HomeMy WebLinkAboutRetirement Committee - Minutes - 03/07/1996City of Fort Collins
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FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE
MARCH 7, 1996 MEETING MINUTES
COUNCIL LIAISON: Ann Azari, Mayor
COMMITTEE MEMBERS PRESENT: ABSENT:
Jerry P. Brown, 221-6350(w), 226-0800(h) Alan Krcmarik, Member/
Dave Meyer, 221-6927(w) Staff Support
Jacci Peterson, 221-6692(w)
Gary Ellis, 221-6700(w)
OTHERS PRESENT:
Sue Wilcox (Staff Support - Secretary)
Dave Agee (Staff Support - Controller)
Russ Proctor - The Watson Wyatt Company, the City's actuarial firm
Bobbie Burnette (Staff Support - Assistant City Attorney)
Laurie Harvey (Staff Support - Benefits Administrator)
CALL TO ORDER: Chairman Jerry P. Brown introduced Russ Proctor of Watson
Wyatt Worldwide, the City's actuarial consultant, who presented a slide
program entitled "Latest Trends in Retirement Plans" in City Council Chambers
at 1:15 p.m. About 35 people were present. Copies of the slides are
available from Sue Wilcox, ext. 6788. Jerry then called the regular meeting
to order at 2:40 p.m. in the 2nd Floor Conference Room of City Hall West.
ITEMS OF NOTE: Jerry reported that Alan Krcmari k was ill and unable to
attend, so there would be no report on "Financial Policy Changes". Also, the
Committee received a letter from Mayor Azari soliciting input during the 1997
budget process. This will be discussed later in the meeting.
APPROVAL OF MINUTES: Russ Proctor suggested that on page 3, item D, of the
February 1, 1996 GERC minutes, the second sentence should be deleted. Dave
Meyer moved and Gary Ellis seconded the motion to approve the minutes with
that change. The motion passed unanimously.
DISCUSSION TOPICS:
1. GER PLAN MEMBER COMMENTS 1 CITIZEN INPUT: There was no member or citizen
input.
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300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
2. DISCUSSION OF "RULE OF 80" ISSUES i COSTS
MAIN POINTS: Russ Proctor of Watson Wyatt explained that his study of "Rule
of 80" and "Rule of 85" costs would be about $5,000. He would use two
assumptions: the "worst case" would be if every eligible employee would opt
to take early retirement under such a plan and the other assuming that 25-35%
of eligible employees would take advantage of such a program. This rate is
based on a survey of 16 comparable entities nationwide which implemented such
a program. Further checking showed that after the first year the program was
available, the rate of employees retiring early dropped back to the "normal"
percentage of between 5% and 10%.
Jerry reported on a meeting earlier today where he invited several service
area managers of those City departments, where employees have expressed the
most interest in a "Rule of 80" option, to meet with him, Russ Proctor, and
the head of Human Resources to outline those managers' philosophy about a
"Rule of 80" program, potential conversion to a defined contribution program,
and about COLAs (Cost of Living Adjustments). The key points were:
o Help employees accumulate wealth
o Flexibility, i.e. no impediment if individuals want to leave,
but no direct incentive to stay.
o Potential funds for severance pay while job -hunting
o Do not want to encourage early retirement, nor impede those
who want to retire early
o Employees take full risk/reward of investments
o Provide more education
o Automatic COLAs should not be a part of a retirement plan.
Russ feels it is possible that the managers may have been influenced by a
premise about the costs and the advantages of defined contribution programs
presented as "facts", but which may not supported by actual data. Jacci
Peterson stated that studies show that 80% of people who control the
investing of their retirement funds do not have much money at retirement.
Russ said that the cost for professionals to manage retirement funds is
actually higher than for "in-house" management, as the professional must make
a profit to stay in business. There was much discussion on these ideas.
CONCLUSIONS/NEXT STEPS: The Committee asked Russ to prepare a survey to be
completed by GERC members and members of the Executive Lead Team (EL Team)
which would help determine what characteristics were most desirable in
retirement benefits. He agreed to have this by the April 4 GERC meeting.
Jerry will schedule a time in April to present this to the EL Team. Russ
will continue to work on the "Rule of 80 and 85" costs study for the May GERC
meeting. Laurie Harvey will assist in assembling potential focus groups of
City employees to discuss the desirable characteristics of retirement
benefits. After the information has been gathered, the Committee can better
prepare information about the options available.
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3. COST OF LIVING ADJUSTMENTS (COLAs)
MAIN POINTS: Mayor Azari in her public outreach contacts has received some
requests from current retirees for a cost -of -living adjustment in retirement
benefits, as the last one was July 1, 1990. This idea was discussed, along
with the costs and desirability of including cost -of -living adjustments
(COLAs) in retirement plans. Russ will include calculations for COLAs in the
study he is conducting. Options suggested were: a COLA for current retirees
only, and a cost -of -living adjustment built into the present retirement plan
for automatic benefit increases every year in the future .
CONCLUSION/NEXT STEPS: It was agreed that Jerry would begin preparing
for City Council consideration a supplemental budget request to provide
another one-time cost -of -living increase for current retirees in 1997 from
funds other than from the GERP. The amount will be based on a 3% increase
per year since the last adjustment.
4. UPDATE OF 'PLANNING FOR YOUR RETIREMENT' BOOKLET
MAIN POINTS: The "Planning for Your Retirement" booklet was created during
the education program in 1992, and is being revised to include Plan changes.
CONCLUSION/NEXT STEPS: The subcommittee's "nearly final" draft was reviewed
briefly. It was agreed to have no picture on the cover except the City logo.
The final draft should be available for the next meeting.
S. 'PERSONAL RETIREMENT PLANNING STATEMENT' FORMS
MAIN POINTS: A "nearly final" draft of the Personal Retirement Planning
Statement, which will now include information about the 401(a) Money Purchase
Plan and the 457 Deferred Compensation Plan, was presented.
CONCLUSIONS/NEXT STEPS: Jacci Peterson moved and Gary Ellis seconded the
motion to approve the form with any final corrections to be made by the
subcommittee of Jerry, Laurie, and Sue. The motion passed unanimously. Russ
will run some sample statements to check for any potential problems.
6. LUMP -SUM UPON TERMINATION REQUEST
MAIN POINTS: At the last meeting, Brian Hahn requested that the GERC
consider allowing all present GER Plan members a one-time option to receive
GER Plan funds in a lump -sum payment upon termination of employment.
CONCLUSIONS/NEXT STEPS: Since the last meeting, Brian has taken his request
to the City Manager and Human Resources. No further action by the GERC is
required at this time.
7. COMMUNITY SERVICE OFFICERS
MAIN POINTS: Also at the last meeting, Laurie read a request from the
Community Service Officers to allow them to withdraw from the GER Plan.
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Laurie said that they actually only wanted the pros and cons of the GER Plan
and of a defined contribution plan, which she provided.
CONCLUSIONS/NEXT STEPS: Laurie is waiting for the CSO's reply.
AGENDA 1 SCHEDULE FOR NEXT MEETING
The next meeting will be April 4th at 1:15 p.m. in the Second Floor
Conference Room of City Hall West. The agenda will include:
1. Plan Member/Citizen Comments
2. Update on "Rule of 80 and 85" Issues
3. "COLAs" Update
4. Review of Survey of Retirement Plan Characteristics
5. Draft of Budget Request Memorandum
6. Final Draft of GER Plan Summary Booklet
7. Update of Financial Policy Changes.
ADJOURNMENT
The meeting was adjourned at 4:50 p.m.
FUTURE MEETING SCHEDULE:
The General Employees Retirement Committee normally meets at 1:15 p.m. on the
1st Thursday of each month in the 2nd Floor Conference Room, City Hall West.
THURSDAY, APRIL 4, 1996
THURSDAY, MAY 2, 1996
THURSDAY, JULY 11, 1996**
THURSDAY, SEPTEMBER 5, 1996
THURSDAY, NOVEMBER 7, 1996
**Rescheduled because of holiday
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THURSDAY, JUNE 6, 1996
THURSDAY, AUGUST 1, 1996
THURSDAY, OCTOBER 3, 1996
THURSDAY, DECEMBER 5, 1996