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HomeMy WebLinkAboutRetirement Committee - Minutes - 11/01/1990• FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE MEETING MINUTES NOVEMBER 1, 1990 MEMBERS PRESENT: MEMBERS ABSENT: Jerry Brown Mollie Mercer None Alan Krcmarik Angelina Powell Dennis Sumner Sue Wilcox, Secretary Don Mazanec, Principal of William M. Mercer, Inc, was present, as well as Jaime Mares, head of Employee Development and Bob Eichem, Treasury Administrator. CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:25 p.m. on November 1, 1990 in the Finance Conference Room. APPROVAL OF MINUTES: Sue Wilcox noted that on page 2, Item should be changed to "data". Jerry September 20th meeting be approved as motion. The motion passed unanimously. ITEMS OF NOTE: Dennis read a letter dated October 8th Power thanking City Council and the recently approved. Dennis will draft the members of Council. AGENDA REVIEW: There were no changes in the agenda. DISCUSSION TOPICS: Open Items #3 under "Next Steps", the word "date" Brown moved that the minutes of the corrected. Angelina Powell seconded the from a group of retirees from Light and Committee for the increase in benefits a cover memo and forward the letter to 1. LONG-TERM DISABILITY VERSUS WORKERS COMPENSATION COVERAGE MAIN POINTS: Jaime Mares explained with the Total Compensation Study, information on this subject. He recommendation for our next meeting. that due to the workload associated he was not prepared to offer any plans to have information and a Don Mazanec explained that almost all long-term disability (LTD) plans are coordinated with Workers Compensation (Workers Comp) benefits and any Workers Comp benefits are deducted from LTD payments. The LTD carrier normally determines eligibility for retirement and most plans do not preclude a person who is receiving Workers Comp benefits from filing for LTD benefits, as it appears the City's carrier does. Mollie expressed the need for clarification on the handling of partial disability versus total disability. She feels the Plan meant to include both, but that the booklet seems to differ from the Plan's intent. It appears that if a person is receiving Workers Comp for a partial disability, they are terminated and no longer receive service credits, nor are they eligible for a lump -sum payment. However, an individual on LTD receives 2/3 of normal salary and is still eligible for retirement benefits. DECISIONS/CONCLUSIONS: It is important to clear up these ambiguities which may require that the information booklet be edited and re -printed. NEXT STEPS: Jaime Mares will consult with Byerly & Co., carrier for the City's LTD coverage, to clarify LTD provisions in relation to the GER Plan. 2. TOTAL COMPENSATION DATA ON RETIREMENT COSTS MAIN POINTS: Jaime Mares prepared a comparison between Fort Collins and other Front Range governmental agencies showing the percentage of total salary and benefits dedicated to retirement benefits. Fort Collins is 14.20%, which breaks down to 7.65% for Social Security, 3.553% for GERC, and 3% for ICMA. Jaime clarified that the City's actual expense is a little less than 3% for ICMA. However, in order to achieve equitable comparisons, the City is using the maximum liability for the City's cost and is doing likewise with other employers in the Total Comp Comparison. It was also noted that the 1.45% of Social Security which is for Medicare is included for all in the survey who participate in Social Security. Although others not participating in Social Security are currently making the 1.45% Medicare contribution, this has no impact on the comparison. This is due to the fact that this charge was initiated in 1986 and therefore would not apply to the "six year" employee used for the study comparison. Jaime felt that the Total Comp question will not be settled enough for the GERC to prepare any proposed changes until next October. DECISIONS/CONCLUSIONS: This item will be deferred for the time being with periodic updates from Jaime. NEXT STEPS: No activity can be done at this time. 3. UPDATE ON LUMP -SUM PAYMENTS MAIN POINTS: There are a total of 95 terminated vested members. Next week Don Mazanec will send a list of those who have benefits of $100 per month or less to Mollie. Don will also provide an information sheet to be sent to those who will be offered settlement of their retirement accounts, explaining various options for using or investing these funds and the tax consequences of each. Mollie asked Don to prepare a worksheet she can use to advise future terminating vested members what their lump -sum payment will be. DECISIONS/CONCLUSIONS: Currently -terminated vested employees will be given the option for lump -sum settlement. Future -terminated vested employees will be required to accept the lump -sum settlement. (This is driven by an IRS requirement intended to avoid discrimination.) NEXT STEPS: Don Mazanec will provide a list of terminated employees eligible for the lump -sum settlement and an information sheet to be sent to these people explaining their options for use of these funds. Don will IL • also provide a worksheet to determine lump -sum settlements for future terminating employees. 4. DISCREPANCY IN BENEFIT PAYMENT DATES MAIN POINTS: There is a discrepancy in the date that benefits are paid: the Plan says they will be paid beginning on the first actual day of retirement. However, practice has been to pay retirees on the last working day of the month. Alan Krcmarik determined that since it has been a time-honored practice for as long as current employees can remember to pay on the last working day of the month, and since this is consistent with similar kinds of payments made by the City, he recommends that the system be continued and the current Plan be amended to comply with current practice. This system also allows for the convenient administration of partial payments for the month of death. DECISIONS/CONCLUSIONS: Angelina Powell moved and Mollie Mercer seconded the motion to accept Alan's recommendation and amend the Plan to comply with current practice. The vote was unanimous in favor of the motion. NEXT STEPS: This item will be included with the next set of changes to the Plan to be proposed to Council. 5. 401(a) & 457 DEFERRED COMP PLAN BIDS MAIN POINTS: Alan and Jaime discussed this item with the Executive Team. E-Team members had received feedback from some employees who were not comfortable with the possibility of changing companies. As a consequence the changing of the 457 plans has been dropped entirely. Fire personnel have shown an intense interest in changing their 401(a) plan, so they will continue to pursue the bid process. There is mixed interest from the police personnel, and it is possible they will be involved also. ICMA was among the top seven companies considered. The GERC might still participate in this change if it proves successful. Don Mazanec may also evaluate the top bids received. DECISIONS/CONCLUSIONS: No Committee decision is required. Members will continue to observe the activities of the fire personnel as they evaluate the alternatives. NEXT STEPS: No action will be taken by the GERC with respect to the evaluation process; when new representatives are appointed to the Fire Pension Board (from the old hire employees who are in the new pension plan), they will review the evaluation points and critiques that were completed on the bids received and will try to get trustee concurrence on an alternate company. DISCUSSION TOPICS: New Items 1. 1989 ACTUARIAL REPORT MAIN POINTS: Don Mazanec summarized and reviewed the actuarial report for 1989. DECISIONS/CONCLUSIONS: It was noted the third, fourth and fifth lines of the third "bullet" on page 2 should read, "...less than this minimum amount, the Retirement Committee shall pay 'Actuarially Equivalent Retirement Benefit Payments' in a single sum." Jerry Brown moved that the report be accepted as amended. Alan Krcmarik seconded the motion and it passed unanimously. NEXT STEPS: A copy of the report will be sent to Chuck Mabry, who is our Council liaison. 2. COSTS FOR PLAN IMPROVEMENTS BEING CONSIDERED MAIN POINTS: In a letter dated October 29th, Don Mazanec reviewed three Plan changes the Committee had suggested for future consideration: Plan A would change the current 50% reduction in benefits for those choosing Early Retirement to a 3% per year reduction. Plan B is the same as the current plan except instead of averaging the last five years salary, it would average the last three years. Plan C is a combination of A and B. DECISIONS/CONCLUSIONS: Action was deferred until June because there were too many uncertainties at the present time. NEXT STEPS: Put this item on "Items for Future Discussion" agenda. 3. QUARTERLY INVESTMENT REPORTS MAIN POINTS: Both the second and third quarters showed healthy returns on investments. Bob Eichem, Treasury Administrator, was able to divest the GER Plan of the Ginnie Maes at a good price and to purchase other investments with a greater rate of return. Bob pointed out that the market continues to be very volatile and requires close monitoring, but that the financial returns have been rewarding. DECISIONS/CONCLUSIONS: Jerry Brown moved to accept the reports "with much praise". Mollie Mercer seconded the motion and it passed unanimously. NEXT STEPS: None required. 4. ALTERATION OF BENEFIT SELECTION FORM MAIN POINTS: Sue had previously distributed copies of a revised benefit option selection form which Don Mazanec had drafted. The new form contains the new "NOTE" outlining the order of distribution of assets when a vested employee dies without designating a beneficiary. It also contains a spousal consent form for use if a beneficiary other than the spouse is named. Don explained the rationale of the form and some changes were suggested. Because of the lateness of the hour, it was decided to complete this item at the next meeting. DECISIONS/CONCLUSIONS: It was agreed to defer this until the next meeting. NEXT STEPS: Add item to next meeting agenda. ITEMS FOR FUTURE DISCUSSION 1. Pension investment seminar/public benefit plans workshop. 2. Evaluation of competitiveness of GER Plan, based on Total Comp Study. 0 3. Defined contribution study (refer to 10/26/90 meeting minutes) delayed until changes to the current plan have been studied and resolved (refer to 1/25/90 minutes). 4. Possible involvement of GER Plan in the 401(a) deferred compensation plan. 5. Plan improvements to be considered. (Review in June. See October 29th letter from Don Mazanec for costs.) AGENDA & SCHEDULE FOR NEXT MEETING The next meeting was tentatively scheduled for Thursday, December 6th at 1:15 p.m., with Thursday, December 13th as the "rain date". Because the normal meeting room is not available, space has been found in the Central Meeting Room at 281 N. College. The Agenda will include: 1. Long -Term Disability VS Workers Comp - Jaime 2. Total Comp Update (if applicable) - Jaime 3. Lump -Sum Payments Letter & Schedule - Mollie 4. Benefit Option Selection Form - Sue 5. Written Explanation of Retirement Options - Mollie 6. Third Quarter Investment Report - Bob Eichem 7. Clarification on benefits for terminated VS deceased vested employees. (Refer to Mollie Mercer's 11/2/90 letter to Don Mazanec.) 8. Consider including a "default" choice of benefit in the Plan. FUTURE REVISIONS TO THE RETIREMENT PLAN 1. Amend the Plan to make the date of the first retirement benefit payment the last working day of the month. (See minutes of 11-1-90 meeting.) ADJOURNMENT Angelina Powell moved that the meeting be adjourned. Jerry Brown seconded the motion and the meeting was adjourned.