HomeMy WebLinkAboutRetirement Committee - Minutes - 04/04/1996City of Fort Collins
Retirement Plan 0
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
APRIL 4, 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)
Dave Agee (Staff Support - Controller)
Russ Proctor - The Watson Wyatt Company, the City's actuarial firm
Bobbie Burnette (Staff Support - Assistant City Attorney)
Laurie Harvey (Staff Support - Benefits Administrator)
Jaime Mares (Staff Support - Human Resources)
Brian Hahn, Member - Water & Wastewater
ITEMS OF NOTE: Jerry noted that the Second Floor Conference Room of City
Hall West has been "decommissioned". Future GERC Meetings will be held in
the Council Information Center (CIC) of City Hall West, except the June
meeting, which will be held in the Finance Conference Room.
Also, Dave Meyer's term as GERC member expires June 30th. Anyone interested
in serving on the Committee can obtain an application from the City Clerk's
Office. The deadline for applications is Friday, April 17th at 5:00 p.m.
(BECAUSE NO ELIGIBLE APPLICATIONS WERE RECEIVED, THE APPLICATION PERIOD HAS
BEEN EXTENDED UNTIL MAY 1, 1996 AT 5:00 P.M.)
CALL TO ORDER: Chairperson Jerry P. Brown called the regular meeting to
order at 1:17 p.m. in the Council Information Center of City Hall West.
APPROVAL OF MINUTES: Jacci Peterson requested that on page 2, in the third
full paragraph of the March 7, 1996 minutes, the second sentence be changed
to read: "Jacci Peterson reported that the State of West Virginia's
experience with a defined contribution plan showed the majority of people
kept their money in fixed rate, low -paying investments and did not maximize
the rate of return. The fear is that retirees would not have enough money on
which to retire." With that change, Jacci moved that the minutes be approved
as amended and Gary Ellis seconded the motion. The vote was 5-0 in favor of
the motion.
se
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
DISCUSSION TOPICS:
GER PLAN MEMBER COMMENTS Al CITIZEN INPUT: No comments or input.
2. MEMBER REQUESTS FOR 'CASH -OUT' OR 'LUMP -SUM TRANSFER' OF GER PLAN FUNDS
MAIN POINTS: Brian Hahn, speaking for himself and Jim Scheller of Light and
Power, requested that the Committee recommend to City Council that Plan
Members be allowed to "cash out" the funds set aside for them in the GER
Plan. He and Jim are considering taking the "early out" option and leaving
City employment. Jerry Brown noted that Sue Coram has also expressed to him
her support of Jim's request. Two parts to this request include 1) does the
GER Plan allow lump -sum payments or cash -outs for employees leaving City
employment, 2) the timing of these requests (in connection with the Early out
program) would require a resolution for City Council consideration on April
16th.
Brian felt that allowing members to withdraw from the GER Plan would remove
some of the City's liability for those future retirement benefits. He noted
that of the 11 City employees who are considering the "early out" option,
only two or three are under 55 and are interested in the cash -out option. He
also pointed out that this action would reduce the City's administrative
costs, and eliminate bias in favor of older, long-term employees. Brian also
felt that as these funds are part of his Total Compensation, he's deprived of
the use of them. He pointed out that former classified employees were given
the option of cashing out when they were changed to unclassified positions,
thus it would only be fair to make this option available to all classified
employees.
There was discussion regarding the possibility of making this action
retroactive. Russ Proctor explained that the funds being paid out could be
greater than the employee's liability to the Plan, resulting in a loss to the
Plan. (The loss is due to the reduced rate of return on the investments.)
Brian also claimed that when this option has been made available in other
plans, it usually has only a few who accept. Jerry pointed out that if the
GERC considers this option that it should only be after conducting a thorough
investigation, preparation of the costs, and a poll of employees (potentially
through focus groups), with Council consideration probably some time in
November as part of Total Compensation.
An Executive Session was suggested. Alan Krcmarik moved and Jacci seconded
a motion to convene an executive session to review legal questions with
Assistant City Attorney Bobbie Burnette. The vote was unanimous in favor of
the session. At 2:00 p.m. the non -committee members left the meeting.
Bobbie requested that Russ Proctor, the actuary, attend also.
At 2:15 p.m. the meeting was reconvened. Alan Krcmarik suggested that the
topic of cash -outs for GER Plan members be added to the list of Potential
Enhancements/Changes to the GERP Plan. Jerry pointed out that the question
of cash -outs and the "early -out" option are not tied to each other.
-2-
CONCLUSIONS/NEXT STEPS: The Committee declined to consider the topic of
cash -outs or lump -sums at this time, but to include it on the list of
enhancements and changes that they will research, review, and discuss as part
of the Workplan. Brian stated that he will probably seek legal council.
3. POTENTIAL ENHANCEMENTS TO THE PLAN
MAIN POINTS: A) Russ stated that he will do most of his work on this
calculation of costs for a "Rule of 80 or 85" after the survey is completed
and tabulated. B) Conversion to a defined contribution plan could be
combined with the purchase of annuities for longer -term employees who wished
to maintain a GERP type of plan (Old Hire -New Hire). C) This could include
a "cash -out" as part of a Cash Balance Plan, but not part of a defined
benefit plan. D) Cost of Living Adjustment for current employees if the
survey warrants it.
CONCLUSION/NEXT STEPS: All items will be researched and discussed further.
4. SURVEY OF RETIREMENT PLAN CHARACTERISTICS
MAIN POINTS: Russ distributed a survey to determine what characteristics
various groups think make up an ideal retirement program. The intent is to
obtain information related to the entire retirement package, not just the GER
Plan. Several suggestions were made for clarity. Alan and Russ will present
the same survey to the Executive Lead Team (EL Team) on April 10th for them
to complete. GERC Members are invited to attend.
CONCLUSION/NEXT STEPS: The GERC members and staff were asked to complete the
survey and return it by April 12th. The Assistant City Attorney left at this
time due to another commitment.
5. PRELIMINARY COSTS FOR COST OF LIVING ADJUSTMENT FOR RETIREES
MAIN POINTS: Russ estimated the price tag of a cost of living increase for
current retirees based on the Consumer Price Index (CPI). It came to over
$800,000 and Russ said options include: a one-time payment, a $100,000 yearly
payment for several years, a set amount each year, a reduced percentage of
the CPI, etc. Many options were discussed at length.
P US N NEXT STEPS: Because Jerry will be out of town, it was agreed
that Dave Meyer, Vice Chairperson, would work with Russ and Sue to finalize
a memorandum to Mayor Azari and City Council proposing that Council consider
a COLA for current retirees, but stating that the funds are not available
from the GER Plan. The Finance Director left at this time to attend another
meeting.
6. "GENERAL EMPLOYEES RETIREMENT PLAN SUMMARY" BOOKLET
MAIN POINTS: The "General Employees Retirement Plan" booklet was created
during the education program in 1992, and is being revised to include Plan
changes.
-3-
CONCLUSION/NEXT STEPS: Watson Wyatt's staff will review the booklet for
compliance and consistency.
7. PERSONAL RETIREMENT PLANNING STATEMENT
MAIN POINTS: Sample copies of this revised form were distributed for review
by the GERP members present. Suggestions and corrections were discussed.
Sue presented a short memo to the members explaining the changes and a survey
asking for feedback on the new format.
CONCLUSIONS/NEXT STEPS: Russ will make the final changes, and Sue will
recruit volunteers to fold and stuff the form/memo/survey in the envelopes,
along with a pamphlet called "Top 10 Ways to Beat the Clock". Attached will
be the Social Security form used to request a statement of past Social
Security earnings and a projected monthly benefit. This is scheduled for
distribution along with paychecks in mid -May.
B. INVESTMENT POLICY CHANGES
MAIN POINTS: The Finance Committee has reviewed changes to the Financial
Management Policies, of which the Investment Policies are a part.
CONCLUSIONS/NEXT STEPS: Because Alan had left the meeting earlier, this
topic was deferred to next month.
9. ESTIMATE OF GER PLAN CONTRIBUTION RATE FOR 1997 BUDGET
MAIN POINTS: Russ estimated that the contribution rate needed for the 1997
budget document will be 4.912% based on the new and revised assumptions in
the 1-1-96 Valuation Report.
CONCLUSION/NEXT STEPS: This information will be forwarded to the Budget
Office for inclusion in the Budget document.
AGENDA i SCHEDULE FOR NEXT MEETING
The next meeting will be May 2nd 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. Investment Report for 1st Quarter, 1996
3. Annual Actuarial Valuation Report (Draft)
4. Investment Policy Changes
5. Finalize Potential Enhancements/Changes to GERP
6. Discuss Survey Results
-4-
ADJOURNMENT
The meeting was adjourned at 4:30 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, MAY 2, 1996
THURSDAY, JULY 11, 1996**
THURSDAY, SEPTEMBER 5, 1996
THURSDAY, NOVEMBER 7, 1996
*Held in Finance Conference Room
THURSDAY, JUNE 6, 1996*
THURSDAY, AUGUST 1, 1996
THURSDAY, OCTOBER 3, 1996
THURSDAY, DECEMBER 5, 1996
**Rescheduled because of holiday
MM: BECAUSE NO ELIGIBLE APPLICATIONS FOR DAVE MEYER'S SEAT ON THE GERC
WERE RECEIVED, THE APPLICATION PERIOD HAS BEEN EXTENDED UNTIL NAY 1, 1996 AT
5:00 P.M.
-5-