HomeMy WebLinkAboutRetirement Committee - Minutes - 05/30/1996City of Fort Collins
Retirement Plan •
CORRECTED
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
MAY 30, 1996 MEETING MINUTES
COUNCIL LIAISON: Ann Azari, Mayor
COMMITTEE MEMBERS PRESENT: ABSENT:
Jerry P. Brown, 221-6350(w), 226-0800(h)
Dave Meyer, 221-6927
Jacci Peterson, 221-6692
Gary Ellis, 221-6700
Alan Krcmarik, Member/Staff Support
OTHERS PRESENT:
Sue Wilcox (Staff Support - Secretary)
Russ Proctor - Watson Wyatt Worldwide, the City's actuarial firm
Laurie Harvey (Staff Support - Benefits Administrator)
Bob Eichem (Staff Support - Treasury)
CALL TO ORDER: Chairperson Jerry P. Brown called the regular meeting to order
at 1:19 p.m. in the Council Information Center of City Hall West.
ITEMS OF NOTE: This meeting replaces the original June 6th meeting. Jerry
advised the group that Mayor Ann Azari and City Manager John Fischbach would both
visit with the Committee today at separate times, and this might require slight
adjustments in the agenda.
Jacci Peterson had planned to attend today's meeting, but her travel arrangements
had been changed without her knowledge, so she is unavailable. In addition Jacci
will resign her City position effective July 19th, but has expressed the desire
to continue on the Committee. According to the City Code, she can continue as
a citizen member, but that decision is up to City Council. Alan asked that the
information about Jacci's resignation be communicated to City Council. -The
consensus of Committee members was that they would like to see Jacci remain on
the Committee.
Assistant City Attorney Bobbi Burnette was unable to attend the meeting.
Jerry had his quarterly meeting with Mayor Azari, GERC Council liaison, and
reviewed the assumptions and information in the valuation report. He showed her
the latest draft of his Personal Retirement Planning Statement, which she felt
provided excellent information. She requested Jerry send a copy of the final
form to all Council members. When advised of the rewrite of the Plan information
booklet, she asked that it also be sent to City Council with a memo explaining
its purpose, background, etc. Mayor Azari affirmed that the GER Committee
reports to City Council and that City staff support persons would be willing to
work with the GERC and management personnel on GERP issues.
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300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
GERC Minutes - Corrected
May 30, 1996
APPROVAL OF MINUTES: Jerry provided the following statement and requested that
it be included in these minutes: "I would like to apologize to the City Manager
and the members of the Executive Lead Team for my negative comments in the May
2, 1996 GERC minutes. My comments were viewed as offensive to some, and were
inappropriate."
Gary Ellis moved and Dave Meyer seconded the motion to approve the minutes of the
May 2, 1996 GERC meeting as distributed. The vote was 4-0 to approve the motion.
DISCUSSION TOPICS:
1. GER PLAN MEMBER COMMENTS & CITIZEN INPUT: There were no member or citizen
comments.
2. DISCUSSION OF GERC PHILOSOPHY OF RETIREMENT
MAIN POINTS: Jacci Peterson had sent members a message explaining that she did
not feel it was worthwhile to proceed with any part of the analysis of the
retirement survey because of the cost and because at present it would only
reflect the GERC's and support staff's views. She also stated that she favored
a "cafeteria -style" retirement benefits plan and felt that cash -withdrawal
features were the biggest drawback to a retirement plan.
Russ Proctor of Watson Wyatt, the GER Plan's actuary, lead the discussion with
the goal that the group determine the characteristics of the present benefits and
the characteristics of the desired benefits. The gap between present character-
istics and desired qualities is what the Committee would then work toward.
Russ presented several charts showing the part each piece of retirement income
plays in providing a reasonable retirement income. 1. The General Employees
Retirement Plan provides a level benefit with no built-in inflation factor.
2. Social Security provides a benefit with built-in cost of living increases,
which are paid by current employees.
The first "Early -Out" program this year had no age requirements and set years of
service at 20 or more. Another "Early -Out" program is being proposed which
likewise sets no age limits or age requirements and requires a minimum of twenty
years of City service. The early -out programs have great support from the
labor/trades workers, who experience a physical "burnout" after years of hard
physical labor. Dave Meyer felt that people were working longer, but Russ said
that statistically, people want to and are retiring earlier (70% of employees in
the early 1900's were over 60 and still working, while now that figure is 27%).
Employees may begin working longer as their Social Security benefits are trimmed
for early retirement. Russ pointed out that burnout is a more significant reason
for reduced productivity rather than age. Burnout can be remedied by
restructuring jobs to relieve boredom.
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GERC Minutes - Corrected
May 30, 1996
Russ polled the GERC members and support staff about the affordability of the
current plan and what increase in contribution to retirement benefits, if any,
could current employees tolerate?
Dave Meyer stated that the current plan is probably the maximum affordable, given
the current economic climate and the Total Compensation system, which requires
that any increase in one benefit means a decrease in another benefit or in wages.
He felt minimal fluctuations should occur, with 1% being the maximum increase in
any year. Gary Ellis essentially agreed with Dave.
Laurie Harvey spoke for younger employees, many of whom are in entry level
positions with low wages. These are often the employees who feel the impact of
any decrease in wages the most. Older and longer -term employees are often able
to contribute more to benefits, for example, the 457 Deferred Compensation Plan.
Bob Eichem agreed with Laurie, suggesting that a formula using years of service
could be used to determine the rate of contribution. Mayor Azari also commented
that in the current housing climate, it is sometimes necessary to use 50% of
Income for housing needs.
Sue Wilcox said that in her training, saving was called "paying yourself first".
Whether it was labeled "parental" or not, she felt some system of required
contribution should exist for those who are unwilling or unable to contribute or
save in any other way. The system in other countries, which requires contri-
butions which cannot be withdrawn for other uses, is a good example. We can plan
and pay now or we will pay later in both financial and personal terms for our
lack of planning.
Alan felt we should aim high with gradual implementation of increases, keep the
options of additional savings (i.e. 401 Plan), and make the various retirement
plans within the City more equitable. Total Compensation is the current con-
straint. Total Comp is even impacting the recruitment of job applicants.
Applicants are often less willing to move from private business to the City
employment because it often means a reduction in the salaries and benefits being
offered.
Jerry's feelings were that Total Compensation is a very large constraint and that
1-1/2% would be the maximum contribution rate increase employees would tolerate.
(He used as a guideline the responses to the GERC post -Education Program survey,
which showed the bulk of respondents would agree to increases of 1% to 2%.) He
noted that employees should be encouraged to save and be provided with education
so that they understand the Plan.
CONCLUSIONS/NEXT STEPS: Russ will summarize the discussion of today's meeting
and provide a list of questions to be discussed at the next meeting.
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GERC Minutes - Corrected
May 30, 1996
3. DISCUSSION WITH CITY MANAGER JOHN FISCHBACH
MAIN POINTS: City Manager John Fischbach joined the group at about 1:35 pm. The
elements of the retirement philosophy the Committee has determined so far were
discussed, along with the presentation to the Executive Lead Team (EL Team) and
the EL Team's participation in the survey. John, speaking for the EL Team,
confirmed that the Team members are concerned about the retirement benefits of
their employees, but recognize that the GERC reports directly to City Council.
Jerry noted that several of the EL Team members have expressed their desire that
the GER Plan become a defined contribution -type of plan, feeling that it has a
number of advantages for the City. However, this type of benefit can often be
vulnerable to non -retirement uses by the employee. John also pointed out that
the EL Team is reviewing budget requests, including the $850,000 request for a
COLA for current retirees.
Russ Proctor explained that while a defined benefit plan, such as the GER Plan,
may be viewed as "parentalistic", it can also be considered good business. A
good employer provides an adequate wage, training, medical insurance, and other
benefits to its employees. That employer would logically provide a reasonable
benefit for the normal progression for employee to retiree. The employee can
move from a beginning employee to a trained, experienced employee, and ultimately
to a retired employee.
CONCLUSION/NEXT STEPS: The City Manager expressed his intent, and that of the
EL Team, to work with the GER Committee to provide adequate retirement benefits
for City employees. The members of the GER Committee were very pleased that the
City Manager could attend.
4. DIALOGUE WITH MAYOR ANN AZARI
MAIN POINTS: Mayor Ann Azari visited with the Committee at 2:25 p.m. Jerry
asked her what other areas of the country are doing? She replied that the trend
is to downsizing of programs and the number of employees in other municipalities,
often because federal funding for programs is discontinued. She also said
technology is being used to replace workers and privatization (using a private
company to provide services/products previously provided by municipal workers)
in certain areas is eliminating public sector jobs. The City of Fort Collins
does not tend to implement programs that lay off large numbers of employees.
CONCLUSION/NEXT STEPS: The Mayor would like to offer employees more choices in
training, retraining, and job reassignment. She is very supportive of the
Committee's work to examine the Plan and to consider changes. She left the
meeting at about 3 pm.
5. NEXT MEETING DATE
MAIN POINTS: There was discussion of holding an additional meeting or study
session to continue the development of the philosophy.
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GERC Minutes - Corrected
May 30, 1996
CONCLUSIONS/NEXT STEPS: It was agreed that the next meeting would be as
scheduled on July 11 (July 4th is a holiday) at 1:15 p.m. in the CIC Room. Russ
will distribute his summary and list of questions by the week of June 17th and
this item will be first on the July agenda.
6. ACTUARIAL FEES
MAIN POINTS: Watson Wyatt provided a letter outlining the costs for providing
various services related to the survey and development of philosophy.
CONCLUSIONS/NEXT STEPS: The consensus was that the Committee would not proceed
with compiling the EL Team surveys, items 4 and 5 are on hold, a decision on item
6 is pending. The philosophy development will take about two more meetings, so
that charge was accepted. Jerry will inform Dave Agee, who is monitoring the
contract, of these decisions.
7. FIRST QUARTER INVESTMENT REPORT
MAIN POINTS: The final version of the First Quarter, 1996, Investment Report was
presented.
CONCLUSION/NEXT STEPS: The report had been accepted in draft form. No further
action is required.
S. PERSONAL RETIREMENT PLANNING STATEMENTS (PRPS) &
INFORMATION ARTICLE ON SOCIAL SECURITY
MAIN POINTS: Questions may be generated by the new Personal Retirement Planning
Statements, which will be distributed with paychecks on June 7th. This revised
form now contains information about the 401(a) money purchase plan and 457
deferred compensation plan contributions, as well as the GERP and Social Security
benefits traditionally included. They also contain a sentence referring to the
age at which an employee can begin receiving full Social Security benefits.
Traditionally this has been age 65, but recent legislation has changed the age,
linking it to date of birth. Sue suggested that an article be written for Fort
Notes or the Health and Benefits Newsletter explaining the changes implemented
in Social Security that will affect the age at which recipients can retire and
receive full benefits.
CONCLUSIONS/NEXT STEPS: The Health and Benefits Newsletter seemed the most
appropriate place for such an article. Russ will provide some information and
Sue and Laurie will draft the article with additional information from Social
Security. The results of a short survey attached to the new PRPS forms will be
discussed at next month's meeting.
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GERC Minutes - Corrected
May 30, 1996
AGENDA 1 SCHEDULE FOR NEXT MEETING
The next meeting will be July llth at 1:15 p.m. in the Council Information Center
(CIC) of City Hall West. The agenda will include:
1. Plan Member/Citizen Comments
2. Farewell to Dave Meyer and Welcome New GERC Member
3. Continued Discussion of Retirement Plan Philosophy
4. Election of New Vice Chairperson
5. Evaluate the Process/Review Survey Results: "Personal
Retirement Planning Statements"
6. Potential Enhancements/Changes to GERP
7. Draft of Social Security Article
ADJOURNMENT
The meeting was adjourned at 3:35 p.m.
FUTURE MEETING SCHEDULE:
PLEASE NOTE: Because of the July 4th holiday, the July GERC meeting will be on
Thursday, July llth at 1:15 pm in the CIC. 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, JULY 11, 1996*
THURSDAY, SEPTEMBER 5, 1996
THURSDAY, NOVEMBER 7, 1996
THURSDAY, AUGUST 1, 1996
THURSDAY, OCTOBER 3, 1996
THURSDAY, DECEMBER 5, 1996
*Rescheduled because of July 4th holiday