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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/05/2010 - RESOLUTION 2010-062 ADOPTING THE EIGHTH AMENDMENT DATE: October 5, 2010 AGENDA ITEM SUMMARY STAFF: Mike Freeman _T COLLINS CITY COUNCIL ' John Voss Resolution 2010-062 Adopting the Eighth Amendment to the City of Fort Collins General Employees' Retirement Plan as Amended and Restated December 31, 2001, Allowing Active Members to Continue Membership in the Plan or to Cease Membership in the Plan and Participate Exclusively in Other City Retirement Plans. EXECUTIVE SUMMARY Recent actuarial studies have established that,due primarily to financial market conditions over the past several years, the General Employees'Retirement Plan(GERP)is significantly underfunded and will be unable to meet its long-term financial obligations under current funding levels and reasonably anticipated financial market conditions.The Council Finance Committee, at its April 19, 2010 meeting, stated it was committed to continuing the GERP. However, in light of the current economic and budgetary challenges facing the City, it appeared prudent to seek additional funding from the members to ensure the solvency of the GERP. The General Employees' Retirement Committee (GERC), its actuary, and the City's Finance Director have extensively studied and considered GERP design and funding alternatives that would strengthen and improve the long-term financial condition of the GERP,and have consulted with active GERP members to seek input into such GERP design and funding alternatives. The best alternative to improve the GERP's funding is to redirect to the GERP, on a uniform percentage basis, employer contributions currently made on behalf of active GERP members to other City retirement plans(i.e.,the City's 401(a) money purchase plans and 457 deferred compensation plan), effective as of January 1, 2011. The City also intends to make additional employer contributions to the GERP, effective January 1, 2011, with such contributions based on a percentage of compensation of active GERP Members, and with an initial targeted contribution rate of three percent (3%) of member compensation, dependent on inclusion in subsequent budget and appropriation ordinances. At the request of the GERC, two alternatives to ongoing membership in the GERP will be provided to GERP members: (1) terminating active membership in the GERP, freezing the member's GERP benefit (for later distribution under the terms of the GERP at the election of the member), and participating exclusively in other City retirement plans; or(2)ceasing membership in the GERP and participating exclusively in other City retirement plans, with the member's GERP benefit to be rolled over into one such other City retirement plan. The options will limit the growth of the City's liability for future benefits while allowing those employees flexibility with respect to ongoing participation in the GERP and with their GERP benefits. This Resolution amends the GERP to allow for the continuation of GERP membership(including benefit accrual)for those willing to have the City's contribution on their behalf made to other retirement plans reduced by 3%, and as an alternative allows GERP members the option to exit the GERP and participate exclusively in other City retirement plans, if they so desire. Any necessary changes to the other retirement plans(401(a) money purchase plan and 457 deferred compensation plan)will be accomplished by administrative action of the City Manager, who is charged by the City Code with establishing the benefits of employment for City employees, subject to appropriation of funds by City Council. BACKGROUND / DISCUSSION The GERP was established in 1971 by the City of Fort Collins as the primary retirement plan for city employees. It is a Defined Benefit Plan,which is a retirement plan set up to pay a fixed monthly amount to eligible employees during their retirement years and provides employees an opportunity to build retirement assets as a reward for long-term service. The GERP has been closed to new employees since January 1, 1999. The City of Fort Collins has amended the GERP from time to time and adopted seven amendments to the GERP since its restatement in 2001. This Resolution, coupled with money purchase retirement plan changes to be made by the City Manager, provides current GERP members with the following options: October 5, 2010 -2- ITEM 10 OPTION 1 (default option): Continue membership in GERP with benefits continuing to accrue based on the formula and the terms and conditions of the GERP document. The current City contribution to the GERP of 4.5% of earnings would be increased to 7.5% by a new City contribution of 3.0%. The current"Employer'contribution of up to 3%of earnings to other retirement plans would be reallocated from those plans to the GERP. The total contribution to the GERP for each member under Option#1 will be 10.5% of earnings. OPTION 2 (freeze GERP benefits): Benefits in GERP would freeze as of December 31, 2010. The current City GERP contribution of 4.5% of earnings would be reallocated to an existing money purchase retirement plan. OPTION 3 (exit GERP completely): Participation in GERP would be terminated completely and the actuarially-determined lump sum amount of the Member's GERP benefit would be rolled over into an existing City money purchase retirement plan. Eligible employees will be provided with an information and election form, and will be required to submit the election form by November 19, 2010. If it is determined that implementing the election results would harm the GERP's ability to meet future benefit obligations as a result of providing Options 2 or 3, either the GERC or the City Finance Director may cancel implementation of either or both Options. Finally,the funding intentions set forth in the Resolution are contingent upon the appropriation of funds for future years. FINANCIAL / ECONOMIC IMPACTS The Resolution, in conjunction with actions to be taken by the City Manager with regard to the other money purchase retirement plans available to employees, would • Redirect future"Employer" contributions from other retirement plans (up to 3% of earnings), and • Create additional "Employer" contribution of 3% of Earnings to the GERP. This would increase the total scheduled City contribution to the GERP from 4.5% to 10.5% of earnings for those employees remaining active in the GERP. Annual supplemental contributions would also continue. The Resolution will allow GERP members to opt out of the GERP if they so choose, thereby reducing future benefit liability growth. If all members elect Option 1 and remain in the GERP,total scheduled City contributions would be 10.5%of earnings plus supplemental contributions. It is estimated that in addition to the 2010 supplemental contribution of$700,000, future supplemental contributions of approximately$740,000 would be required through approximately 2034 to fully fund all benefit liabilities. If all members elect Option 2,the only source of funding would be the supplemental contribution. In order to fund the remaining liability, it is estimated that the City's supplemental contribution would be approximately$590,000 starting in 2011 and continuing through 2034,with the scheduled supplemental contribution of$700,000 being made for 2010. If all members elect Option 3, there would be a large reduction in GERP assets at the beginning of 2011. This would reduce the potential future earnings on trust assets. As with Option 2 the only source of funding would be the supplemental contribution. In order to fund the remaining liability, it is estimated that the City's supplemental contribution would be approximately $600,000 starting in 2011 and continuing through 2034, with the scheduled supplemental contribution of$700,000 being made for 2010. These projections should be compared to the alternative of continuing the GERP without any changes. If the current GERP funding policy is continued without the redirection of"Employer"contributions or the additional 3%of earnings, October 5, 2010 -3- ITEM 10 it is estimated that the City's supplemental contributions would be approximately $1,175,000 starting in 2011 and continuing through 2034, with the scheduled supplemental contribution of$700,000 being made for 2010. Actual experience will be some combination of Option 1,2,and 3. Projections for actual results can be estimated once participant elections are known. All of the projections noted above are based on the actuarial assumptions, GERP provisions, data, and results from the January 1, 2010 actuarial valuation, and reflect a 7.5% return on assets for all future years. If any of these projected assumptions are not met in any future year, these results could differ greatly. These projections do not anticipate future annuity purchases or changes in portfolio structure. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BOARD / COMMISSION RECOMMENDATION At its April 19, 2010 meeting, the Council Finance Committee tentatively agreed to a proposal to discontinue contributions to 401/457 ICMA accounts for GERP members, and to redirect an equal 3% to GERP. At its July 8, 2010 meeting, the General Employees' Retirement Committee unanimously recommended adoption of the Resolution. At its September 27, 2010 meeting, the Council Finance Committee asked for clarification of the 10.5% employer contribution to GERP. There was also discussion on long-term costs, investment earnings assumptions, implications of freezing GERP, obligations to employees, understanding the need for supplemental contributions, implications of not making changes to GERP,and the fairness of the recommended proposal. Committee questions were answered, but the Committee made no recommendation. PUBLIC OUTREACH At its May 13, 2010 meeting,the General Employee Retirement Committee(GERC) reviewed the presentation made to the Council Finance Committee in April 2010. The GERC set up a series of four meetings with GERP members to: • help members understand the financial state of the GERP. • review proposals made to the Finance Committee to close the gap between financial assets and future retirement benefits. • answer their questions. • seek their feedback for formulating the GERC recommendation. Over 100 of the 208 active members attended these meetings. Many other members have provided feedback to GERC members. A majority of the feedback the GERC received was to"stay the course." The members consider the GERP, along with Social Security benefits, the foundation for their retirement planning. They appreciate the challenges being faced--market conditions and the funding shortfalls and agree shifting the 3%of earnings contribution made to money purchase retirement plans on their behalf will work to help the City ensure the long term soundness of the GERP. ATTACHMENTS 1. History of Annual Required Contributions (graph) 2. GERC Minutes from July 8, 2010 3. Total City Cost Projections (table and graph) ATTACHMENT 1 History of Annual Required Contributions Annual Required Contribution ( as a Percent of Total Compensation ) 16% 14% Proposed Contribution consists of following : 13 .62 % A. Existing City Contribution - GERP 4.50 % 14,68% 12% B. Existing City Contribution - ICMA 3 .00 % 11 .28% C . New City Employer Contribution 3 .00 % — — — — — — — 10% Total City Contribution 10.50 % 8 .44z 44% 10 .81 % 9 .57% 8% 5.694 6 6% 4,30% 4,72% 3.98°/0 6.35° o � . OO 4% 4.41 % 4.46% 422% 4.31 % 2% 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Annual Required Contribution City' s Present Contribution — - City's Proposed Contribution 101401 ARC Su wj me ATTACHMENT CiC �� General Employees Retirement '�L° Committee 215 N.Mason . d4mr3h, 9%% domw 2'°'Floor PO Box 580 F6rt UU1111 n.-Afto Fort Collins,CO 80522 V� 970 221. 78 970,221.5782-fax /cgov.com GENERAL EMPLOYEES' RETIREMENT COMMITTEE MINUTES JULY 8, 2010 1:15 To 3:00 P.M. 215 N. MASON—COMMUNITY ROOM COUNCIL LIAISON: Councilman Ben Manvel COMMITTEE MEMBERS PRESENT Rick Richter, Chair Angelina Sanchez-Sprague Dee Toplyn John Voss (interim Finance Director) COMMITTEE.MEMBERS ABSENT: Dennis Freeburg Jim Lathrop, Vice Chair OTHERS PRESENT: Harold Hall Heather Shepherd Chris Donegon Janie Appleton Pat Kahle, Milliman Meeting called to order at 1:18 Rick Richter noted that over 100 Plan members attended the informational meeting and he'd heard from another 40 members via phone and email, The majority of plan members support preserving the Plan and it's their intention to stay and continue with using that benefit as part of their retirement planning. Citizen Participation Et Plan Member comments Jim O'Neill stated that he thinks the Council is within their rights to decide on funding without any effect or change to the plan. Since the shift will be coming from ICMA which is affected by IRS regulations, and he wonders how much 'we' have looked in to that so far. For people who are within about 5 years of retirement the shift is more difficult. Jim supports giving the participants the option to stay in the plan or choose a lump sum. Consider Approval of the June 10, 2010 Minutes Rick Richter moved to approve the minutes, and Angelina Sanchez-Sprague seconded the motion. Minutes were approved unanimously. Otyof F`ortor`�ins Discussion of the feedback from the informational meetings with GERC members and recommendations to Council on plan changes. Angelina Sanchez-Sprague said that members who are younger than the average (56.5 years old) might be the members most likely to leave the Plan since they couldn't be sure the Plan would continue as designed until they retire. Dee Toplyn reported that some people had questioned of whether the GERP can be guaranteed going forward/future. Another question she received was whether it was advisable to hire an attorney to deal with any changes now and in the future. Dee Toplyn asked if Greg Tempel, City Attorney, could fill that role. Rick Richter said that although he is an attorney for the City, Greg can still potentially serve in this role. Pat Kahle suggested that, since attorney's are specialized in subject, it would be advisable to find someone specifically focused on pensions. Angelina Sanchez-Sprague said that it was very beneficial to meet and talk with the various Plan members. It gave her a sense of who Plan members are and what they need from us as Retirement Committee members. Pat Kahle's opinion is that people should be given a choice, and not to attempt a particular change by force. Rick Richter moved to: Shift the 3.00% from ICMA to GERP resulting in an existing employer contribution of 7.50% plus the New City Contribution of 3.00% for a total of 10.50% to start in 2011. * Also preserving member's option to exit the plan Et roll over the lump sum equivalent to the ICMA plan. The lump sum should be based on the member's age at 12/31/10, which may differ from normal retirement age. * Exit the plan Et leave the benefit earned to date in the plan and receive as either annuity or lump sum when the benefit is paid. The GERC reserves the right to alter their recommendation if new alternatives are presented as a result of the Council Finance meeting. Angelina Sanchez-Sprague seconded the motion. The committee discussed the wording of the motion and made some suggestions. Dee Toplyn suggested adding a the same date of 12/31/10. Rick Richter stated that the term exit should be replaced with "term vested". Ben Manvel suggested combining the two options into one. John Voss suggested a reminder that this will require an actual change to the plan Based on discussion the motion was amended as follows: i i City of i Fit Collins The General Employees Retirement Committee recommends that City Council address shortfalls in GERP funding by shifting the members' 3% ICMA benefit to GERP staring in 2011 resulting in a total of 10.5% comprised of the existing employer contribution of 7.5110 and the new City contribution of 3%. The GERC also recommends offering members the option of exiting the Plan at 12/31/10 and rolling over a lump sum equivalent into the ICMA Plan OR exiting the Plan at 12/31/10 becoming a term vested member receiving an annuity or a lump sum distribution when selecting their benefit. The GERC reserves the right to alter their recommendation if new alternatives arise. Rick Richter moved to accept the statement as amended, and Angelina seconded. The motion was unanimously approved as amended. Chris Donegon gave an update on the planned process for calculating an estimates for each member including three options: 1. Exit the plan and take lump sum 2. Term vest 12/31/10 at age 65 3. Continue in plan w/ payment at age 65. Pat Kahle suggested adding the member's birth date, hire date, and benefit credits. And if there are beneficiaries, name that person and include their birth date. Angelina Sanchez-Sprague suggested we add a disclaimer statement noting the statement is provided only for purposes of comparison when making their selection of the available options effective 1/1/2011. The Committee generally agreed with the recommended draft changes. The group discussed the timing of when this information could be considered and approved by City Council. Currently, the plan in to present this data to the Council Finance Committee August 17`h, and then add this topic to the Agenda for the regular City Council meeting on September 7 h. Monthly investment and other reports Harold Hall reported to the Committee that the YTD contribution amount to the plan is $633,000. $171,000 in interest has been earned so far this year. Harold said the total portfolio YTD is down -2.69%. One new fixed income investment was purchased - Federal Farm Credit, currently yielding 3.25 Angelina Sanchez-Sprague moved to adjourn the meeting and Rick Richter seconded. Meeting was adjourned at 2:29 p.m. Total City Cost Proiections : ATTACHMENT 3 Current Proposed (All Members) Freeze (All Members) Lump Sum Payout (All Members) Year Proposed GERP ICMA Proposed GERP Proposed ICMA Proposed ICMA Actives Supplemental 4 . 5% Contribution 3 . 0% Contribution Supplemental 10 . 5% Contribution Supplemental 7 . 5% Contribution Supplemental 7 . 5% Contribution Remaining 2011 151755000 499 , 500 3335000 740 , 000 15172 ,900 590 , 000 8325500 600 , 000 8325500 92 . 5% 2012 151755000 472 , 500 3155000 740 , 000 151093500 590 , 000 7875500 600 , 000 7875500 87 . 5% 2013 15175,000 445 , 500 2975000 740 , 000 110463100 590 , 000 7425500 600 , 000 7425500 82 . 5% 2014 191759000 418 , 500 2799000 740 , 000 9829700 590 , 000 6979500 600 , 000 6979500 77. 5% 2015 191759000 391 , 500 2619000 740 , 000 9199300 590 , 000 6529500 600 , 000 6529500 72 . 5% 2016 191759000 364 , 500 2439000 740 , 000 8559900 590 , 000 6079500 600 , 000 6079500 67. 5% 2017 191759000 326 , 700 2179800 740 , 000 7679140 590 , 000 544 , 500 600 , 000 5449500 60. 5% 2018 191759000 288 , 900 1929600 740 , 000 6789380 590 , 000 4819500 600 , 000 4819500 53 . 5% 2019 191759000 251 , 100 1679400 740 , 000 5899620 590 , 000 4189500 600 , 000 4189500 46 . 5% 2020 191759000 213 , 300 1429200 740 , 000 5009860 590 , 000 3559500 600 , 000 3559500 39.5% 2021 191759000 175 , 500 1179000 740 , 000 4129100 590 , 000 2929500 600 , 000 2929500 32 .5% 2022 191759000 156 , 600 1049400 740 , 000 3679720 590 , 000 2619000 600 , 000 2619000 29.0% 2023 191759000 137 , 700 919800 740 , 000 3239340 590 , 000 2299500 600 , 000 2299500 25.5% 2024 191759000 118 , 800 799200 740 , 000 2789960 590 , 000 1989000 600 , 000 1989000 22 .0% 2025 191759000 99 , 900 669600 740 , 000 2349580 590 , 000 1669500 600 , 000 1669500 18 .5% 2026 191759000 81 , 000 549000 740 , 000 1909200 590 , 000 1359000 600 , 000 1359000 15.0% 2027 191759000 72 , 900 489600 740 , 000 1719180 590 , 000 1219500 600 , 000 1219500 13 .5% 2028 191759000 64 , 800 439200 740 , 000 1529160 590 , 000 1089000 600 , 000 1089000 12 .0% 2029 191759000 56 , 700 379800 740 , 000 1339140 590 , 000 949500 600 , 000 949500 10. 5% 2030 191759000 48 , 600 329400 740 , 000 1149120 590 , 000 819000 600 , 000 819000 9.0% 2031 191759000 40 , 500 279000 740 , 000 959100 590 , 000 679500 600 , 000 679500 7 . 5% 2032 191759000 36 ,450 249300 740 , 000 859590 590 , 000 609750 600 , 000 609750 6 .8% 2033 191759000 32 ,400 219600 740 , 000 769080 590 , 000 549000 600 , 000 549000 6 .0% 2034 191759000 28 , 350 189900 740 , 000 669570 590 , 000 479250 600 , 000 479250 5. 3% 2035 24 , 300 169200 579060 409500 409500 4 . 5% 2036 20 ,250 139500 479550 339750 339750 3 .8% 2037 16 ,200 10 ,800 389040 279000 279000 3 .0% 2038 12 , 150 89100 289530 209250 209250 2 .3% 2039 8 , 100 59400 199020 139500 139500 1 .5% 2040 4 , 050 21700 91510 61750 61750 0 . 8% 2041 - - - - - 0 . 0% Sum 28 , 200, 000 4 , 907 ,250 372719500 17 , 760 , 000 11 , 522, 950 14 , 160 , 000 8, 1789750 14 ,400 , 000 8, 1789750 Total 36,378,750 2952825950 2253385750 2255785750 Costs : Current Plan $ 3693789750 Cost reduction (Current vs Proposed ) $ (750955800) Proposed Plan $ 29 , 2829950 Cost reduction ( Proposed vs Freeze) $ (659445200) Freeze Option $ 22 , 3389750 Cost Increase (Freeze vs Lump-Sum ) $ 240,000 Lump-Sum Option $ 22 , 5789750 Assumptions : Investment Return on Assets 7 . 5% No pay increases G :\Agenda-Final\GERP .att 3 .xls 9/29/2010 1 : 15 PM Total Contributions ( GERP and ICMA) 2 . 0 - 1 . 5 N C O 1 . 0 0 . 5 2011 2016 2021 2026 2031 2036 Current Proposed Freeze Lump Sum RESOLUTION 2010-062 OF THE COUNCIL OF THE CITY OF FORT COLLINS ADOPTING THE EIGHTH AMENDMENT TO THE CITY OF FORT COLLINS GENERAL EMPLOYEES' RETIREMENT PLAN AS AMENDED AND RESTATED DECEMBER 31, 2001, ALLOWING ACTIVE MEMBERS TO CONTINUE MEMBERSHIP IN THE PLAN OR TO CEASE MEMBERSHIP IN THE PLAN AND PARTICIPATE EXCLUSIVELY IN OTHER CITY RETIREMENT PLANS WHEREAS,the City adopted,effective January 1, 1971,a qualified defined benefit pension plan known as the City of Fort Collins Employees' Retirement Plan(the"Plan"),for the purpose of providing retirement benefits for certain of its employees; and WHEREAS, the City has amended the Plan from time to time, restated the Plan to incorporate all prior amendments and other changes required by law effective December 31, 2001, and adopted seven amendments to the Plan since its restatement in 2001; and WHEREAS,recent actuarial studies have established that, due primarily to financial market conditions over the past several years, the GERP is significantly underfunded and will be unable to meet its long-term financial obligations under current funding levels and reasonably anticipated financial market conditions; and. WHEREAS,the City believes, based on the actuarial studies,that it is necessary for the City to modify the Plan's design or to increase funding of the Plan in order to ensure the long-term viability of the Plan to provide retirement benefits to Members; and WHEREAS,the General Employees'Retirement Committee("Retirement Committee"),its actuary, and the City's Finance Director have extensively studied and considered Plan design and funding alternatives that would strengthen and improve the long-term financial condition of the Plan, and have consulted with active Plan Members to seek input into such Plan design and funding alternatives; and WHEREAS,the City believes that the best alternative to improve the Plan's funding is to re- direct to the Plan, on a uniform percentage basis, employer contributions currently made on behalf of active Plan Members to other City retirement plans(401(a)money purchase plan and 457 deferred compensation plan), effective as of January 1, 2011; and WHEREAS, the City also intends to make additional employer contributions to the Plan, effective January 1, 2011,with such contributions based on a percentage of compensation of active Plan Members, and with an initial targeted contribution rate of three percent (3%) of Member Compensation, dependent on inclusion in subsequent budget and appropriation ordinances; and WHEREAS, the Retirement Committee has recognized the need for additional funding of the Plan and supports the above described funding alternative provided that active Plan Members are each given a one-time option to either: (1)terminate active Membership in the Plan,freezing the Member's Plan benefit, and participate exclusively in other retirement plans offered by the City, or (2)cease Membership in the Plan and participate exclusively in other retirement plans offered by the City, rolling over the actuarially-determined value of the Member's Plan benefit to one such other . City retirement plan,; and WHEREAS, the City Council believes and determines that the funding improvement measures described above are necessary based upon actuarial studies and that offering the options requested by the Retirement Committee provides Plan Members with retirement plan options that will not adversely affect the Plan. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO, as follows: Section 1. That Sections 3 and 4 of Article III of the City of Fort Collins General Employees' Retirement Plan are amended in their entirety to read as follows: Section 3. Termination. Membership of any Member shall terminate (except as a Vested Member) if and when he or she ceases to be in Covered Employment for any reason, except as provided in Article VI, Section 2 and in Article XIV. Section 4. Withdrawal. Except as provided in Article XIV or as provided otherwise herein, once an Employee has become a Member of the Plan, such Employee may not withdraw from Membership in the Plan unless he or she ceases to be an Employee. Section 2. That Article XIV of the City of Fort Collins General Employees' Retirement Plan is amended in its entirety to read as follows: ARTICLE XIV 2010 Plan Member Election Options Section 1. Options. Each Member who remains in Covered Employment as of January 1, 2011, who files with the City by November 19, 2010, a retirement plan election form approved by the City(for purposes of this Article XIV,the"Member Election Form") setting forth his or her election under either Section 2 or Section 3 of this Article shall have his or her election implemented effective January 1, 2011. A Member who fails to submit a completed Member Election Form by the above date shall not thereafter be eligible for the options set forth herein and shall continue to participate in the Plan pursuant to its provisions. -2- Section 2. Terminated Vested Option. Each Member who remains in Covered Employment as of January 1, 2011, who files with the City by November 19, 2010, a Member Election Form stating his or her decision to cease his or her Membership in the Plan and become a Vested Member of the Plan shall become a Vested Member of the Plan as of midnight on December 31, 2010. As of January 1, 2011, the Vested Member shall cease Membership in the Plan, shall no longer be eligible to accrue additional Credited Service, and shall have his or her Final Average Monthly Compensation be calculated based only on his or her Compensation paid prior to January 1,2011. The Vested Member may elect to receive his or her Accrued Benefit at such time and in such manner as is permitted under the Plan for Vested Members. Section 3. Transfer Option. a. Transfer of Transition Account Balance. Each Member who remains in Covered Employment as of January 1, 2011, who files with the City by November 19, 2010, a Member Election Form stating his or her decision to cease Membership in the Plan and transfer the actuarially- determined value of the Member's Accrued Benefit to a retirement plan shall have the amount of his or her Transition Account Balance in the Plan as of December 31, 2010, transferred to an account in the Member's name in the retirement.plan designated by the City. Such transfer shall occur on January 1, 2011, or as soon thereafter as reasonably practicable. At the time of transfer, each transferring Member shall be 100% vested in the Transition Account Balance. After the transfer, the transferring Member shall not be entitled to any further or future benefits of any kind from the Plan. b. Transition Account Balance Defined. For purposes of this Section 3 of Article XIV, the Transition Account Balance transferred from the Plan to a Member's account in the Employer retirement plan shall be equal to the lump sum Actuarial Equivalent value of the Member's Accrued Benefit as of December 31, 2010. For this purpose, the lump sum Actuarial Equivalent value shall be determined based on the assumptions described in Article II, Section 2b, Subsection (2)(b) and Section 2b, Subsection(3) of the Plan. Section 4. Extension of Member Election Deadline. The Retirement Committee is empowered to extend the filing deadlines described in Sections 1, 2, and 3 above for any Member who was, through no fault of the Member,unable to file the Member Election Form by the applicable deadline set by the City. The burden shall be upon such Member to establish by clear and convincing evidence that the failure to file the Member Election Form by the deadline was not the result of the Member's neglect, carelessness, delay, procrastination, forgetfulness, or otherwise the fault of the Member. -3- Section 5. Contingency. The above Sections of this Article notwithstanding, if either the Retirement Committee or the Director of Finance determines prior to January 1, 2011, based upon actuarial evidence, that either or both of the options described in this Article would have an adverse effect upon the funding needs or actuarial soundness of the Plan for those Members who remain in the Plan, or that the Plan will be unable to meet its future benefit obligations as a result of providing the options to Members set forth in this Article, then such option or options shall not be implemented. Section 3. All other terms and provisions of the Plan shall remain unchanged and in full force and effect. Section 4. The funding intentions set forth in this Resolution are contingent upon the appropriation of funds for future fiscal years. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 5th day of October A.D. 2010. Mayor ATTEST: City Clerk -4-