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HomeMy WebLinkAboutRetirement Committee - Minutes - 05/08/2008GENERAL EMPLOYEES' RETIREMENT COMMITTEE MINUTES MAY 08, 2008 1:15 To 3:00 P.M. 215 N. MASON —ROOM 2A COUNCIL LIAISON: Councilman Ben Manvel COMMITTEE MEMBERS PRESENT: Jim O'Neill, Chair, 221-6779 Charles Seest, 221-6795 Bill Switzer, 221-6713 Rick Richter, Vice Chair 221-6798 Dennis Freeburg Jim Lathrop COMMITTEE MEMBERS ABSENT: OTHERS PRESENT: Joel Stewart, Milkman Actuarial Harold Hall, 221-6784 Tracy Hoffman, 221-6747 Heather Shepherd 221-6788 Janie Appleton 221-6562 Greg Temple, City Attorney, 221-6267 Meeting called to order at 1:15pm. Citizen Participation and Plan Member Comments None Consideration and Approval of Minutes from the April 10`h Meeting Harold made a correction to an amount on his investment report. Rick moved to approve the minutes as corrected and Dennis seconded the motion. The minutes were approved unanimously. Formal Acceptance of 2008 Actuarial Report Bill moved to accept the report and Dennis seconded the motion. The motion carried unanimously. where renewal is a way of life Review of 47% GERP Death Benefit Provision Joel distributed information from 1995 explaining how the 47% amount was decided on and how it is calculated for the reduction for the Death Benefit. Joel calculated what the cost would be to the plan if this practice was eliminated. Actuarial liability would increase by about $643,000.00. The increase to the Plan's annual required contribution would be $92,442.00 which is.67% of payroll. If the plan had no unfunded liability after the change, it would cost $15,000.00 which is .1% of payroll. The Committee discussed the possibilities for the Death Benefit. Jim O'Neill summarized the discussion. See attached. Personal Retirement Planning Statements discussion The Committee considered whether to re -send the second page of the statement with corrections to all plan members. Since the third page had no corrections, only the first and second pages will be re -sent to plan members. Monthly Investment Report Harold reported that there are no in house changes to portfolio this month. GERP total was down 2.72% for the past month. Other Business Jim said there will be a quasi-judicial hearing on June 12, 2008. Two people have asked for benefit pay which they maintain they are owed and haven't been receiving. They will attend the upcoming meeting to present their case. 47% GERP death benefit. Why is the amount of my GERP benefit reduced to 47% if I die prior to retirement? Here is the history. Before August of 1995, the GERC only paid a death benefit to employees who were over 55. Before the plan change two employees age 55, one who retired and one who kept working had different payout amounts if they died. In order to remedy this; the plan was changed August 1, 1995. This is when the 47% of your actuarial equivalent value of the life annuity benefit was adopted. (See plan for exact language) The General Employees' Retirement Committee reviewed the history behind the death benefit in May of 2008. We had our actuary provide information on what it would cost to raise the 47% to 100%. The GERC decided that at the present time they would not recommend any change. Why? There are two basic reasons: 1. Cost — it would cost .67% of salary to increase the death benefit. This cost would most likely have to be paid by active GERC members and not terminated vested members. The GERC reasoned that since all members of the plan have different needs that it may not be a benefit everyone would value or want to pay for. The cost of providing this increased benefit is similar to buying insurance. If individual plan members want to increase their death benefit they could do so by buying their own insurance to make up the difference. 2. Reasonableness — the present 47% of the equivalent value of the life annuity benefit if you die is close to the same amount your beneficiary would receive if a member retired at 55 and took a joint and survivor benefit of 50%.