Support — Human Resources)
Greg Tempel, (Staff Support — Legal)
Julie Depperman, (Staff Support — Investments)
Sue Wilcox, (Staff Support — Clerical)
CALL TO ORDER: Vice Chairperson Jim Hume called the meeting to order at 1:21 PM
ITEMS OF NOTE: Jim Hume noted that Kevin was out of town this week.
APPROVAL OF MINUTES: Alan Krcmarik distributed copies of the minutes for September 2,
1999. Alan noted that Julie's suggested edits had been incorporated. Jim moved that the
minutes be approved as distributed. Terry Van Cleave seconded the motion, which passed
unanimously (5-0).
ADDITIONS TO AGENDA AND ITEMS FOR NEXT AGENDA: There were no changes.
DISCUSSION TOPICS:
1. GER PLAN MEMBER(S) COMMENTS AND CITIZEN PARTICIPATION:
A. GER Plan member Dave Meyer addressed the Committee regarding the inclusion of
personal information in the September minutes related to Committee consideration of a
domestic relations order (DRO). Dave stated the discussions reported in the minutes were
factually incorrect and contained extensive, detailed personal information that was not
necessary. Dave also expressed concern about how the retirement plan contributions and
benefits would be tracked and the possibility that his salary would be made part of the public
record.
Greg Tempel advised that the minutes are the official record of the Committee's activities.
To properly track the DRO the member's name is a necessary part of the minutes. It may be
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GERP Meeting Minutes
October 7, 1999
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possible to omit other personal information. This was the first DRO that the Committee had
considered and no process had been established for its deliberations and actions. Several
suggestions were made for ways to meet the record -keeping requirements of the Committee
while preserving the privacy of the member.
In response to the concern about employee salary levels, Debbie Weedman confirmed that
Human Resources' practice for responding to requests for salary information is to provide a
salary range for a specific job title.
At the September meeting, Ken Jamison of Watson Wyatt, the Plan's actuary, had outlined a
contribution and benefit tracking process. At the October meeting he stated that the process
he outlined would not be consistent with the terms of the DRO agreement. He said the
account would be flagged so that the correct procedure is followed when the benefit
distribution is determined. Ken provided Debbie Weedman with an updated computer
program for calculation of retirement benefits.
Committee members made suggestion to formulate a policy or procedure for GERC
discussions and actions on DRO's, requirements for inclusion of information in the minutes,
tracking and calculation of benefits, maintaining a record of the certified copy, etc. It was
suggested that the discussion and tracking of future DROs be an agenda item for the next
meeting.
B. Sue Wilcox read a short letter from member Janice K. Lind asking that if the GERC makes
any changes to the Plan in relation to how part-time service credit is calculated, that the
changes would be effective only for future benefits earned. Jim Hume will call Janice to
discuss her concerns.
C. Jim also had received a member comment suggesting that the GERC spent too much time
discussing ICMA Retirement Corporation issues. ICMA-RC related issues included the
conversion of GER Plan members to an ICMA RC money purchase plan, announcement of
the retirement planning seminar held recently, and reduction and elimination of the fees
ICMA RC charges.
2. RE -STATED GER PLAN AND IRS APPROVAL
MAIN POINTS: Ken provided a letter estimating the costs Watson Wyatt would charge for
activities related to reviewing our Plan document for compliance with various legal requirements,
drafting any needed Plan revisions, and submitting the Plan document to the IRS in time for the
December 31, 2000, IRS deadline. The Watson Wyatt quote was $6,000 plus the IRS filing fee,
which he estimated to be under $500. There was discussion of the time line for such a review
and how it would fit with the actuarial contract renewal, which is due to be re -bid next year.
Another suggestion was made to submit it to an attorney who specializes in pension benefits
and compliance issues, with a shorter review by Watson Wyatt, and submittal to the IRS. The
review by Watson Wyatt would be to ensure that the basic benefit plan was intact and that
nothing was added that was not really necessary.
Greg Tempel outlined some pension work being contracted for Poudre Fire Authority pension
plans, and stated that the costs for this work were comparable. Several attorneys who
specialize in pension matters were mentioned. Susan Lehman asked if there were advantages
to having an attorney do the work. Ken responded that a document drafted by an attorney may
contain more careful wording couched in "legalese", which might be easier to defend, but a little
• GERP Meeting Minutes
October 7, 1999
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harder to read. It also would provide the Committee with a relationship with an attorney who
specializes in pensions. He said that if Watson Wyatt reviewed the Plan and drafted the
changes, review by a pension attorney is still advisable and might cost $1,000. While the IRS
will review the Plan and reject it if it doesn't comply with federal statutes, the IRS does not
review it for compliance with State statutes.
Alan recommended that the Committee not try to do the submittal to the IRS too soon. In the
past many pension requirements have been delayed and suspended. This happened just a few
years ago with non-discrimination requirements.
CONCLUSION AND NEXT STEPS: After some discussion, the Committee consensus was to
table this item to a later date in the year 2000 GERC Work Plan.
3. POSSIBLE DECREASING BENEFIT DUE TO PART-TIME AND FULL-TIME ISSUE
MAIN POINTS: At the request of the Committee, Sue, Deb, and Julie Depperman drafted a
letter and a chart showing how moving from a full-time position to a part-time position could
reduce an employee's benefit after five years. According to a preliminary survey done by
Watson Wyatt, approximately ten members of the Plan may be in this situation. The Committee
had proposed advising them of this issue. (For this topic, full-time is defined as 40 hours per
week and part-time is anything less than 40 hours per week.) A number of revisions were
suggested.
CONCLUSION AND NEXT STEPS: Revisions will be made and a draft sent to the GERC
members for review before being sent to the ten members who may be affected. A more
general version could be sent to all GERP members, along with their personal retirement
planning statements, next spring.
4. ISSUE OF FULL-TIME -- PART-TIME EQUITY
MAIN POINTS: The Committee members discussed the equity issues associated with
calculation of benefits for employees who move from part-time (less than 40 hours per week) to
full-time (40 hours per week) or vice versa. These equity issues have a financial impact on the
Plan and the members.
There was much discussion of the effects of these issues on the Plan and the Plan population.
As the current members age and begin drawing benefits, less money is contributed to the Plan,
and no new members are added. Also, as the members age, it is anticipated that some will
likely want to reduce the number of hours they work. Not only could this affect their benefit, but
it also would have an adverse effect on the Plan.
CONCLUSION AND NEXT STEPS: In order to try to illustrate the dynamics of these forces, Ken
Jamison will provide a graphic showing the impact on the Plan of the current 40 members who
work part-time compared with conditions if all 489 members were working full-time. He also
agreed to provide some sample calculations showing the effects of various possible changes,
which the Committee might consider making to correct the equity issues, and how to transition
to alternative formulas. The cost to complete these illustrations is estimated to be $1,500. Alan
moved that the Committee authorize Watson Wyatt to provide the requested calculations for
$1,500 and Susan Lehman seconded the motion, which passed unanimously (5-0).
GERP Meeting Minutes
October 7, 1999
Page 4 of 5
5. UPDATE ON GERP CONTRIBUTION RATE FOR BUDGET and COST OF LIVING
ADJUSTMENT (COLA) BUDGET REQUEST
MAIN POINTS: Alan addressed both topics, stating that neither item was included in the
recommended budget that went to Council members. While members of the Finance
Committee (Chuck Wanner, Scott Mason, and Bill Bertschy) expressed support for the COLA for
current retirees at the Finance Committee meeting, they made no comments during the Council
Budget study session. October 1 Vh will be an opportunity for retirees to address Council
regarding the issue. Alan suggested that the GERC Chairman send a letter to City Council and
the GERC Council Liaison requesting that the COLA be included in the Budget. Jim Hume said
he would sign the COLA letter to Council if someone would draft it, and Alan agreed to do so.
Fred Garth will also be notified that October 19'h is an opportunity to address the Council on this
issue.
Alan said the increase in contribution rate for current employees was not included in the budget.
If the Plan is underfunded, this situation would probably be noted next year in the City's
Comprehensive Annual Financial Report (CAFR).
CONCLUSION AND NEXT STEPS: Alan will draft a letter to City Council for Jim Hume's
signature requesting that the COLA for current retirees be included in the 2000-2001 Budget.
Retiree Fred Garth will also be notified of the October 19"' opportunity to address City Council
about this issue.
7. MONTHLY INVESTMENT REPORT
MAIN POINTS: Julie Depperman distributed the GERP investment report for September and
noted that the annualized return for the month was 9.35%, which is above the 7.5% actuarial
target. The Nicholas, IAI Regional, and Fidelity Equity Income II mutual funds continue to be
under -performing their benchmarks, but Julie reminded the Committee that these are long-term
investments and must be viewed over the long haul. On the up side, the foreign investments
have bounced back from the Asian monetary crisis of a year ago and are doing very well, led by
TRP New Asia Fund with a 40.72% YTO return. Julie said that the investments are still within
the 60%-40% (domestic and international) target.
CONCLUSION AND NEXT STEPS: No action is necessary
8. OTHER BUSINESS
MAIN POINTS: There was discussion of the status of the chairperson's position after Kevin's
decision to remain on the Committee as the "at large" representative. Jim expressed his
willingness to chair alternate meetings and to serve as a co-chair of the Committee. There were
questions about possible impacts on the Standing Rules.
CONCLUSION AND NEXT STEPS: It was agreed to defer this discussion until November, when
Kevin is expected to return.
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October 7, 1999
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SCHEDULE FOR NEXT REGULAR MEETING: The next regular meeting will be Thursday,
November 4, 1999 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 October 7, 1999, minutes
3. Discussion of Process to Update and Revise Plan Document
4. Discussion of Full-time — Part-time Issue
5. Committee Chairperson Discussion
6. COLA - Budget Update
7. Discussion and Tracking of Domestic Relations Orders
8. Third Quarter, 1999, Investment Report
9. Other Business
ADJOURNMENT
The meeting was adjourned at 3:04 PM.
GERC AND GERP WEB PAGE ADDRESS:
httD://www.ci.fort-collins.co.us/CITY HALUBOARDS 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.
THURSDAY, NOVEMBER 4, 1999
THURSDAY, DECEMBER 2, 1999
THURSDAY, JANUARY 6, 2000
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