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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/01/1999 - SECOND READING OF ORDINANCE NO. 83, 1999, APPROPRI AGENDA ITEM SUMMARY ITEM NUMBER: 9 DATE: June 1, 1999 FORT COLLINS CITY COUNCIL STAFF: Alan Krcmarik SUBJECT: Second Reading of Ordinance No. 83, 1999, Appropriating Prior Year Reserves in the General Employees' Retirement Fund. RECOMMENDATION: Staff recommends adoption of the Ordinance on Second Reading. i f� I EXECUTIVE SUMMARY: Ordinance No. 83, 1999, which was unanimously adopted on First Reading May 18, 1999, appropriates funds to accommodate separated vested employees who have elected to take single sum payments from the GER Plan,thus terminating their membership in the GER Plan. Ordinance No. 83, 1999,also authorizes a$250,000 appropriation for the employees hired in 1998 who have elected to convert their GER Plan benefits to the ICMA Money Purchase Plan. AGENDA ITEM SUMMARY ITEM NUMBER: 20 FORT COLLINS CITY COUNCIL DATE: May 18, 1999 STAFF: Alan Krcmarik SUBJECT: First Reading of Ordinance No. 83, 1999, Appropriating Prior Year Reserves in the General Employees' Retirement Fund. RECOMMENDATION: r fiF Staff recommends adoption ofthe Ordinance wifirst.Reading.r" Y TA FINANCIAL IMPACT: The assets of the General Employees Retirement Plan are held in a trust fund. As of January 1, 1999, the date of the most recent draft actuarial report,the Plan assets totaled $30 million. This Ordinance appropriates $650,OW--$400,000 NidUbe tised"foi siffle sum benefit payments. The remaining $250,000 will be used for tiansfer 'to the ICMAe[irement Corporation for the 72 employees who are expected t-6,elect to nvert*om the GER Ian to the Money Purchase Plan. 7 '-A _ EXECUTIVE SUMMARY: ,In 1998 General Employees Retirement Plan (the "GER Plan") members were asked to elect whether they would like to transfer their defined benefit plan balance in the GER Plan to a money purchase plan. Of 800 active GER-Plan members,36I;�ected-to convert from the GER Plan to the Money Purchase Plan. Empl fees hiredn 199swere not eligi a to make the election to convert because they had not been em oiled b e Ci�v for atat least si .months. The General Employees Retirement Committee has no ttp nve sionption fo a 72 employees hired in 1998. This Ordinance authorizes a$400,000 appropriation to accommodate separated vested employees who have elected to take single sum payments from the GER Plan, thus terminating their membership in the GER Plan. The Ordinance also authorizes a $250,000 appropriation for the employees hired in 1998 who have elected to convert their GER Plan benefits to the ICMA Money Purchase Plan. ACKGROUND: The City Council created the GER Plan in 1971 to provide a retirement benefit in addition to the Social Security system. Oversight is provided by a six-member committee, five of whom are appointed by Council,the other being the Financial Officer. DATE: May 18, 1999 2 ITEM NUMBER: 20 Within the last several years,the General Employees Retirement Committee(GERC)has sponsored several educational programs for members. Members identified several possible changes for the GER Plan. Two changes: lump sum distribution to separated vested members and conversion from defined benefit to money purchase plan were determined to be financially feasible and the GERC has pursued both option. The single-sum benefit, approved by City Council in 1998, is designed to be actuarially neutral to the Plan. The employee is taking a lump sum amount from the Plan and the liability of providing a future pension benefit to the employee is being removed from the Plan. 1,c.. The GER Plan actuary, Watson=& Wyatt, con$ucted amattcial analysis using the amounts to be transferred from the GER Plantto the money purlasg plan. Ttiexnalysis concluded that the transfer of the retirement balances of the 68 members could not,at the time of analysis, financially harm the GER Plan or the members wo elected to remain. The actuary has advised that the amounts associated with the 72 employees hired in 1998 are not sufficient in size to financially harm the GERP plan or the members that remain in the Plan. SUMMARY: The GERC and staff recommend that Council authorize the$650,000 appropriation from prior year reserves in the GER Plan.