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Finance Administration
City of Fort Collins
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
SEPTEMBER 2, 1999, MEETING MINUTES
Approved October 7, 1999
COUNCIL LIAISON: Mayor Ray Martinez
COMMITTEE MEMBERS PRESENT: ABSENT:
Jim Hume, 221-6776 Alan Krcmarik, 221-8788
Susan Lehman, 221-8813
Dottie Nazarenus, 484-7592
Terry Van Cleave, 221-6321
Kevin Westhuis, 224-6156
OTHERS PRESENT:
Ken Jamison, Watson Wyatt Worldwide, the Plan's actuarial firm
Deb Woodman, Vincent Pascale (Staff Support — Human Resources)
Greg Tempel, (Staff Support — Legal)
Julie Depperman, (Staff Support — Investments)
Sue Wilcox, (Staff Support — Clerical)
CALL TO ORDER: Chairperson Kevin Westhuis called the meeting to order at 1:20 PM.
ITEMS OF NOTE:
A. Kevin advised the Committee that Alan had been called out of town unexpectedly and
would not be at today's meeting.
B. Kevin also announced that he had accepted another position with a local company and his
last day with the City would be October 1. He stated that he would be resigning from the
General Employees Retirement Committee and that according to the standing rules, Jim
Hume would become Acting Chairperson. NOTE: Since this announcement, Kevin has
reconsidered his options and elected to remain on the General Employees Retirement
Committee serving as a 'tax -paying elector of the City, as allowed by the GER Plan.
C. Kevin, Julie Depperman, and Deb Woodman will coordinate filing the materials they have
collected relating to the conversion of GERP members to the 401 Plan in 1998 and 1999.
The City Clerk's office will have a permanent file and staff will maintain a working reference
file.
APPROVAL OF MINUTES: Julie Depperman distributed copies of the August 12 meeting
minutes for review. These minutes included some changes suggested by Greg Temple.
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
GERC Meeting Minutes
September 2, ION
Page 2
Debbie Weedman asked that a sentence be deleted in Item #3. Kevin moved that the minutes
be approved as revised. Jim Hume seconded the motion, which passed 5-0.
DISCUSSION TOPICS:
1. GERC PLAN MEMBER (S) COMMENTS AND CITIZEN PARTICIPATION:
Kevin informed the group that former employee and GERC staff support, Mollie Mercer, had
called and requested that the Committee concentrate on the full time to part time benefit
inequity question. She felt that it was not fair for a part time employee to get a full year of
credited service.
2. REVISION OF PLAN DOCUMENT
MAIN POINTS: Greg Tempel explained that he had incorporated all the GERP amendments
and resolutions that had been approved by City Council since 1992 into the current Plan
document to facilitate working with the document and make the wording consistent. Julie
Depperman and Deb Weedman had suggested some changes and discussion continued on
the best way to review it and submit it to the IRS for approval. The restated Plan document
has to be submitted to the IRS by December, 2000, for review.
Ken Jamison said that Watson Wyatt could review the document. Jim Hume advised that if
the estimated cost of this service was less than $30,000 and there were compelling reasons
for using a particular firth or person, it would not need to go through the request for proposal
(RFP) process. There was also discussion of whether an outside attorney specializing in
retirement and pension plans should review it Vincent Pascale suggested that an outside
attorney would not be necessary if, after initial staff and Committee review, it were submitted to
the IRS. If the IRS rejected the document, they would list the areas of deficiency. When the
areas of deficiency are corrected, it can be resubmitted to the IRS. The document can be
submitted to City Council either before or after the IRS reviews it
CONCLUSION AND NEXT STEPS: Ken will provide a list of governmental attorneys in the
area and then the estimated fees for such a plan review can be solicited. At the next meeting
Ken Jamison will provide an estimate of the cost for Watson Wyatt to review the Plan
document and an estimated time line for completing this review. The Committee will decide at
that time what steps it wishes to take.
3. ISSUES RELATED TO FULL-TIME COMPARED TO PART-TIME EMPLOYMENT
MAIN POINTS: Several years ago a former Committee member brought to the Committee's
attention a retirement benefit equity question related to employees who move from full-time
positions to part-time positions and those who make the opposite move. The GERP benefit is
calculated using the highest 60 months of the last 10 years of employment If an individual
worked 10 years as a full-time employee and then moved to a part-time position, the retirement
benefit would begin to erode as their part-time employment exceeded five years. Conversely,
a part-time employee who had worked for five years and moved to a full-time position, might
have a retirement benefit that more heavily reflected the full-time work.
• GERC Meeting Minutes
September 2, 1999
Page 3
Ken Jamison had been asked to provide a report showing how many current GERP employees
are impacted by the full-time / part-time factor in the retirement benefit calculation. The report
depicts the year that the highest average salary was earned for each of the 489 current GERP
employees. Out of 489 Plan members, 11 have current salaries that are lower than the salary
they were earning prior to 1995. This means that the future retirement benefit for those 11
people will begin to erode. The report did not show if any employees might have moved from
part time to full time in the last ten years.
There was discussion of how these employees might be affected and possible actions the
Committee could take. To amend the Plan now and change the method of calculating benefits
to prevent future negative consequences for members was felt to have a minimal positive
impact. Suggestions were made about notifying Plan members, both those whose benefits
would probably be impacted and all members at large. It was determined that Human
Resources does not systematically counsel all employees who change their percent of FTE
(equivalent to a full-time position), but responds to specific questions from employees. It is
possible that an employee would notice a change in his or her retirement benefit as shown on
the Personal Retirement Planning Statement sent out each spring, but that would only appear
after the person worked reduced hours for six years and might not even be noticed.
Other options discussed included changing the highest five years of salary in the last ten years
of salary calculation method; creating a subcommittee to deal with both issues (full-time to
part-time and part-time to full-time); and instituting a Deferred Retirement Option Plan (DROP),
whereby an employee's benefit would be deposited in an individual account where it grows
and can be withdrawn when the employee retires.
CONCLUSION AND NEXT STEPS: It was agreed that Deb and Sue would draft a letter from
the Committee to the eleven employees who may be affected by a shift from a full time to a
part-time position explaining their situation.
NOTE: At this point, Susan Lehman and Dottie Nazarenus left the meeting due to prior
commitments.
4. COST OF LIVING ADJUSTMENT UPDATE
MAIN POINTS: Alan had planned to give an update on the request for a cost of living
adjustment (COLA) for retirees. At the September 15 Finance Committee meeting, he planned
to provide a statistical profile of the retirees and beneficiaries currently receiving GERP
benefits.
CONCLUSION AND NEXT STEPS: No action is necessary at this time.
5. GERP VALUATION REPORT
MAIN POINTS: Because of questions raised by the Committee and staff, the original Valuation
Report documents have been revised. Ken Jamison distributed them to the Committee and
staff.
CONCLUSION AND NEXT STEPS: Those not present will receive theirs after the meeting.
GERC Meeting Minutes
September 2, 190
Page 4 -
6. GERP CONTRIBUTION RATE -BUDGET
MAIN POINTS: The GER Committee had recommended a contribution rate of 4.8% in the
2000-2001 budget process, but it was not included in the Managers recommended budget
Alan was to provide an update.
CONCLUSION AND NEXT STEPS: No action at this time.
7. REGULAR MONTHLY INVESTMENT REPORT
MAIN POINTS: Julie Depperman distributed the GERP investment report for the month ending
August 31, 1999. The annualized yield for the entire portfolio was 11 %, with the domestic
equity portion returning 9.43% YTD. The annualized yield of the fixed income portfolio was
6.1%.
CONCLUSION AND NEXT STEPS: No action is necessary.
SCHEDULE FOR NEXT REGULAR MEETING: The next regular meeting will be Thursday,
October 7, 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 September 2, 1999, minutes
3. Decision on Process for Restated Plan Document Review & IRS Submission
4. Update on Full-time — Part-time Issue
5. Update on GERP Contribution Rate — Budget
6. COLA - Budget Update
7. Regular Investment Review
8. Other Business
ADJOURNMENT: The meeting was adjourned at 3:20 PM.
GERC AND GERP WEB PAGE ADDRESS:
http:/A~.ci.fort-collins.co.us/CITY HA i IBOARDS COMMISSIONS/RETIREMENTLindex.htm
FUTURE MEETING SCHEDULE:
The General Employees Retirement Committee normally meets at 1:15 PM. 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