HomeMy WebLinkAbout2006 - Retirement Committee - Annual ReportGeneral Employees' Retirement Committee
2006 Annual Report
The General Employees' Retirement Plan (GERP) is managed and administered by the General
Employees' Retirement Committee (GERC) in accordance with the terms of the Plan. The 2006 actuarial
report, prepared by Milliman USA, Actuaries and Consultants indicates that as of January 1, 2006, there
were 553 members in GERP of whom 300 were active members who continue to accrue benefits under the
Plan, including 3 partially vested employees, 297 fully vested employees, 119 vested employees; 134
retirees and beneficiaries currently receiving benefits; and 119 vested terminated employees.
One way to look at the adequacy of Plan funding is to compare the value of benefits under the Plan terms
to the value of Plan assets as of the valuation date (January 1, 2006). By this measure, the Plan is fairly
well funded, since the actuarial value of plan assets covers 75.8% of the present value of future benefits,
and the market value of plan assets covers 78.3% of the Present Value of Future Benefits. The Present
Value of Future Benefits is $48,651,824 and the Market Value of Assets is $38,098,146. The Present Value
of Future Benefits includes benefits earned to date plus the value of benefits anticipated to be earned for all
expected future service by current participants. The market value of plan assets exceeds the present value
of accumulated Plan Benefits by 6.6%, as of January 1, 2006.
According to a special study by Milliman, the Plan will be under -funded. The City of Fort Collins Finance
Committee studied the under funding and recommended the following funding strategy. The 2007 Budget
contains a phased -in approach for the General Employees' Retirement Plan to fund predicted shortfalls a
$200,000 increase in fiscal years, $400,000 in 2008 and 2009, $600,000 in 2010 and 2011, $700,000 in
years 2012-2019 and $750,000 in 2020 — 2022.
In 2006, the Committee was composed of Jim O'Neill, Chair, Purchasing and Risk Management, Bill
Switzer, Vice -Chair, Utilities, Financial Operations; Susan Lehman, Advance Planning; Michele Hays -
Johnson, Utilities, Water Production; Dottie Nazarenus, a retired Plan member; and, Chuck Seest, Finance
Director.
Staff support for the Committee included Heather Shepherd, Finance, Secretary; Debbie Weedman, Human
Resources; Greg Tempel, Assistant City Attorney; and Harold Hall, Finance, as staff support for
investments.
COMMITTEE HIGHLIGHTS FOR 2006:
PERSONAL RETIREMENT PLANNING STATEMENTS (PRPS)
The GERC had the PRPS prepared by the actuary, Milliman, and distributed them to individual members in
the Spring of 2006.
General Employees' Retirement Plan 4th Ammendment — Council passed resolution 2006-29 making
changes to the plan pertaining to Community Services Officers.
General Employees' Retirement Committee
2006 Annual Report
January 11, 2007
Page 2 of 2
RETIREMENT PHILOSOPHY
The Committee continues to monitor investment returns and to have discussions with Milliman regarding
our retirement philosophy. Thus far we have not determined changes that may be necessary considering
the state of investment returns.
INVESTMENT RESULTS
The Annual Rate of Investment Return was 14.37% as of December 31, 2006 compared to 9.59% as of
December 31, 2005. The Total Market Value of Assets was $42,209,891 as of January 1, 2007, compared
to $38,016,264 as of January 1, 2006; an increase of $4,193,627.