HomeMy WebLinkAboutRetirement Committee - Minutes - 12/16/1996City of Fort Collins
Genet Employees Retirement Plan •
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
December 16, 1996 MEETING MINUTES
COUNCIL LIAISON: Mayor Ann Azari
COMMITTEE MEMBERS PRESENT: ABSENT:
Jerry P. Brown, 221-6350(w), 226-0800(h)
Jim Hume, 221-6776
Kevin Westhuis, 221-6156
Dave Agee, 221-6770
Alan Krcmarik, Member/Staff Support
OTHERS PRESENT:
Sue Wilcox (Staff Support - Secretary)
Russ Proctor & Mark Sanford - Watson Wyatt Worldwide, the City's actuarial firm
Laurie Harvey, (Staff Support - Human Resources)
CALL TO ORDER Chairperson Jerry P. Brown called the regular meeting to order at 1:19 p.m.
on Monday, December 16, 1996, in the Finance Conference Room of City Hall West.
ITEMS OF NOTE: Jerry thanked Russ Proctor and Mark Sanford of Watson Wyatt Worldwide
for providing lunch for the Committee members and support staff. He also advised the GERC that
he had been invited to join GER Committee Liaison Ann Azan, Council Member Chuck Wanner, City
Manager John Fischbach, and GERC member Dave Agee on January 14 to discuss non-member
appointments to the Committee. Questions arose when Dave Agee was appointed to the GERC, as
he is not a member of the GER Plan, but is legally eligible to serve as a Committee member.
APPROVAL OF MINUTES: Jerry had two changes to the November 7, 1996 minutes: Under
"Approval of Minutes", he would add "September 5, 1996" before "minutes" for clarity. On page
3, #5, "Work Plan", the copy of the 1997 Work Plan was not attached to the hard copies of the
minutes as stated. The Work Plan will be distributed with these minutes. On page 4, item 9,
"Election of GERC Officers", the term expiration date for the four Council -appointed members
should be "June 30" of the stated year. Alan Krcmarik moved that the November 7, 1996 minutes
be approved as corrected. Kevin Westhuis seconded the motion, which passed unanimously.
DISCUSSION TOPICS:
1. GER PLAN MEMBER COMMENTS/CITIZEN PARTICIPATION: There were no member
or citizen comments.
2. GERC STANDING RULES
MAIN POINTS: The Standing Rules under which the GERC operates are normally revised in
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
GERC Minutes - December 16, 1996
September, but were delayed until the new appointees had an opportunity to look them over. Minor
changes are needed in the heading, meeting place, name of the investment report, and the type of
staff support assistance provided, as well as in reporting new officer elections to the City Clerk, and
adding annual review of actuarial consultant to the "General" section, and adding a revised date at
the end.
CONCLUSIONS/NEXT STEPS: Sue will make the proposed changes and send a draft to Jerry for
review. Distribution will be made to all members, support personnel, and City Clerk's office.
3. UPDATE ON REVIEW OF ACTUARIAL CONSULTANT
MAIN POINTS: Russ only received one of the comment sheets he distributed to GERC members
for review of Watson Wyatt's staff although at least four were returned. Since the items of concern
on the single sheet received were discussed last time, nothing more is needed at this time. Russ did
advise that any time there is a concern to give him a call. It is not necessary to wait for the review
period.
CONCLUSION/NEXT STEPS: Russ will check with his office personnel for the missing comment
sheets.
4. STUDY SESSIONS)
MAIN POINTS: Since the Committee now has three new members, it seems appropriate to provide
some training and education about the Plan and the fiduciary responsibilities of the GERC. The
people Alan contacted no longer conduct training. One contact through the Colorado Government
Finance Officers Association does training, but Alan felt a better trainer might be found. He
suggested a GFOA resource document and a chapter in a book on trustee responsibilities may provide
some good information.
CONCLUSION/NEXT STEPS: Alan will route the resource document and the book chapter to the
members, along with the monthly GFOA Pension and Benefits Newsletter. Russ will check on
educational sources available in his area. This topic will be revisited in January.
5. GERP WEB PAGE UPDATE
MAIN POINTS: Tim Hume is putting together some GERP information for the City of Fort Collins
Web Site. He has collected documents which he can incorporate: annual report, the investment
report, the work plan, and the agenda of the next meeting. He also plans to include the minutes, Plan
Summary Booklet highlights, and executive summary of the actuarial report. It may be possible to
include a page on how to calculate your projected benefit. Dave offered his assistance.
CONCLUSIONS/NEXT STEPS: Jim plans to put together the basic pieces by the next meeting.
6. CREDIT FOR PART-TIME SERVICE ISSUE
MAIN POINTS: The GERC realized that movement of an employee from a fiill-time position to a
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GERC Minutes - December 16, 1996
part-time position (or vice versa) affects the GERP benefit earned, and that the affects may not be
proportional to the amount of time actually worked. Mark Sanford advised the members to keep
three concerns in mind as they consider changes in benefit calculations to rectify this situation:
Changes in present GERP benefit calculation methods may affect the MPP and the 457 Plans; any
such changes should fit into the GERC's philosophy of retirement; and any changes to the Plan must
be effectively communicated to the employee members.
The current system bases retirement benefits on the employment status at termination (full- or part-
time). Mark explained how an earned benefit may be the same for two people, one of whom worked
part-time and one who worked full-time. He provided three options to address this: option #1 would
annualize pay at a yearly rate, and pro -rate the service by the percentage of full-time worked. Option
#2 would freeze the earned benefit at the time any change is made in the percentage of time worked
(i.e. 100% to 60°/o position). A new period of benefit earning would then begin, but not a new
vesting period. Option #3 is to maintain the status quo.
There was discussion about what constitutes part-time, whether to use scheduled hours or hours
actually worked, how overtime would be treated, would a new system be retroactive, and how many
people move from fiill-time to part-time and vice versa The amount of work to administer a different
system will have to be weighed, along with possible difficulties in transitioning to a new system, and
the costs of any change. When a decision is made, Watson Wyatt can provide some assistance on
how to effectively communicate the need for the change to the GERP members.
CONCLUSION/NEXT STEPS: The GERC decided that Option #1 of annualizing pay and pro-
rating service seemed the most equitable. The Committee requested Russ and Mark to work with
Laurie Harvey and Linda Brown (payroll technician) to study the administrative affects of a change
to the #1 option (annualizing pay and pro -rating service) and to do some sample calculations for
recently terminated employees.
7. LUMP -SUM PAYMENT DECISIONS
MAIN POINTS: Sue advised the Committee that some former employees are entitled to receive
lump -sum GERP benefit payments because their monthly benefits at age 65 would be less than $100.
The normal process is that one year after separation from the City, the former employees are advised
that they are entitled to receive their retirement benefit either as a lump -sum payment (minus 20%
withheld for income taxes) or as a rollover to another tax-exempt fund/IRA, and asked to make a
choice. There are several former employees who have not made that decision and/or not returned
the necessary paperwork and Sue is uncertain how to proceed.
CONCLUSIONS/NEXT STEPS: Sue was advised by Watson Wyatt that all former employees have
30-90 days to make the decision and retum the necessary paperwork. If they do not do so within the
allotted time, the City is permitted to pay the benefit as the lump -sum amount and withhold the
required 20%. It was agreed that it would be prudent to send these payments via registered mail to
the last known address with address correction requested.
Sue and Alan will put this procedure into a formal policy to be acted upon by the Committee at the
next meeting. Mark will also incorporate similar wording in the forms that Watson Wyatt prepares
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GERC Minutes - December 16, 1996
for hump -sum recipients. Laurie will incorporate this information in the preliminary calculations she
prepares for those who will be eligible for the lump -sum benefit. The Committee voted 5-0 in favor
of these friendly amendments to procedural changes.
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MAIN POINTS: The new members completed the survey already completed by the other Committee
and staff members. This is used to determine what characteristics of a retirement plan are most
important to the group. Of highest importance for all but one person was the adequacy of the
retirement benefit. Further discussion determined that "adequate" was approximately 75-80% of
pre -retirement income. Tim Hume pointed out that there may be a misconception among GERP
members that their GER Plan benefit should provide the entire "retirement benefit" amount, when in
fact it is only one piece of retirement income, which could also include the 457 Plan, the Money
Purchase Plan (MPP), Social Security, and/or personal savings and investments. Tim would like to
see the Personal Retirement Planning Statement (PRPS), which is distributed by the GERC each
spring, use a format that makes this point more clearly.
Of the four City -provided benefits which can be used for retirement, only the GERP benefit has no
built-in COLA or potential for benefit increase over time. Instead it provides a "floor of protection"-
-a place on which to build other sources of income. It was also pointed out that if a person leaves
City employment with a deferred vested benefit, this benefit remains the same until the person is
eligible to receive it (age 55 or after). The value of the benefit may be eroded by inflation over time.
Discussion followed on how the Retirement Plan provisions affect how long employees continue to
work for the City.
Earlier discussions with some upper -level managers revealed there is a feeling that the GERP is
"outdated" and that it should not encourage "career" employees, but should provide a contribution
to employees which the employee can put away or invest for retirement. Accessibility to "retirement"
funds by the employee is controversial. One side maintains that employees are "entitled" to access
to these funds, while the opposite camp holds that to do so is to risk having the funds used for non -
retirement purposes and thus not be available when needed for retirement.
CONCLUSIONS/NEXT STEPS: Because the philosophy issue is so all -encompassing, it was
suggested that the Committee hold a study session to concentrate and complete a retirement
committee philosophy. It was decided to set aside the February 6th meeting for this purpose. Jerry
urged everyone to read the survey summary information Russ provided.
9. OTHER BUSINESS
A. ICMA-RC Conference
MAIN POINTS: ICMA-RC (International City Managers Association -Retirement Corporation) will
hold a conference January 30th and 31st in Orlando for municipalities and actuarial firms to learn
about converting defined benefit plans to defined contribution plans. Alan plans to attend and the
registration is $900. He requested that the GERP pay a third of the conference expenses.
CONCLUSION/NEXT STEPS: The consensus was that this might be very beneficial information for
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GERC Minutes - December 16, 1996
the GERC and financial support could be provided. Alan will also explore possible financial support
from the 457 and MPP fimds, which are provided by ICMA-RC.
B. Investment Strategies
MAIN POINTS: This topic is partly dependent on approval of the revised Financial Policies by City
Council, which has not happened yet.
CONCLUSION/NEXT STEPS: This item was deferred to the March 6, 1997 GERC meeting.
AGENDA & SCHEDULE FOR NEXT MEETING
The next meeting will be January 9, 1997 (rescheduled from January 2) at 1:15 p.m. in the Council
Information Center (CIC) of City Hall West. The agenda will include:
1. Plan Member Comments/Citizen Participation
2. Consider approving the 1996 GERC Annual Report
3. Lump -Sum Payment Policy and Procedure
4. Review Format for "PRPS" Forms
5. Proposed Plan for Study Session
6. Retirement Philosophy Discussion
ADJOURNMENT
The meeting was adjourned at 3:52 p.m.
The General Employees Retirement Committee normally meets at 1:15 p.m. on the 1 st Thursday of
each month in the Council Information Center, City Hall West.
THURSDAY, JANUARY 9,1997"
THURSDAY, MARCH 6, 1997
THURSDAY, MAY 1, 1997
THURSDAY, JULY 10, 1997•
THURSDAY, SEPTEMBER 4, 1997
THURSDAY, NOVEMBER 6, 1997
"Rescheduled because of holidays
THURSDAY, FEBRUARY 6, 1997
THURSDAY, APRIL 3, 1997
THURSDAY, JUNE 5, 1997
THURSDAY, AUGUST 7, 1997
THURSDAY, OCTOBER 2, 1997
THURSDAY, DECEMBER, 4, 1997
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