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HomeMy WebLinkAboutRetirement Committee - Minutes - 01/06/2000Generomployees Retirement Plan • City of Fort Collins FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE January 6, 2000 MEETING MINUTES COUNCIL LIAISON: Mayor Ray Martinez COMMITTEE MEMBERS PRESENT: Jim Hume, 221-6776 Alan Krcmarik, 221-6788 Susan Lehman, 221-6813 Dottie Nazarenus, 484-7592 Terry Van Cleave, 221-6321 .�Yli 4Z&1�:7�'1 k IV Approved on February 3, 2000 Did Not Attend this Meeting ABSENT: The Committee has one vacancy due to Kevin Westhuis' resignation Ken Jamison, Watson Wyatt Worldwide, the Plan's actuarial firm Vincent Pascale (Staff Support — Human Resources) Greg Tempel, (Staff Support — Legal) Julie Depperman, (Staff Support — Investments) Sue Wilcox, (Staff Support — Clerical) Michele Hays -Johnson, GERP member David Meyer, GERP member CALL TO ORDER: Chairperson Jim Hume called the meeting to order at 1:15 PM. ITEMS OF NOTE: There were no items of note. APPROVAL OF MINUTES: Alan Krcmarik distributed draft copies of the minutes for December 2, 1999. He had previously incorporated a few comments from other members, staff, and from Michelle Hayes -Johnson, who had spoken at the meeting. Jim Hume moved that the minutes be approved as distributed and Susan Lehman seconded the motion, which passed unanimously (5-0). DISCUSSION TOPICS: GERC PLAN MEMBER (S) COMMENTS AND CITIZEN PARTICIPATION: Michele Hays -Johnson read her letter (attached for reference) outlining her concerns that possible changes in the method of calculating GERP benefits could result in loss of her current benefit. She restated her position that the Retirement Plan should be consistent with the City's definitions of full-time and part-time for other benefits. 300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 GERC Meeting Minutes January 6, 2000 Page 2 of 5 2. REVIEW OF UPDATED AND REVISED PLAN DOCUMENT MAIN POINTS: Greg Tempel had revised and distributed a draft of the GER Plan which incorporated all the amendments since it was last revised in 1992. At a previous meeting the Committee had discussed various options for checking the document for compliance with federal and state regulations, including having the Plan's actuary perform the review and hiring an outside attorney to perform the review. This review is needed for the 12/2000 federal deadline for compliance, but Ken Jamison advised that this deadline may be extended. He stated that most of the federal and state regulation changes to date do not impact the administration of this Plan. Ken estimated that it would take about two months for an outside attorney to become familiar with our Plan and to render an opinion on whether any changes to the Plan are required. If any changes are needed, the Committee would recommend the changes to City Council for approval. CONCLUSION AND NEXT STEPS: The consensus of opinion was to wait until later in the year when the Committee has completed the selection process for the actuary to begin the review process on the revised plan. 3. PLAN OF ACTION FOR POSSIBLE FULL-TIME — PART-TIME PLAN CHANGES MAIN POINTS: The Committee continued the discussion about the over compensation of certain retirees created by the current method of benefit calculation for Plan members who may change the number of hours in their work week. Based on the City's compensation practices and the provisions of the Plan, employees moving from full time to part time or vice versa may earn a benefit greater than the amount that has been contributed to the Plan. At the last meeting the Committee started discussion of the definition of part-time for purposes of the Plan and other City benefits programs. Vincent Pascale of Human Resources provided three references in the City's Personnel Policies and Procedures that pertain to full-time and part-time: A. Two references in the second paragraph on page 2-1 under "Categories of Employment /Classified Positions", and B. the first paragraph on page 4-6, "Benefits". Based on these references, the provisions of the GER Plan determines the eligibility and coverage provided by the Plan. Vincent also noted that Watson Wyatt calculates the Plan benefit based on the pay rate the member receives from the City after the Pay Plan for the new year is implemented in January. Deb Weedman uses the same data in her preliminary calculations. He felt this was consistent with the provisions of the GER Plan. If an employee receives a salary increase during the year, this would not be reflected in a benefit calculation performed after the pay increase. The Committee discussed what information may be presented in an educational forum for Plan members. Topics included: A. that GERP is a "closed plan" and how this affects the Plan, B. the current calculation method and how it may result in retired employees receiving benefits greater than amounts contributed for them, C. the need to maintain the financial well-being of the Plan, • • GERC Meeting Minutes January 6, 2000 Page 3 of 5 D. the need for equity in benefits going forward, E. commonly used terms, F. the new calculation method suggested by Watson Wyatt, G. other methods of calculation that were considered, and H. maintaining any benefit already earned. It was suggested that Watson Wyatt conduct the education session, as they had successfully conducted previous education sessions. Alan stated that the Committee should be concerned about administrative costs and suggested that the Committee members conduct the education sessions. Susan Lehman suggested that an issue paper be prepared and sent to the Committee members as a starting place for discussion and education. CONCLUSION AND NEXT STEPS: Jim Hume agreed to draft an issue paper and circulate it to the Committee and staff for review. It could then be presented at the February meeting for Committee action and decisions on how to proceed. 4. REVISION OF DOMESTIC RELATIONS ORDERS PROCEDURE MAIN POINTS: After legal and actuarial review last year, the GERC adopted a procedure for reviewing and approving Domestic Relations Orders (DRO). However, a statutory change allows the court to change a DRO with the consent of the parties. This provision has been included in Resolution 2000-1, which was presented by Greg Tempel for Committee review and approval. CONCLUSION AND NEXT STEPS: After discussion, Alan moved that the procedure for review of Domestic Relations Order be revised as outlined in GERC Resolution 2000-01 (previously submitted as Resolution 00-01) be approved. Susan Lehman seconded the motion, which passed unanimously (5-0). This resolution does not need to be presented to City Council. 5. COST OF LIVING ADJUSTMENT (COLA) IMPLEMENTATION UPDATE MAIN POINTS: Alan distributed copies of City Council Resolution 2000-4, which approved the implementation of a benefit increase for current retirees under the GER Plan. Julie and Alan calculated the actual amounts each retiree would receive and the various accounts within the City which would be charged with the increase for their former employees. Retirees will begin receiving their increase in their January checks. The final cost to implement the increased benefits for the COLA for retirees was $627,924, which was less than the $755,000 appropriated by Council for this purpose. The funds not needed will revert to their source accounts. CONCLUSION AND NEXT STEPS: The consensus was that this plan was acceptable. 6. PRELIMINARY DECEMBER AND YEAR-END 1999 INVESTMENT REPORT MAIN POINTS: Julie distributed a preliminary December and Year -End 1999 investment report, which showed that despite some widely fluctuating stock market conditions, the total GERP portfolio showed a rate of return of just over 25% for the year. Domestic mutual funds returned 24.71 %, while foreign mutual funds showed an increase of 66.77%. The return on fixed income assets was 6.13%. GERC Meeting Minutes January 6, 2000 Page 4 of 5 CONCLUSION AND NEXT STEPS: Julie advised that they will continue to sell more mutual funds to return to the 60% equities / 40% fixed income ratio required by the investment policies. The low -performing IAI and Nicolas funds plus some foreign mutual funds will be sold. The proceeds will be used to invest in fixed income bonds and consistent with the investment policy, domestic mutual funds. She will present the final December and year-end investment reports at the February meeting. The results are expected to be very good. Alan requested that a Morningstar composite report be prepared to communicate the good news to the Plan members, City management, and the Finance Committee. 7. OTHER BUSINESS A. RESIGNATION. Jim Hume announced that when his term on the GERC is up for renewal in June, he will not request reappointment, citing the press of work as a contributing factor. He felt it best to announce his intentions now so the Committee could keep it in mind when they are planning. B. ACTUARIAL RFP. Watson Wyatt's contract is being extended on a month -to - month basis to include presentation of the Actuarial Valuation Report and the Personal Retirement Planning Statements (PRPS), which would be approximately April of this year. Alan has requested that Jim O'Neill prepare the Request for Proposal (RFP) and suggested that a committee of 5 to 7 people review the bid proposals. Alan and Jim O'Neill will review them and Greg Tempel, Vincent Pascale, Terry Van Cleave, and Julie Depperman also agreed to be a part of the review committee. SCHEDULE FOR NEXT REGULAR MEETING: The next regular meeting will be Thursday, February 3, 2000 at 1:15 PM in the Council Information Center (CIC) of City Hall West. The agenda will include: 1. Citizen Participation and Plan Member Comments 2. Consider approving the January 6, 2000, minutes 3. Tracking of Domestic Relations Order (DRO) Benefit 4. Education Plan on Full-time — Part-time Issue 5. Discussion of Valuation Report Assumptions & PRPS Revisions 6. Inclusion of Pay Increases in Benefit Calculations 7. COLA Update 8. 4'" Quarter, Year -End & Regular Investment Review 9. Other Business ADJOURNMENT The meeting was adjourned at 2:05 PM. GERC AND GERP WEB PAGE ADDRESS: htto7//WWW.Ci.fort-collins.co.us/CITY HALL/BOARDS COMMISSIONS/RETIREMENT/index.htm GERC Meeting Minutes January 6, 2000 Page 5 of 5 2000 MEETING SCHEDULE: The General Employees Retirement Committee normally meets at 1:15 p.m. on the first Thursday of each month in the Council Information Center, City Hall West. THURSDAY, jaFiwaFy 6, 2000 THURSDAY, FEBRUARY 3, 2000 THURSDAY, MARCH 2, 2000 THURSDAY, APRIL 6, 2000 THURSDAY, MAY 4, 2000 THURSDAY, JUNE 1, 2000 THURSDAY, JULY 6, 2000 THURSDAY, AUGUST 3, 2000 THURSDAY, SEPTEMBER 7, 2000 THURSDAY, OCTOBER 5, 2000 THURSDAY, NOVEMBER 2, 2000 THURSDAY, DECEMBER 7, 2000 January 4, 2000 TO: Alan Krcmarik FROM: Michele Hays -Johnson RE: General Employees Retirement Committee Minutes Alan, Thanks for offering the opportunity to make corrections. I stated that the retirement plan should reflect the city's policy for full-time definition. (Part time employment (20- Ins) is not three -quarter -time (32-hrs) employment, is not full time (40-hrs) employment. I did not come to the committee with my accommodation as an issue. I did not offer the reason for my part- time status until asked directly by a committee member. I answered openly and to the point. I fmd it rather distressing that the accommodation somehow has become an issue in and of itself. The committee seems to have a rather one-sided opinion that all employees are cleverly waiting to take advantage of the system by changing their work hours to fit their retirement position. I do not believe that to be true. There are many, varied reasons to reduce work hours, and not all are by choice. My statement was that under the proposal as explained by Watson/Wyatt that day, I could stand to lose the benefit of my full time employment. I have requested by letter to you, that the Committee run a comparison for the current plan and the plan proposed by Watson/Wyatt to see if in fact that is correct. Thank you for the opportunity to discuss the full time/ part time issue. Michele Hays -Johnson 4316 W. LaPorte Avenue Ft. Collins, CO. 80524