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HomeMy WebLinkAboutRetirement Committee - Minutes - 06/05/1997Retirement Plan • FORT COLLINS GENERAL EMPLOYEES RETIRENEP T CONEVMTEE City of Fort Collins JUNE 5, 1997 MEETING MINUTES COUNCIL LIAISON: Mayor Ann Azari COMMITTEE MEMBERS PRESENT: Jerry P. Brown, 221-6350(w), 226-0800(h) Dave Agee, 221-6770 Alan Krcmarik, Member/Staff Support Kevin Westhuis, 224-6156 ABSENT: Jim Hume, 221-6776 OTHERS PRESENT: Sue Wilcox (Staff Support - Secretary) Russ Proctor - Watson Wyatt Worldwide, the City s actuarial firm Laurie Harvey (Staff Support - Human Resources) Greg Tempel (Staff Support - Legal) Bob Eichem (Staff Support - Investments) John Austerberry, Community Service Officer, Police Department Patti Teraoka, GERP member, Light & Power, GERC member candidate Stephen Tracy, GERP member, Finance, GERC member candidate CALL TO ORDER: Chairperson Jerry P. Brown called the regular meeting to order at 1:20 p.m. in the Council Information Center of City Hall West. ITEMS OF NOTE: Jerry advised the members that: 1) Tim Hume was absent because of a prior commitment ..... 2) Jerry advised the Committee that Dave Agee has to leave the meeting at 3:00 p.m ...... 3) Because the minutes are not distributed until after they are approved at the next meeting, the last page of the minutes (containing the agenda for the next meeting) will be sent to the GERP members about two weeks before each meeting ..... 4) No word has been received about the progress of the budget request for a COLA for existing retirees. APPROVAL OF MINUTES: Jerry briefly outlined the suggested changes in the May 1, 1997 minutes in sections 2 and 7, as well as correcting the numbering of the items. Alan Krcmarik moved that the minutes be approved as corrected and Keven Westhuis seconded his motion. The vote was 4-0 in favor of approving the minutes as corrected. DISCUSSION TOPICS: 1. GER PLAN MEMBER(S) COMMENTS/CITIZEN PARTICIPATION: Kevin Westhuis relayed a request from a Light and Power employee -member that the GERC again conduct classes on planning for retirement. Laurie Harvey reported that Sharon Roulier in Human Resources is arranging retirement classes for Fall, 1997. These classes are designed for all employees, not just those nearing retirement age. Laurie will inform Sharon of this request. 300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 GERC Minutes - hne 5, 1997 2. COMMUNITY SERVICE OFFICERS REQUEST TO "OPT OUT" OF GERP MAIN POEM: John Austerberry, representing the Community Service Officers of the City's Police Department, was present. Laurie Harvey stated that the community service officers have requested to "opt out" of membership in the General Employees Retirement Plan and become part of the Police Pension Plan. The group of eight CSOs has been working with Human Resources on this issue and on withdrawing from Social Security. They are awaiting a decision from the IRS on whether the CSOs can legally do this. Jerry advised the GERC that although there is no provision in the GER Plan allowing employees to leave the Plan, it has been done in the past. Most of those leaving the Plan did so because their positions became "unclassified", and some of these received a cash -out at the time they left the Plan. Greg Tempel provided details of the Dispatcher's request to leave the GER Plan: In 1951, The City entered into an agreement with the State and Federal governments. This agreement brought all City employees into the Social Security system, with the exception of those who were already covered by a pension plans as of 1/1/51. As police dispatchers were covered by the police pension plans as of that date, they were not brought into the Social Security system and subsequently, the GERP. At a point in the early 1980's a decision was made by the City to move newly -hired dispatchers into Social Security and the GERP. This decision was reversed when it was determined that the dispatchers should be in the police plan pursuant to the intent of the 1951 agreement. As the Community Service Officers job category did not exist as of 111151, the 1951 agreement requires that this job category be maintained in the Social Security system. Greg is currently exploring with the State whether the amendment of the 1951 agreement is possible CONCLUSIONS/NEXT STEPS: It was the consensus of the members that the GERC postpone any action on this request until an answer is received from the State and Federal authorities on the CSO's request to drop out of Social Security; and that there will hopefully be some "management" direction on this issue. 3. DISABLED GERP MEMBER REQUESTS RETIREMENT BENEFITS BEFORE AGE 65 MAIN POINTS: A GERP member and former City employee who became disabled and has been drawing disability benefits through the City's long-term disability carrier, is considering accepting an offer from the insurance carrier to take a lump -sum payment. The member has inquired of Laurie Harvey as to whether he could receive early retirement benefits from GERP (prior to age 65) if he accepts the lump -sum settlement. Laurie asked that the Committee provide guidance on how she should answer this inquiry. It was noted that the Plan does not appear to allow for a disability retirement until age 65, as long as the member continues accruing service credit toward a GERP benefit. Further, the Plan provides that a disabled member cannot receive early retirement unless the disability ends prior to age 65. It was suggested by Greg Tempel that an executive session be called to receive legal advice on this matter. Dave Agee moved and Kevin Westhuis seconded his motion to call an executive session. The vote was 4-0 in favor of the motion and everyone except the Committee members, Russ Proctor, Greg Tempel, and Laurie Harvey was excused at 1:50 p.m. At 2:12 p.m. the regular meeting was reconvened. -2- CERC Minutes - June 5, 19970 0 CONCLUSION/NEXT STEPS: Dave Agee moved that the Committee concluded that the member would not be eligible for early retirement benefits under the scenario presented by Laurie, based on interpretation of the current GER Plan document. His motion was seconded by Alan Krcmarik. At Laurie Harvey's suggestion, Dave Agee offered a friendly amendment stating that the request was made because the individual had received a lump -sum benefit from the City's long-term disability insurance carrier. The proposed amendment was seconded by Alan Krcmarik also. Both the motion and the amendment were approved 4-0. In addition, Kevin Westhuis moved that the issue of disabled individuals being required to reach age 65 before receiving retirement benefits be re -considered with other possible Plan amendments at a later time. Dave Agee seconded the motion, which was approved 4-0. 4. INVESTMENT REPORT, FIRST QUARTER,1997 MAIN POINTS: Alan Krcmarik provided the final numbers for the first quarter GERP investment report, noting that bonds, which comprise 58.8% of the portfolio, enjoyed a 6.7% return, slightly better than its index, the 5-year Treasury bonds (6.35%). The domestic mutual funds, representing 33% of the portfolio, showed a negative return of 0.8%. The international mutual fund component, which represents 8.4% of the total portfolio, echoed the domestic funds with a negative 1.9% return. Alan noted that a format change allows the various kinds of funds to be compared with their respective benchmarks by matching the asterisks in the first section with those in the second section. Dave Agee related an issue that arose on a proxy vote on merging Royce Equity with another Royce fund. For a longer view of the portfolio's performance, Alan recommended looking at the last two pages of the report, where the column marked "Trailing 12 Months" shows the longer -term gains which are sometimes overshadowed by short-term setbacks. CONCLUSION/NEXT STEPS: The strategy for the year for investing GERP funds includes continuing to diversify in various ways: spreading out the maturities of the bond holdings, considering allocation options in the bond markets, and researching other mutual funds for possible inclusion in the portfolio. The forecast for investments is looking brighter, as most funds are back up to the levels seen before the first quarter's drop. Anyone wishing a copy of the investment report can call ext 6788 or e-mail Sue Wilcox. 5. INVESTMENT POLICIES MAIN POINTS: Alan had previously distributed the revised draft of the GERP Investment Policies to the Committee members. CONCLUSIONS/NEXT STEPS: Alan asked for comments and suggestions to be sent to him via Groupwise. 6. DB/DC STUDY UPDATE & ICMA MODEL REVIEW MAIN POINTS: Alan had transmitted his sample spreadsheet to the GERC members electronically. The spreadsheet can be used to calculate the difference between a Defined Benefit (DB)and Defined Contribution (DC) using varying years of service, age, start dates, and retirement dates. In general it showed that those who have been in the General Employees Retirement Plan for 20 years or more -3- GERC Mirmtes - June 5, 1997 would be better off to stay in the Plan. This reaffirms the findings that Russ Proctor has reported before, that employees with longer service generally reap the most benefit from staying in a DB plan. Russ also distributed additional information that was requested at the last meeting. CONCLUSION/NEXT STEPS: The Committee was encouraged to find it could be financially possible to convert to a DC plan. At the July meeting the Committee may review the retirement philosophy it has developed and look at the general steps involved in considering the option of a DC plan, the pros and cons of DB and DC plans, the problems expected, and how to educate the GERP members. Possible implementation dates were discussed. 7. OTHER BUSINESS Jerry is completing eight years on the GERC and expressed his thanks to the members and staff both past and present, for a very worthwhile experience. The members and staff in turn expressed their thanks to Jerry for his many hours contributed to the plan, his organizational skills, and his willingness to support and promote the Retirement Plan. AGENDA & SCHEDULE FOR NEXT MEETING The next meeting will be Thursday, July loth at 1:15 p.m. in the Council Information Center (CIC) of City Hall West. (Date change due to holiday.) The agenda will include: 1. Plan Member Comments/Citizen Participation 2. View "Nightline" Video on DB/DC Issue 3. DB/DC Study Update & Details of Design of Retirement Philosophy 4. Update on GERC Web Page 5. Investment Policies Review 6. Election of Interim GERC Officers (Until the September Meeting) ADJOURNMENT The meeting was adjourned at 3:40 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, JULY 10,1997 *Date changed because of holiday* THURSDAY, AUGUST 7, 1997 THURSDAY, SEPTEMBER 4, 1997 THURSDAY, OCTOBER 2, 1997 THURSDAY, NOVEMBER 6, 1997 THURSDAY, DECEMBER, 4, 1997 -4-