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HomeMy WebLinkAboutRetirement Committee - Minutes - 12/06/1990• FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE MEETING MINUTES DECEMBER 6, 1990 MEMBERS PRESENT: MEMBERS ABSENT: Jerry Brown Mollie Mercer None Alan Krcmarik Angelina Powell Dennis Sumner Sue Wilcox, Secretary Also present were Don Mazanec, Consulting Principal of William M. Mercer, Inc., and Pam Stultz of Employee Development. CALL TO ORDER: The meeting was called to order at 1:20 p.m. in the Central Conference Room of Parks and Recreation, 281 N. College. APPROVAL OF MINUTES: Mollie Mercer moved that the minutes of the November 11 meeting be approved as written. Angie Powell seconded the motion. The motion passed unanimously. ITEMS OF NOTE: Dennis welcomed Pam Stultz of Employee Development, representing Jaime Mares. AGENDA REVIEW: Dennis briefly reviewed the agenda and since there was no new information on the Total Compensation topic, it was deleted. DISCUSSION TOPICS: Open Items LONG-TERM DISABILITY VERSUS WORKERS COMPENSATION COVERAGE MAIN POINTS: Don Mazanec explained that under most plans, disabled individuals apply for both Workers Compensation and long-term disability through the insurance carrier. The LTD begins paying disability benefits very quickly. Then, if Worker's Comp benefits are granted, the amount the long-term disability pays is off -set by the Workers Comp benefit. Pam explained that the City used to allow this also, but what often happened was that both Workers Comp and LTD were paying benefits, with no notification to the City. When the duplication was discovered, recovering the duplicate funds was very difficult. That is why the City requires the employee to file for one or the other (depending on whether it is a work -related injury or not), but not both. Other questions that arose included: 1. Who determines disability for the Retirement Plan? It is not clear at this time who makes this decision. Pam will discuss with Stewart the possibility of contracting with Equicor (current carrier for long-term disability) to do this. The City currently pays the first three years of disability payments. If the individual is still disabled at the end of three years, Equicor picks up the payments. Currently there is no way to track someone who gets a lump -sum payment from Workers Compensation. Do they continue to earn service credit towards retirement or does this sever the relationship to the Plan? There are no provisions in long-term disability for partial disability, only total disability. DECISIONS/CONCLUSIONS: More information is needed. Pam will consult with Risk Management to see if there is a way to handle some of these questionable situations. It was agreed that since the City is now self -insured, tracking of applications and benefits paid for both Workers Comp and LTD would be much easier. We may want to conduct these situations as Don Mazanec suggested as the normal procedure. Pam will discuss this and other options with Stewart Ellenberg, Risk Manager, and see what would be the most workable. Pam will also explore what procedures are available to determine eligibility and prepare a recommendation for the Committee. NEXT STEPS: Pam or Jaime will report back to the Committee at its next meeting. 2. UPDATE ON LUMP SUM PAYMENTS & LETTER FOR BENEFITS OF $100 OR LESS & WRITTEN EXPLANATION OF RETIREMENT OPTIONS MAIN POINTS: Don presented a draft of a letter to those eligible to receive lump -sum payments now rather than receiving payments of $100 or less per month when they retire. The Committee decided to give those eligible a choice of whether they want a lump -sum pay -out or not. Don understood that the City sent a letter to employees when they left City employment, stating what their benefit payment would be and what the lump -sum payment would be. However, it appears that the City has never made this a practice. Therefore, Don's letter will be revised to summarize the re -calculated monthly retirement benefit, in addition to the amount of the lump -sum payment. Don also presented a draft summary of the tax rules which apply to these lump -sum payments. This summary will be included with the notification letter. Since it was related to this discussion, Item #1 "Written Explanation of Retirement Options" of the New Items section of the Agenda was considered at this time. Mollie presented a draft of a one -page information sheet explaining the four standard options available to retirees, listing the benefits in descending order by the amount each paid. It explains how the benefits are computed and urges consultation with the spouse. One individual, ex -employee Rose Cefkin, chose to forego her retirement benefits at age 65 because she was still working. Don explained that the value of her benefit is going down each year and urged the Committee to begin paying her benefit immediately, along with a lump -sum back payment from age 65 to July, 1990. We should then add the 9% increase approved by Council and pay it through the end of 1990. At this point she would be caught up with those who have already retired. • 0 DECISIONS/CONCLUSIONS: The Committee concluded that currently -terminated employees eligible for the lump -sum payments should be given the option of a lump -sum payment or their normal benefit payment of $100/month or less when they reach retirement age. Future terminated employees will not be given an option, although it may be advisable to wait a year before making the lump -sum payment to allow for any employees who might choose to exercise their option to return to City employment within one year of termination without loss of retirement benefits. It was agreed that it probably would not be possible to complete the letter and a mailing to those who are eligible for lump -sum payments before January 1. Mollie's information sheet on benefit options was approved with a few small wording changes. This form will be called the "Retirement Benefit Option" form and will be mailed, along with the "Retirement Benefit Option Selection" form, to the home of the retiree. The Committee will follow Don's recommendation in relation to Rose Cefkin. NEXT STEPS: Don will revise the letter to the recipients to allow them 60 days to choose. It will summarize the re -calculated benefit and lump -sum amounts for them also. Mollie, Don, Sue and possibly Alan will be involved in creating this notification letter and information. Mollie will finalize the Retirement Benefit Option form. Mollie will contact Rose to explain what is being done and begin the process of paying her. 3. BENEFIT OPTION SELECTION FORM MAIN POINTS: At the last meeting the subject of the new benefit option form was raised, but because of time, it was not discussed. Sue explained that two recent retirements had required that changes be made in the form that Don Mazanec had drafted. This form will be called the "Retirement Benefit Options Selection" form and will list the options in descending order by the amount of the benefit. Sue will work with Dennis Sumner and his staff to try to use typesetting techniques to reduce the form from three pages to two. Since it was closely related to this Benefit Choice in the Plan" from the discussed at this time. Don's draf t questioned the use of the underlined plans have a "default" option (Option written into their plan in the event However, the GER Plan does not have phrase has been dropped from the form Don suggested that the default option and spouse release be added the next time the Plan is revised, as this provides some protection for the spouse and the City. Angelina Powell moved and Alan Krcmarik seconded a motion to include this change the next time the plan is revised and to also remove any gender distinction from the forms. The motion passed unanimously. DECISIONS/CONCLUSIONS: A default option of the 50% Joint and Survivor Benefit and use of a spouse release for any options selected other than joint benefit will be added to the Plan the next time it is revised. For options other than a joint benefit with spouse, a spouse's signature line will be added and a signature required. The Committee would like to see the revised Retirement Benefit Options Selection form at the next meeting. NEXT STEPS: A new "Retirement Benefit Options Selection" form, reduced in size and possibly on self -carbon paper, will be created for Committee review. The inclusion of a default option will be added to the list of future changes to the Plan. DISCUSSION TOPICS: New Items 1. CLARIFICATION ON BENEFITS FOR TERMINATED VS DECEASED VESTED EMPLOYEES MAIN POINTS: This related to a letter dated November 2 from Mollie Mercer to Don Mazanec regarding an apparent inequity: 1. A fully -vested employee who leaves receives a lump sum payment if the benefit would be $100 per month or less, regardless of the age of the employee. 2. A vested employee who dies must be 55 years of age or older in order for his beneficiary to receive ANY benefit, and the amount is only one-half the benefit. Don's reply was that the difference in benefits is very small in terms of dollar amount and also that it impacts very few people. The beneficiary of the employee who dies also is entitled to other compensation, i.e. insurance. He noted that although it is an inequity, the terminated employee is receiving an additional gain based on the convenience of the retirement plan. DECISIONS/CONCLUSIONS: The Committee felt that attempting to make the two benefits equal would create more inequities and problems, so it will not be pursued. NEXT STEPS: This item will need no further action. ITEMS FOR FUTURE DISCUSSION 1. Pension investment seminar/public benefit plans workshop. 2. Evaluation of competitiveness of GER Plan, based on Total Comp Study. 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. 0 5. Plan improvements to be considered. (Review in June. See October 29th letter from Don Mazanec for costs.) 6. Resolve retirement benefit questions related to employees injured during employment with the City, i.e. Sehestedt and Hattan. AGENDA & SCHEDULE FOR NEXT MEETING The next meeting will be Thursday, February 21st at 1:15 p.m. in the Finance Conference Room. The agenda will include: 1. Workers Comp VS LTD - Jaime Mares & Pam Stultz 2. Information/Progress on lump -sum payments and letters. 3. Retirement Benefit Option Selection form and explanation. 4. Fourth Quarter 1990 Investment Report. 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.) 2. Amend the Plan to include a "default" option of 50% Joint and Survivor Benefit. (Refer to minutes of 12-06-90 meeting.) 3. Amend Plan to require spouse's approval on the selection of any retirement option other than joint benefit with spouse. ADJOURNMENT Angelina Powell moved and Alan seconded a motion to adjourn at 3:17 p.m.