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HomeMy WebLinkAboutRetirement Committee - Minutes - 07/21/1998Gene Employees Retirement Plan • FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE JULY 21, 1998 INTERIM MEETING MINUTES COUNCIL LIAISON: Mayor Ann Azari COMMITTEE MEMBERS PRESENT: Jim Hume, 221-6776 Susan Lehman, 221-6813 Alan Krcmarik, 221-6788 Kevin Westhuis, 224-6156 Patti Teraoka, 221-6715 OTHERS PRESENT: Russ Proctor, Watson Wyatt Worldwide, the City's actuarial firm Beth Molenaar, Plan Member Laurie Harvey (Staff Support - Human Resources) Greg Tempel (Staff Support - Legal) Bob Eichem (Staff Support - Investments) Sue Wilcox (Staff Support - Secretary) CALL TO ORDER: Chairperson Kevin Westhuis called the meeting to order at 2:37 p.m. in the Hallway Conference Room of City Hall West APPROVAL OF MINUTES: Because this was an interim meeting, no minutes were presented. ADDITIONS TO AGENDA/ITEMS FOR AUGUST AGENDA There were no changes in the current agenda, but several items were proposed for the August agenda: Draft of Actuarial Report, Election of Officers, and Eligibility of Disabled Vested Members. DISCUSSION TOPICS: 1. GER PLAN MEMBER(S) COMMENTS/CITIZEN PARTICIPATION: Susan Lehman had a question from a staff member: Why is the administration and investment of the GERP funds not put out for bid? Under the GER Plan investment policies, administration and investment of GERP funds has been assigned to the City's Finance Department. The Finance Department does not charge for the cost of administering and investing the funds. In the future the Committee may consider bidding out these services. Actuarial services which are required to administer the Plan have been solicited through a request for proposal process. 300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 GERC Minutes - July 21, 1998 Page 2 - 2. UPDATE ON DB/DC INFORMATION: MAIN POINTS: Kevin Westhuis reported that fifteen people attended the "make-up" educational program he provided with the video-taped session and there is one more session tomorrow. After discussion of the importance of all members having an opportunity to attend the educational program, Kevin and Susan Lehman volunteered to try to contact the remaining members who had not attended a session (approximately 100) and poll them for the reasons they did not attend. These reason(s) would be noted and included in their personal files in Human Resources for future reference. Jim Hume will draft an addition to the "Frequently Asked Questions" to acquaint members (especially those over 50) with the need to consider the lump sum values to the various options and how to obtain a calculation of the lump sum. This would be distributed via Groupwise and as flyers distributed to individuals in the departments. Using the financial software provided by Watson Wyatt, Kevin and Bob Eichem will be available to help with preparing the lump sum amounts that are requested. Jim was asked to also include a section on the FAQs that asks members to submit a selection form, even if they wish to remain in the Plan. Beth Molenaar commented that the Committee's assumption that members feel they can do better than the 7.5% the GERP eams is not universally true. She has heard comments from plan members indicating they are satisfied with the guaranteed rate of return the GERP provides. She also said the issue of survivor benefits shouldn't be a major focus of the Committee. Greg Temple reported that outside consultant attorney Stephen Weinstein confirmed that current employees will be able to roll GERP funds to their ICMA 401(a) plans. Laurie will check with ICMA Retirement Corporation representative Andy Ahrens on whether former employees can roll their GERP funds into their City 401(a) accounts. NOTE: Laurie reported that when employees leave City employment, their 401(a) accounts are essentially closed to further contributions. Former employees are not able to roll GERP funds to their City of Fort Collins 401(a), but can roll them to another 401(a) plan (if it accepts rollovers) or to an IRA. Assuming the defined contribution plan is approved by City Council, more information and education will need to be provided to the GERP members on how the funds will be transferred and disbursed to the personal accounts. Alan reported that Jerry Huggins, the ICMARC representative who attended the last meeting, has moved to a different company. ICMARC has not indicated who will fill Mr. Huggins position. CONCLUSIONS/NEXT STEPS: This topic and related questions will be included in the September meeting after the results of the selection process are known. Alan may suggest that Jerry Wagner, Andy Ahrens, or Teresa Myers of ICMA attend the September GERC meeting. 3. REQUEST FOR RECALCULATION OF MPP OPENING BALANCES MAIN POINTS: Responding to requests from several individuals, Laurie had furnished the names of employees who had moved from full time to part time status and whose MPP opening • A Minutes - July 21, 1998 Page 3 balances might have been adversely impacted by this change. Russ recalculated the MPP opening balances for those people whose highest 60 months income in the last 10 years exceeded their 1998 base pay. There were about 28 individuals included in the analysis. The total additional cost to the GER Plan would be about $65,000 - $70,000, which Russ did not consider a significant impact on the Plan. CONCLUSION/NEXT STEPS: Kevin moved that Russ Proctor of W W W be authorized to prepare recalculated MPP opening balances for those individuals whose Final Average Pay (FAP) was higher than their 1998 base pay. Alan seconded the motion, which passed unanimously. Jim Hume will add this item to the FAQ update he is preparing, and explain why it is being done. The recalculations will be sent to Sue for distribution. 4. QUALIFIED DOMESTIC RELATIONS ORDERS (QDROs) MAIN POINTS: Greg Temple advised the Committee that the addition of the lump -sum provision to the GER Plan will require some changes in the QDRO forms and procedures he had planned to present to the Committee. CONCLUSION/NEXT STEPS: This item will be deferred to the 1999 work plan. 5. GERC MEETING LOCATIONS MAIN POINTS: A GER Plan member had suggested that GERC meetings be held in various workplace locations throughout the City in order to make the process more available to outlying workers. Laurie suggested that the flip side of this idea is that having the meetings in the same location provides continuity and prevents confusion among individuals wishing to attend a meeting. Rarely do employees attend the meetings unless there is an issue of importance to them. CONCLUSION/NEXT STEPS: The Committee decided to leave the meeting place and schedule as it is through the end of the year. If there is more feedback from members about moving the meeting site, it can be reconsidered in December when the 1999 meeting schedule is set. 6. USE OF YEAR-END PAY RATES ON PERSONAL RETIREMENT PLANNING STATEMENTS MAIN POINTS: As part of the process of preparing the annual Valuation Report, Watson Wyatt provides Personal Retirement Planning Statements (PRPS) to all members. Plan members do not know what pay rate is used to calculate these statements. CONCLUSION/NEXT STEPS: After discussing the topic, the Committee agreed future PRP statements will use the pay rate in effect on December 31 of the previous year. The wording on the PRP statement forms will be revised to reflect this. GERC Minutes - July 21, 1998 Page 4 7. WATSON WYATT FEES AND CONTRACT ISSUES MAIN POINTS: Russ explained that following the City's RFP process, Watson Wyatt signed a five-year agreement with annual renewals by the Committee. The fees were set when the original contract was signed. Watson Wyatt is now requesting a fee increase which was explained in a letter to Jim O'Neill, Director of Purchasing. Russ assured the Committee that Watson Wyatt would honor the existing contract with the City. CONCLUSION/NEXT STEPS: A copy of the letter to Jim O'Neill was given to Jim Hume for review and he will bring any concerns to the Committee at the Interim Meeting scheduled for August 20th. 8. INTERIM MEETING SET MAIN POINTS: The Committee would like to meet soon after the results of the balloting for the DB/DC choice are known, so it can consider the next steps it must take. CONCLUSION/NEXT STEPS: Kevin moved the Committee set an interim meeting for the GERC on Thursday, August 20' at 1:15 p.m. in the CIC room. Jim Hume seconded the motion, which passed unanimously. 9. OTHER BUSINESS A. MAIN POINTS: Laurie Harvey advised the Committee that one former employee had received the lump -sum information in error. He is currently receiving disability payments, which, under the current plan, makes him ineligible to receive a lump -sum distribution. CONCLUSION/NEXT STEPS: Laurie has drafted a letter to the individual explaining why he is not eligible. Greg will review the letter before Sue sends it out. B. MAIN POINTS: Another Plan member when advised of his lump sum eligibility, questioned why the dollar amount was different from previous information he had obtained from an actuary. CONCLUSION/NEXT STEPS: Russ Proctor advised that the difference is caused by the change in the actuarial assumptions used. The GER Plan changed from using Pension Benefit Guaranty Corp. assumptions and now uses a 7.5% assumption, resulting in a lesser lump -sum calculation. Alan advised the Plan member of this change. AGENDA & SCHEDULE FOR NEXT MEETINGS The next meeting will be Thursday, August 6' at 1:15 pm in the Council Information Center (CIC) of City Hall West. The agenda will include: • A Minutes - July 21, 1998 Page 5 1. 1998 Actuarial Report Draft 2 Election of Officers 3. Eligibility of Disabled Vested Members for Lump -sum Distributions. 4. Quarterly & Regular Investment Review 5. Other Business The Interim meeting will be Thursday, August 20" at 1:15 pm in the Council Information Center (CIC) of City Hall West. The agenda will include: 1. Next Steps in DB/DC Choice Process 2. Watson Wyatt Fees & Contract Issues ADJOURNMENT The meeting was adjourned at 4:25 p.m. GERC/GERP WEB PAGE ADDRESS: www.ci.fort-collins.co.us/CITY HALL/BOARDS CON4 IISSIONS/RETIREMENT/index.htm FUTURE MEETING SCHEDULE: 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, AUGUST 6, 1998 THURSDAY, SEPTEMBER 3, 1998 THURSDAY, OCTOBER 1, 1998 THURSDAY, NOVEMBER 5, 1998 THURSDAY, DECEMBER 3, 1998