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HomeMy WebLinkAbout1998-138-10/06/1998-AMENDING GENERAL EMPLOYEES RETIREMENT PLAN TO ALLOW FOR A CONVERSION TO MONEY PURCHASE PENSION PLAN RESOLUTION 98-138 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING THE CITY OF FORT COLLINS GENERAL EMPLOYEES RETIREMENT PLAN TO ALLOW FOR A CONVERSION TO A MONEY PURCHASE PENSION PLAN WHEREAS, the terms of the City of Fort Collins General Employees Retirement Plan (as restated and effective January 1, 1992) (the "Plan") have been reviewed by the General Employees Retirement Committee ("the Committee"); and WHEREAS, the Committee has engaged in a comprehensive process to determine actual Plan member interest in allowing members to convert their participation in the Plan to a defined contribution, self directed, money purchase pension plan ("money purchase plan") and to transfer their Transition Account Balance in the Plan to the money purchase plan; and WHEREAS,following an educational process,Plan members were provided the opportunity to irrevocably elect to convert their participation in the Plan to a money purchase plan and to transfer their Transition Account Balance in the Plan to the money purchase plan, contingent upon City Council approval; and WHEREAS,following this election process,the actuarial firm charged with determining the actuarial soundness of the Plan has analyzed the results of the election and has determined that allowing the conversion from the Plan to a money purchase plan and the transfer of accrued benefits for those members who have chosen to convert and transfer will not, at this time, have an adverse effect upon the funding needs or the actuarial soundness of the Plan for those members who have chosen to remain in the Plan, and the Plan will be able to meet its near-future benefit obligations; and WHEREAS,the Committee has recommended to the City Council that the Plan be amended so as to provide the ability for those members who have so elected,to convert and transfer from the Plan to a money purchase plan; and WHEREAS, the City Council wishes to adopt the recommendation of the Committee; and WHEREAS, Article XIV, Modification or Termination of Plan, Section 2, of the Plan authorizes the City Council to amend the terms of the Plan. NOW, THEREFORE, BE IT RESOLVED BY TI IE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO as follows: Section 1. That effective January 1, 1999, Section 2 of Article III of the City of Fort Collins General Employees Retirement Plan shall be amended to read as follows: 1 Section 2. Employees Hired After December 31 1970 but before January 1, 1999. Each Employee of the City hired after December 31, 1970, but before January 1, 1999, shall become a Member in the Plan on her or his date of employment. Effective January 1, 1990, an Employee must also be in Covered Employment to become a Member. Employees hired after December 31, 1998 will not be eligible for Membership in the Plan. Section 2. That effective January 1, 1999, the City of Fort Collins General Employees Retirement Plan shall be amended by adding a new Article XVIII to read as follows: ARTICLE XVIII Money Purchase Plan Option Section 1. Conversion Options a. Each current Employee hired prior to January 1, 1998 and remaining in Covered Employment as of January 1, 1999,who has filed with the City by August 14, 1998, a Retirement Plan Selection Form approved by the City stating her or his decision to convert from participation in the Plan to a money purchase plan shall be converted from the Plan to a money purchase plan as designated by the City,effective January 1, 1999. Upon conversion, the Employee shall not be permitted to participate further in the Plan. b. Each current Employee hired after December 31, 1997, but before January 1, 1999,and remaining in Covered Employment as of the date of conversion under this subsection shall be given the option of converting from the Plan to a money purchase plan as designated by the City. Such conversion option shall be provided to such Employees during the first six months of 1999 at a time and in a manner as determined by the City. Upon conversion, the Employee shall not be permitted to participate further in the Plan. Section 2. Transfer of Transition Account Balance a. Each current Employee,hired prior to January 1, 1998 and remaining in Covered Employment as of January 1, 1999,who has filed with the City by August 14, 1998, a Retirement Plan Selection Form approved by the City stating her or his decision to convert from participation in the Plan to a money purchase plan shall have the amount of her or his Transition Account Balance in the Plan as of December 31, 1998, transferred to an account in the Employee's name in the money purchase plan designated by the City. Such transfer shall occur on January 1, 1999,or as soon thereafter as reasonably practicable. At the time of transfer, each transferring Employee shall be 100% vested in the Transition Account Balance. As of January 2 1, 1999, the transferring Employee shall not be entitled to any further or future benefits of any kind from the Plan. b. Each current Employee hired after December 31, 1997, but before January 1, 1999, and remaining in Covered Employment as of the date of transfer under this subsection, who files with the City by the date determined by the City pursuant to subsection 1 b.of this Article,a Retirement Plan Selection Form approved by the City stating her or his decision to convert from participation in the Plan to a money purchase plan shall have the amount of her or his Transition Account Balance in the Plan transferred to an account in the Employee's name in the money purchase plan designated by the City. Such transfer shal I occur within the first six months of 1999, or as soon thereafter as reasonably practicable, at a time to be set by the City. At the time of transfer, each transferring Employee shall be 100% vested in the Transition Account Balance. As of the date of transfer, the transferring Employee shall not be entitled to any further or future benefits of any kind from the Plan. Section 3. Transition Account Balance Defined a. For purposes of subsection 2a. of this Article,the Transition Account Balance to be transferred from the Plan to an Employee's account in the money purchase plan shall be equal to the greater of the following: (1) the lump sum Actuarial Equivalent value of the Employee's Accrued Benefit as of December 31, 1998. For this purpose, the lump sum Actuarial Equivalent value will be determined based on the assumptions described in subsection 2b(2)(b) and subsection 2b(3) of Article Il. (2) the amount which would have accumulated in a money purchase plan account from the Employee's date of hire until December 31, 1998 based on the following factors: (a) contributions of 4.5% of the participant's salary; (b) interest earnings of 7.5%per year; and (c) salary increases of 4.5% per year, with the salary for prior years determined by discounting the 1998 rate of pay by 4.5% per year back to the date of hire. b. For purposes of subsection 2b. of this Article,the Transition Account Balance to be transferred from the Plan to an Employee's account in the money purchase plan shall be calculated by the same method as described in subsection 3a. of this Article,except that the date of December 31, 1998, shall be replaced with the appropriate transfer date selected by the City pursuant to subsection 2b. of this Article. 3 Section 4. Extension of Selection Deadline The Retirement Committee is empowered to extend the selection filing deadlines described in Sections 1 and 2 of this Article for any Employee who was, through no fault of the Employee, unable to file the Selection Form by the applicable deadline set by the City. The burden shall be upon such Employee to establish by clear and convincing evidence that the failure to file the Selection Form by the deadline was not the result of the Employee's neglect, carelessness, delay, procrastination, forgetfulness, or otherwise the fault of the Employee. Section 5. Minimum Single-Sum Amount For each current Employee who remains in the Plan and continues in Covered Employment through the applicable actual conversion date set forth in Section I of this Article,the amount of any single-sum benefit subsequently selected by such Employee shall not be less than the amount of the Transition Account Balance as defined in Section 3 of this Article. Section 6. Contingency. The above sections of this Article notwithstanding, the conversions and transfers described in this Article shall not occur if the Retirement Committee determines, based upon actuarial evidence, that the conversion and transfer would have an adverse effect upon the funding needs or actuarial soundness of the Plan for those members who have chosen to remain in the Plan, or that the Plan will not be able to meet its near-future benefit obligations. Such determination by the Retirement Committee shall be considered at a special meeting of the Retirement Committee to be held not earlier than December 14, 1998, nor later than December 31, 1998. Passed and adopted at a regular meeting of the Council o€the City of Fort Cans h this 6th day of October, A.D. 1998. Mayor l=� ATTEST: Atylerk 4