HomeMy WebLinkAboutRetirement Committee - Minutes - 10/10/1988E
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Start of Item 50.
Message.
Subject: G.E.R.C. 10/10/88 Minutes
Sender: Angelina POWELL / CFC52/01
TO: Alan KRCMARIK / CFC/01
Part 1
TO: DISTRIBUTION
Part 2
Dated: 11/16/88 at 1510.
Contents: 3.
Attached are minutes of the October loth meeting. Please review and submit
changes for items that may have not been recorded correctly.
I have not heard from Don Mazanec but I will schedule another meeting as
soon as I hear from him. I have received the third quarter investment report
from Gynn Strand. Do you want to meet to discuss it or hold off review of
the report til the next scheduled meeting with Don?
Mphile, Council, with the adoption of Ordinance No. 79, 1988 asks that
boards and commissions prepare work plans in addition to annual reports.
The work plans are due on or before November 30 for the following year.
Work plans are filed with the City Clerk. I would be glad to prepare
the work plan giving the questions currently before the board --the
questions and answers section of the minutes. If you'd like o submit
ideas as to what should be included in the work plan (beyond or instead of
what I propose), please let me know by the first of next week.
Ogie
Part 3.
GENERAL EMPLOYEES RETIREMENT COMMITTEE
MINUTES
October 10, 1988
The meeting was called to order at 3 p.m. in the Finance Department Conference
Room. Members present were: Dennis Sumner, Deb McClurkin, Mollie Mercer,
Angelina Powell and Alan Krcmarik. Guests present were: Don Mazanec of
Mercer Meidinger Hansen, actuaries and Pam Stultz of Employee Development
ACTUARIAL REPORT
Don brought the actuarial study for the period ending December 31, 1987.
He reviewed the various statements, explaining the fund is in good health.
Given the actuarial assumptions we have historically been using, there is no
unfunded actuarial accrued liability and the 3.553% retirement benefit factor
used for the budget should continue to insure good health.
There was some question on the Determination of Pension Benefit Obligation
Statement, Exhibit 4 as to why cost versus market was used for the assets
valuation. Don said cost was used because market values were not available
On the study was being prepared.
Dennis Sumner asked Alan Krcmarik whether something could be done by
December 31, 1988 so that market value could be provided for the next
acturial report. Alan said he would look into it.
REQUESTS FOR INFORMATION
The following questions had been sent to Don Mazanec in advance so he could
give the committee input from an acturial perspective.
Q. Can changes be made to include the death benefit to an estate rather
than limiting it only to a spouse? (Plan Section VIII, page 1...
married, vested, not retired.)
A. Don Mazanec would have to do further analysis as to the effect of what
such a request would have on the unfunded liability. He will do a
personal computer spreadsheet analysis of the Comparative Summary of
Acturial Valuation Results. The statement would provide a comparison
to the current plan and would have a column for comparison for "what
if" questions we were posing today.
Any change to the plan would require an approval by council and IRS.
In addition, pages to the employee's information booklets would have
to be updated.
• Is it time to do a cost of living raise to current retirees?
A. The last cost of living adjustment was given November 1, 1983.
At that time a 10% increase was given to retirees prior to 9/1/72 and
a 5% increase was given to retiree after 9/1/72. Don Mazanec
recommended a 3% per year for retirees prior to 11/1/83 and a flat
rate, say 5% for retirees after 11/1/83.
e also recommended we review the cost of living question every 3 to
years. There was some discussion that we make the review mandatory
under the plan. Don recommended we create a tickler file rather than
add a section to the plan.
Don will do a "what if" comparison of the costs related to his
recommendations and variations thereof and how they would affect
unfunded liability.
Q. Can we have an analysis of five year vesting?
A. Don provided us with a Comparative Summary of Acturial Valuation
Results. With a 5 year vesting assumption, some of the main points
used for comparison follow:
10 Yr. Vesting 5 Yr. Vesting
Current Plan Proposed Plan
Normal
Cost
rate
3.093%
3.188%
Normal
Cost
payroll
$15,507,601
$15,507,601
Total
N.C.
as of 1/1/88
494,899
509,631
Total
N.C.
expressed as %
of normal
cost payroll
3.191%
3.286%
This option would be covered under the present retirement benefit
factor used for 1989 budget (3.553%.)
ros for going to 5 year vesting are: does not create unfunded
iability that budget does not currently cover, no change -over
costs, easier to administer (cut costs). Cons for going to 5
year vesting is: may contribute to higher turnover.
Q. Would it be possible to allow the beneficiary to change the benefit?
For example, if the retirees stipulates 100% Joint then dies, can the
beneficiary change this to ten year certain?
A. Don said this change would not increase unfunded liability. Basically,
an event, such as a retiree's death, opens up to the beneficiary
options of how the actuarial liability is distributed.
Q. How would a conversion in the General Retirement plan similar to the
change in the Police plan affect the soundness of General Retirement
plan?
A. Don thought a conversion from General Employees to ICMA by the
majority of the eligible employees would undermine the soundness of
the General Employees plan. The younger employees would opt for
the more portable retirement program and the net result would be
increased liability to the City. The retirement benefit factor
would rise above the current 3.553%.
IRS code may also influence the conversion, current law says that
on order for a plan to be nondiscriminatory that 50 people or 40%
f the employees need to participate. Would we have at least 50
people remaining in the General Employees Retirement plan? Will a
law currently under consideration relieve governmental agencies of
having to comply?
*More•consideration shoulpe given this question before the committee
elects to pursue this course.
5would go back to his office to create the "what if" comparisons requested
bhe committee. He'll get back to us, schedule another meeting when the
results are ready.
Meeting was adjourned at 5:20 p.m.
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