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HomeMy WebLinkAboutRetirement Committee - Minutes - 08/01/1996City of Fort Collins COUNCIL LIAISON: Retirement Plan FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE AUGUST 1, 1996 MEETING MINUTES Mayor Ann Azari COMMITTEE MEMBERS PRESENT: Jerry P. Brown, 221-6350(w), Jim Hume, 221-6776 Alan Krcmarik, Member/Staff ABSENT: 226-0800(h) (two positions vacant) Support OTHERS PRESENT: Sue Wilcox (Staff Support - Secretary) Russ Proctor & Jeff Kraft - Watson Wyatt Worldwide, City's actuarial firm Bobbie Burnette (Staff Support - Assistant City Attorney) Bob Eichem (Staff Support - Treasury Administrator) Jacci Peterson, former GERC member Roger Buffington, Water Department & GER Plan Member CALL TO ORDER: Chairperson Jerry P. Brown called the regular meeting to order at 1:29 p.m. in the Council Information Center of City Hall West. ITEMS OF NOTE: Jerry noted that after the last meeting he asked the City Clerk's Office for assistance in publicizing the two vacant GERC positions. A purple flyer was distributed to all employees with the last pay checks. Jerry hopes that the two positions will be filled by the September 5th meeting Pebsco, a company which supplies services similar to ICMA, contacted Mayor Azari, who in turn asked Jerry and Assistant City Manager Darin Atteberry to meet with her and a Pebsco representative about providing investment services for the 457 Plan. Alan commented that the company had made a bid for City business previously, but was not among the firms chosen for the interview step of the RFP process. Any new service providers, in addition to ICMA, would have to be chosen through such a process. APPROVAL OF MINUTES: Jerry advised that the chart on page 3 of the July 11, 1996 minutes should read: 1970 No formal City retirement plan 1971 GER Plan implemented Jacci Peterson and Russ Proctor suggested that in the "Main Points" paragraph on page 5, item 4, it would be more correct if the following replaced the first three sentences: "About a year ago Jacci Peterson switched from full-time to part-time status. She discovered when calculating her possible future GER Plan benefits that long-term, part-time employment might actually decrease the amount of the retirement benefit already earned. Since she has resigned from the City, her benefits are not in question, but other employees who have moved or who will move to part-time positions could be impacted. Russ stated that in the private sector, it would be contrary to the law for vested benefits already earned to be diminished because of subsequent work." -1- 300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 Sue Wilcox, on behalf of former member Gary Ellis, asked that on Page 5, item 6, in the second line of the next to the last paragraph, a period be inserted after "City" and the rest of the sentence be deleted. Alan Krcmarik moved and Jim Hume seconded the motion to approve the July 11, 1996, minutes as amended. Corrected pages 3 and 5 will be distributed. DISCUSSION TOPICS: 1. GER PLAN MEMBER COMMENTS/CITIZEN PARTICIPATION: There were no member or citizen comments. 2. DISCUSSION OF RETIREMENT PHILOSOPHY MAIN POINTS: At the last meeting Russ explained the current status of the retirement philosophy discussion, noting that the Committee recommended continued communication in order to educate members about the GER Plan. The GERC and staff support also wanted to encourage employees to save toward retirement and not rely solely on the GER Plan and Social Security. Jeff Kraft of Watson Wyatt explained that there is a fairly standard "model" of how people become educated about a subject: 1. Awareness 3. Acceptance that 5. Consider of an issue issue involves self options 2. Understanding 4. Decision to do 6. /Take of the issue something about it action(s) He also explained that there is a "learning curve" with each step, with the first steps occurring slowly and gradually, and the latter steps being stronger and faster. He indicated that such things as FortNotes articles and ICMA newsletters are examples of the first two steps, with the GERC's education programs being examples of step 3, the Personal Retirement Planning Statements (PRPS) suggestions for action are steps 5 and 6. Some suggestions for communicating the philosophy to the members when it is complete include: printed matter, focus groups, and polling members. It was noted that many employees see the GERC as the only opportunity they have had to provide input or feedback on retirement benefits. The question was asked if the GERC's role could be expanded and would the members want it to be expanded? CONCLUSIONS/NEXT STEPS: No further in-depth study or discussions will take place until the two new members are appointed, so that their ideas can be included. 3. CREDIT FOR PART-TIME SERVICE MAIN POINTS: Russ Proctor was to review what affects, if any, moving from full- time work to part-time (or from part-time work to full-time) would have on retirement benefits. From Russ's charts it appeared there would be some changes in benefits in some situations. As presently written, the Plan is within legal '.F2 • GERC Minutes August 11, 1996 guidelines, but the question concerns equitability of benefits. The private sector apparently is governed by different rules than the public sector and the Committee may want to look at private sector requirements in relation to equitability. Jim Hume pointed out that it appears that government is being required to adopt many of the regulations of the private sector and we may need to look at moving in that direction. A question was raised about the feasibility of "encapsulating" the vested benefits from the first period of employment and begin earning a new benefit for the second period. Also suggested was that part- time credit be given for part-time work or the use of "career averaging". CONCLUSION/NEXT STEPS: The need to study this issue with the full Committee was evident, with Russ suggesting that it concentrate on Option 2 with transition issues, exceptions, and examples of other places that have dealt with this situation. The Committee agreed. 4. REVIEW OF SOCIAL SECURITY ARTICLE MAIN POINTS: Sue Wilcox drafted an article explaining some recent changes in the Social Security system in relation to how the year of birth affects the age of retirement with full Social Security benefits. CONCLUSION/NEXT STEPS: The GERC approved the article for inclusion in the next FortNotes and/or the Wellness and Benefits newsletter. 5. INVESTMENT REPORT: 2ND QUARTER, 1996 MAIN POINTS: Alan presented the GER Plan Investment Report as of June 30. All components showed very good returns for the first half of 1996: bonds yielded 7.02% compared with 5-year Treasury note returns of 6.05%; domestic mutual funds returned 9.6% compared with the Standard & Poor Index 500's yield of 9.24%; and international mutual funds had a 6-month return of 9.4% compared with the European, Asian, and Far East (EAFE) Index's return of 3.7%. He explained that because it is difficult to compute the blended yield of stocks and bonds with mutual funds, that they will only provide that figure at the end of the year. Alan advised that the Stock Market took a steep drop during the first two weeks of July, which may be reflected in the next quarter's report. In the meantime, the administrators have attempted to capitalize on this "correction" by increasing purchases of mutual funds, which are approximately 30% of the total portfolio. The goal for all mutual funds is to be about 50% of the portfolio. International mutual fund purchases are approaching the 10% limit set by the GERC. Jim Hume commented that currency valuations in foreign investments increase the degree of risk in those investments. CONCLUSIONS/NEXT STEPS: Alan advised that staff is continuing to investigate software that will allow them to follow and track mutual funds. Jerry accepted the report and thanked Alan, Bob Eichem, and Sherrie Temple for the report and the investment results. -3- GERC Minutes August 11, 1996 6. OTHER BUSINESS Because the GERC will have three new members, Alan suggested it may be appropriate to schedule an orientation -type work session to discuss the role of the GERC, and to thoroughly know the fiduciary responsibilities of the GERC. AGENDA & SCHEDULE FOR NEXT MEETING The next meeting will be September 5th 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. Annual Review of Actuarial Consultant Services 3. Continued Discussion of Retirement Philosophy 4. Credit for (part-time) Service Issue 5. Election of GERC Officers for 1996-97 6. Annual Review of GERC Standing Rules 7. Other Business ADJOURNMENT The meeting was adjourned at 2:53 p.m. FUTURE MEETING SCHEDULE: The General Employees Retirement Committee normally meets at 1:15 p.m. on the 1st Thursday of each month in the Council Information Center, City Hall West. THURSDAY, OCTOBER 3, 1996 THURSDAY, NOVEMBER 7, 1996 THURSDAY, JANUARY 2, 1997 THURSDAY, MARCH 6, 1997 THURSDAY, MAY 1, 1997 -4- THURSDAY, DECEMBER 5, 1996 THURSDAY, FEBRUARY 6, 1997 THURSDAY, APRIL 3, 1997 THURSDAY, JUNE 5, 1997