HomeMy WebLinkAboutRetirement Committee - Minutes - 02/04/1999GenesEmployees Retirement Plan •
City of Fort Collins
FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
FEBRUARY 4, 1999, MEETING MINUTES
Approved March 4, 1999
COUNCIL LIAISON: Mayor Ann Azari
COMMITTEE MEMBERS PRESENT: ABSENT:
Jim Hume, 221-6776
Susan Lehman, 221-6813
Alan Krcmarik, 221-6788
Kevin Westhuis, 221-6156
OTHERS PRESENT:
Russ Proctor, Watson Wyatt Worldwide, the GERP's actuarial firm
Deb Weedman, (Staff Support — Human Resources)
Greg Tempel, (Staff Support — Legal)
Julie Depperman, (Staff Support — Investments)
Sue Wilcox, (Staff Support — Clerical)
Fred Garth, representing some GER Plan Retirees
Dave Meyer, former GERC member & Utilities employee
CALL TO ORDER: Chairperson Kevin Westhuis called the meeting to order in the Council
Information Center (CIC) at 1:20 p.m. There were no changes to the agenda.
ITEMS OF NOTE: Fred Garth, former City Light and Power employee and representative of a
group of retirees, attended the meeting.
APPROVAL OF MINUTES: Alan Krcmarik distributed copies of the minutes for the
December 3, 1998, meeting. He noted previously suggested edits and corrections had been made.
Susan Lehman moved that the December 3, 1998, minutes be adopted. Jim Hume seconded the
motion, which the Committee approved unanimously (4-0). Alan distributed the December 17,
1998, minutes. He again noted he had made the edits and changes that reviewers suggested.
Kevin Westhuis moved to approve the December 17, 1998, minutes as corrected. Jim Hume
seconded the motion. The Committee passed the motion unanimously (4-0). The January 7,
1999, GERC minutes were distributed and changes noted. Alan moved that the January 7, 1999
minutes be approved as corrected and Jim Hume seconded the motion. The motion passed
unanimously (4-0).
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
February 4, 1999, GER Committee Meeting Minutes
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DISCUSSION TOPICS:
1. GER PLAN MEMBER(S) COMMENTS AND CITIZEN PARTICIPATION:
Plan member or citizen did not comment at this meeting.
2. GERP TO MONEY PURCHASE PLAN CONVERSION PROCESS FOR 1998 HIRES
MAIN POINTS: Deb Weedman provided a list of 44 people who were hired during 1998.
These employees were not eligible to be included in the 1998 partial conversion from the GER
Plan to the ICMA-RC 401(a) Money Purchase Plan. Russ Proctor had also created a list of
employees hired in 1998, using the computer tape of Payroll information provided at year-end.
His list showed 70 employees. Since some of them may be police, firefighters, hourly, or
contractual employees, and not a part of the GERP, Deb will reconcile the two lists and have a
final list for the next meeting.
Julie Depperman had contacted Theresa Myers of ICMA Retirement Corporation to set up a
schedule outlining notification of the members eligible to convert to the MPP, educational
meetings, deadlines, and the actual transfer date. The ICMA-RC representative will also be
available for individual appointments. The GERC decided to provide an opportunity for appeals,
if any are necessary, during the regular GERC meeting scheduled for June 3, 1999. It was
suggested that at least one presentation be held at an outlying location. Some changes were made
to the outline that Julie provided. The final schedule is listed below.
The Committee discussed equal pension contributions for classified employees. Participation in
the ICMA-RC 401(a) MPP requires a 6-month wait after hiring, with a 3% contribution by the
employee, which is matched by the City's 3% contribution. In addition, the City contributes 4.5%
to the MPP after 6 months of employment instead of to the GER Plan.
The Committee agreed that using the hire date for the employee for the lump sum calculations
was consistent. The employee must be employed through June 30, 1999 in order to make the
conversion to the ICMA-RC plan.
CONCLUSION/NEXT STEPS: Russ will provide a cost estimate for Watson Wyatt's services
and for revising the presentation material. On the individual materials, Russ will provide the
calculated transfer balance and the monthly benefit expressed as a lump sum.
The schedule for the conversion of 1998 hires is:
April 1 GERC finalizes handout materials (regular meeting)
April 19 Letters sent to eligible GERP members
May 4, 6 Employee Information Meetings at which information packets and
transfer balances are distributed.
May 18 Send electronic reminders about the deadline to eligible members
May 28 Deadline for returning conversion forms to Human Resources
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February 4, 19WER Committee Meeting Minutes
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June 3 Regular GERC Meeting — Opportunity for Appeal of Decision
June 14 Provide Russ with a list of any eligible members who have
terminated
June 15 Human Resources provides conversion/distribution forms to
ICMA-RC.
Russ to send data to ICMA-RC
June 30 Wire transfer of funds from GERP (City) to ICMA
3. GER COMMITTEE MEMBER APPOINTMENT
MAIN POINTS: Kevin explained that City Council members interviewed several applicants
before appointing Susan Lehman to the GER Committee last spring. At that time, the Council
Members identified a back-up if Susan were not able to serve. The alternate candidate was Terry
Van Cleave. He works for the Utilities Department at the Drake Water Reclamation Facility.
The City Council will fill the vacancy on February 16, 1999.
CONCLUSION/NEXT STEPS: Alan will check to make sure the resolution is on the Council
agenda.
4. REVIEW OF 1990 COST OF LIVING ADJUSTMENT BUDGET REQUEST
FOR 2000
MAIN POINTS: Russ reviewed the Cost of Living Adjustment (COLA) provided to GERP
retirees in 1990 and outlined a proposal for the Committee to consider. The previous COLA was
granted before the implementation of the Total Compensation plan. Russ also said there are more
retirees now than in 1997 when the GERC last submitted a budget request to the City Manager
for a COLA for retirees. Russ used the Consumer Price Index (CPI) less 1.5%, with those who
retired in 1990 and before receiving the full amount and those who retired since 1990 receiving
varying amounts. Russ explained that the 1.5% reduction was included because some sources
feel the CPI doesn't reflect a true cost of living increase for retirees.
If the calculation of "CPI minus 1.5%" was used, Russ said that the 57 people who retired in
1990 or before would receive a 9.7% increase and the 39 who retired since 1990 would receive
4.9%. The latter group would receive a lower benefit because cost of living increases were
received while they worked and thus were included in the benefit calculation at the time they
retired. The latter groups' percentage is an average of all of those employees who retired
between 1990 and 1999. Retiree specific COLAs may be different from this percentage.
The current proposal that is "CPI minus 1.5%," would be a one-time contribution of $496,663 to
the GER Plan, rather than a "percentage of pay" contribution. (A "percentage of pay"
contribution would be a larger increase to active employees now than a year ago because there are
fewer GERP members as a result of the conversion.) The contribution could be spread over 5
years if necessary. Individual departmental budgets could be used for funding contributions for
the retirees who had worked in that department. The funds would go directly to the GER fund.
The Committee discussed the merits of requesting a specific amount versus providing a range of
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February 4, 1999, GER Committee Meeting Minutes
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options. The Committee also discussed building a COLA into the existing GERP members'
contributions, but that could affect the Total Compensation formula.
CONCLUSION/NEXT STEPS: Russ will provide a breakdown of current retirees, their
retirement dates, and current monthly benefit amounts. Alan stated that budget requests will be
submitted in April or May to the City Manager for inclusion in his recommended budget. Alan
will prepare the request. Fred Garth, who represents a group of former Light and Power
employees, will take this information to the others. He will also advise them that they can address
City Council with their concerns at the beginning of each meeting on the 1" and 3rd Tuesdays.
5. QUALIFIED DOMESTIC RELATIONS ORDERS (QDROs)
MAIN POINTS: Last year Greg provided the GERC with draft forms for any Qualified
Domestic Relations Order (QDRO) requests received by the Committee. The forms would be
used in cases where the court decides the value of a retirement benefit and divides it between
divorcing individuals. The draft forms are based on model forms, with revisions particular to the
GER Plan. The forms would provide consistency and save money and time in lawyer preparation
if adopted by the Committee for its use.
CONCLUSION/NEXT STEPS: Greg will meet with Russ after this meeting, revise the drafts,
and bring the revised forms to the next meeting. Greg will also send a draft copy to Dave Meyer.
6. GER COMMITTEE MEMBERSHIP MAKEUP
During the last meeting a suggestion was made about including a retiree as a member of the GER
Committee. The GER Plan is now closed to new members and the Plan members will, over time,
move from being employees to being retirees. Currently, Article XI of the Plan document
provides that only one of the four appointed members can be a non -employee and that could be a
retiree. Greg distributed copies of a draft Plan change to increase the GERC members to six, with
the sixth person being a retiree. This would require City Council approval for a Code Change, as
well as an ordinance change.
CONCLUSION/NEXT STEPS: Greg was asked to bring proposed wording to the March 0
GERC meeting for review and possible submission to City Council for action at their April 6t° and
20'h meetings.
7. FOURTH QUARTER AND 1998 YEAR-END INVESTMENT REPORT
MAIN POINTS: The 1998 Investment Report figures show domestic mutual funds returned
14.1% and the return on foreign mutual funds was 3.9%. The annualized yield for fixed income
investments was 6.4%, compared with its benchmark's return of 5.15%. Along with the 1998
Investment Report, Julie Depperman distributed a one -page report for January. That summary
reflects the nearly $9 million reduction in Plan assets resulting from the conversion of 368
members to the MPP. While liquidating two low -performing investments (SIT Mid -Cap Growth
fund and Royce Total Return) for the funds transfer, the required percentages of equities and
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February 4, 1999, GER Committee Meeting Minutes
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fixed income investments were maintained, as well as the approved percentages of foreign and
domestic investments.
The Committee discussed using mutual funds managed to replicate certain stock markets, referred
to as index funds. Usually index funds have lower management fees. According to Morningstar
performance reports, 7% of fund managers outperformed the S&P 500 Index funds. During
discussion the Committee also noted that many domestic funds hold foreign investments.
CONCLUSION/NEXT STEPS: The Committee will review the demographics of the GER
members remaining in the Plan, and when their retirements will most likely impact the Plan funds.
They Committee will review the Plan's investment strategy and make changes if necessary. Alan
and Julie will be meeting with representatives of the funds that the GERP is now invested in.
SCHEDULE FOR NEXT REGULAR MEETING: The next regular meeting will be
Thursday, March 4, 1999, at 1:15 p.m. in the Council Information Center (CIC) of City Hall
West. The agenda will include:
1. Citizen Participation / Plan Member Comments
2. Consider approving the February 4, 1999 meeting minutes
3. Valuation Report & Person Retirement Planning Statement Update
4. Review Handout Materials for DB/DC Conversion of 1998 Hires
5. Committee Membership Issues
6. Review QDRO model forms and procedures
7. Prioritize Work Plan Items
8. Regular Investment Review
9. Other Business
ADJOURNMENT
Kevin adjourned the meeting at 3:00 p.m.
GERC/GERP WEB PAGE ADDRESS:
www.ci.fort-collins.co.us/CITY_HALIJBOARDS_CONMUSSIONS/RETIREMENT/index.htrn
FUTURE MEETING SCHEDULE:
The General Employees Retirement Committee normally meets at 1:15 p.m. on the 1" Thursday
of each month in the Council Information Center, City Hall West.
THURSDAY, MARCH 4, 1999
THURSDAY, APRIL 1, 1999
THURSDAY, MAY 6, 1999
THURSDAY, JUNE 3, 1999
THURSDAY, JULY 1, 1999
THURSDAY, AUGUST 5, 1999
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