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12/12/1995 (2) ,r ,l. .," ~.~ '". .:,',:~'~ " ,.'.:. ,~: ,.' '.,,';\.'.' .' :.0 \''" .,,' 0 .~'.. " " j ~ I.,," '.' '. ',: ~ '. ',.,." ~ :' , . ~ '. I I' I . , .' 'of ~, i, , , ' , ,.' , , ' .' , ' .'> o' I' . ' . :'...:.,:, :,:., I . ~. '" ." c'. . , , , , . ..'h.... ~...~. .....'r:'-',!;,l'!,~\\'::1r;,.o..i~l:..~":\{l:f~, "'!1;J-}~1,' 101, <, <, \: ,....~..:',~ ' ~,~.J~I '~t \ "',1 >',:- -' ~ '/. .' , . . . . .. . . " . , PAC Pension Advisory Committee Minutes " " , , 'Date ., J~ ~l " .1 , . , " . ' '",'_' .; I..". ",', ...',' ,.,',.,..>' ,,::.,\'.'...,:,-:, ..'.'.',:', ,',> ".' ",.'. :' . " ..' J L....:i , ',I i' .,."..'. , ' Chair Committee Member Committee Member Mayor/Commissioner Commissioner Commissioner Assistant City Attorney Human Resources Director Finance Director Risk Management Specialist Temporary Staff Assistant 111 Board Reporter /~ ~' PENSION ADVISORY COMMITTEE CITY OF CLEARWATER December 12, 1995 Present: Edwin Hooper Richard Breest Fred Ratley Rita Garvey J. B. Johnson Robert Clark Leslie Dougall-Sides Michael Laursen Margaret L. Simmons Jon Marcin Jackie Kline Patricia O. Sullivan The Chair called the meeting to order at 9:00 a.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. Aooroval of Minutes (~;) Member Ratley moved to approve the minutes of the regular meeting of December ....+,"-. 6, 1995, as recorded and submitted in written summation to each member. The motion was duly seconded and carried unanimously. ITEM #2 - Overview Presentation of the Revised Pension Plan Human Resources Director Michael Laursen distributed copies of Ordinance #5890- 95, addressing the adoption of the revised employees' Pension Plan. The ordinance identifies those who participate in the plan and defines "employeett and those who are exempt from the Plan. In answer to a question, he said the Plan's language allows employees to remain in the plan if they are promoted to exempt positions. Language in the new Plan does not remove any members. The City's Pension Plan is a Defined Benefit Plan that establishes a benefit based upon a standard formula: Benefit multiplier of 2.75% times years of Pension Service Credit times the average salary during the last five years. The formula is augmented for job-connected disability by establishing a minimum benefit of 66% of the average salary during the last five years. As of Fall 1995, 445 people were receiving pension benefits: 1) 205 - years of service pensioners (46.2%); 2) 104 - job-connected disability pensioners (23.4%); 3) 39 - non-jab-connected disability pensioners (8.8%); 4) 95 - widows, widowers, pensioners (21.3%) and 5) 1 dependent child pension (0.2%). ~ mpac 1 2b.95 1 12/12/95 " '\1 .1.:':'.,1:.',,"'.:...', _:::".",'.:',:,~~,~_;,:~~",,,,'~,_'.:..:,:;~" ,:.."."..'.':~'.,:~.: .'.':, ,:.',..'...,: ';,'.'.: ,'I ,,',",' ., ,_I: ~ ,".:,~',' '" , t~ , The revised Plan will be funded by contributions from the City and Employees. The City will pay 7%, plus any additional funds needed to keep the Plan actuarially sound. Employees will pay 8 % of their salaries on a pre-tax basis. Currently, participants are taxed on their contributions; they pay no income tax on amounts contributed by the City on their behalf. Mr. Laursen will report on the a mount to be deducted from paychecks after January 1, 1996, for employees who qualified for . Pension benefits prior to that date and who will continue on the payroll into 1 996 through use of accumulated vacation and sick leave. (:~~ The Trustees, who are the members of the City Commission, in conjunction with the PAC (Pension Advisory Committee) control and manage the operation and administration of the Plan. Finance Director Margaret Simmons distributed the Callan Associates Investment Measurement Review on the City's Employees Pension Fund dated September 30, 1995. She said the City's Investment Review Team, consisting of the City Manager or Deputy City Manager, Finance Director, Controller, Risk Manager and two outside specialists, meets quarterly to evaluate each manager and measure their performance. Currently, Pension Fund assets are invested in: 1) 20.8% - Aeltus Investment Management (Equities); 2) 21.3 % - Denver Investment Advisors (Equities); 3) 14.5% - Hanson Investment Management (Equities); 4) 22.1 % - Eickhoff, Pieper & Willoughby (Fixed-Income); and 5) 21.3 % - Shields Asset Management (21.3%). The Plan is required to invest no more than 50% of the funds in equities measured on a cost, not a market basis. Ms. Simmons reviewed the performance of the different firms and the customized benchmark used to evaluate that performance. Performance ratings are listed for the last quarter, last year, last three years, last five years and from the June 1982 inception. She noted 1994 was the Plan's worst year with only a 1 % gain, although the fund was benchmarked to lose 2.83%. In answer to a question, Ms. Simmons said the In-House Account includes cash pool contributions held for benefit payments and is invested until needed. Ms. Simmons referred to last yeart s Actuary Report prepared by Coopers & Lybrand and dated January 1, 1995. The report reviews such things as market value activity, paid contributions, employeest agesl length of service, and turnover rates. Using standard life tables, the actuary determines the needed level of contribution each year. The Plan is in good shape. The present value of credited projected Plan benefits is $188,376,144 while net assets available for benefits are $217,777,829. The actuary will make a full presentation to the Trustees in April or May 1996. Ms. Simmons said the Investment Review Team has considered other investments during the past three years. The team is hesitant to bring forward any changes as current investments are doing well. In answer to a question, Ms. Simmons u mpac12b.95 2 12/12/95 .............._.. .'. . ":,:",. ',' ,:'.:::1,''',''. ' , ",:- .';:.< " .'. ,\ ,.',., -.,.'. 1.-.;"'" a:J, ,.;.J ,." ..',:' ,. '. " .,ol--....i;- ('1-\ \ '., ' .' '; '.' 1'\:,:;/::.:. '.;'. : <.'...:._".,;,.'.,~.',:.....;.:.:_~t~:;....:, ,~:.~' :," ':.., . .: \ .'.'d. ,,:" ,t ".'," "'l'" j' 'I; ":"'. ,':" '. '~","" .,,' ~:, ~~~ J "~~i'\; ',1,\:. ,~ " said the value of actuarial reserves differs because changes are averaged over five years and do not reflect individual fluctuations. Mr. Laursen continued with the Plan overview and noted the Plants basic eligibility did not change from the current plan. Employees can resign after 20 years or more credited service and attainment of age 55. After 30 years or more of credited service, employees can resign regardless of their age. Employees who perform "Hazardous Duty" can resign after 20 years of service regardless of their age. The new Plan defines "Hazardous Duty" as pertaining to those who are employed by the City as full-time sworn police officers or full-time firefighters and certified according to State statute. A change to the Plan permits early retirement benefits for those who are 65 years old and fully vested with at least 10 years of service. The benefit shall be determined by the standard benefit formula and then reduced to an Actuarial Equivalent of the benefit otherwise payable. He said this change does not harm the Plan. I~~) ..'.....,: Mr. Laursen explained the PACts role is to: 1 )arrange for physicians and medical examinations required for Plan admittance; 2) establish the scope of medical examinations; 3) recommend, in conjunction with actuaries, mortality tables for Plan operation; 4) recommend to Trustees improvements or changes to the Plan; 5) receive applications for benefits and determine right of applicant to Plan benefits; 6} prepare and distribute Plan information; 7) investigate and determine eligibility of participants for disability pension; 8) recommend rules, procedures, forms and administrative procedures to Trustees; 9) review all requests for Plan benefits; and 10} review "mistakes of fact as to the City contribution" and recommend to the Trustees if such contribution should be returned to the City. Mr. Laursen pointed out the new Plan disallows job-related disability benefits for pre-existing conditions. He suggested the PAC may want to address this issue to identify pre-existing conditions prior to hiring. In answer to a question, Mr. Laursen felt the PAC would have the right to obtain past medical history from an applicanes former doctor. Assistant City Attorney Leslie Dougal~Sjdes expressed concern that pre- employment screening must comply with ADA (Americans with Disabilities Act). It was noted the Committee's Policies and Procedures Manuar needs to be updated to reflect the changes. Pension options for employees taking their retirement benefit include: 1) joint & survivor annuity (standard benefit); 2) life annuity; 3) 10 years certain & life annuity; 4) 50% joint & survivor annuity; 5) 75% benefit & survivor annuity; and 6) 100% joint & survivor annuity. Mr. Laursen said Coopers & Lybrand will make the computations until a third party administrator is contracted to counsel retiring employees and provide each with an accurate account of each option. He said an options form needs to be o mpac12b.95 3 12/12/95 -....,.""'....... ..".. ~. . ,.. , . , ." , ~ ,.. "R' I . ,. .',,-,', < ",'. '\,...' ."- . '.., <. '~\' in """,,':-'_" . ,,," . ,,',"'.. <....'1>.<C:,'C.':;.~~.";I' : ~' .". .' ". ..::,;i~:'i':'''~~'':'' , .. " .,< '.. '. .,,' " .' ' .' '.' ~ ,.U \ ,,',,' . , of " ',~' . .' " .........f. "__~' " ". ' ' , '. '] developed that allows retiring employees to make an irrevocable choice of one option. It was noted the system needs to be in place for those who wish to retire after January 1, 1996. Mr. Laursen will draft an options form for PAC review. Employees who leave without a retirement benefit will receive their total contribution made to the Plan, with 5 % simple interest on such contributions. Other key changes from the previous Pension Plan include: 1) elimination of the dependent child benefit; b) reduction of minimum disability benefit from 75% to 66" 2/3 %; 3) addition of pre"existing conditional waiver; 4) reassignment in lieu of payment of disability pension; 5) annual recall and reexamination; and 6) PAC composition to seven members. Mr. Laursen said the new Plan requires the City to provide not less than 8 positions within the Police Department and not less than 5 positions within the' Fire Department rated hazardous duty for alternative assignment purposes in lieu of receipt of disability payments. He noted the disability pension exists only as long as the disability exists. Mr. Laursen said the PAC may have the right to determine if a non-job-connected disability still exists. A question was raised if those with job- connected disabilities approved before 1996 would be required to accept a reassignment. Mr. Laursen indicated the change cannot be applied retroactively. ".~ '\~-t. C.'; , "'r"' It was recommended that a member of the City Attorney1s office attend each meeting. Ms. Dougall-Sides said that was the City Attorney's intent. It was questioned if the recipient of a job-connected disability could accept a job elsewhere. Risk Management Specialist Jon Marcin said that recipient could not accept a like-type job. Mr. Laursen said a pensioner seeking employment in a job that could be viewed as similar to their City job should appear first before the PAC, indicate this ambition, and seek their advice. It was questioned if the new Plan will be more expensive for the City. It was indicated the City's cost would not increase. ITEM #3 - Discussion of PAC Policies and Procedures It was recommended that formulating PAC policies and procedures and naming a Chair be addressed after the 7th member is selected. Consensus was for Mayor Garvey to be Acting-Chair until a Chair is chosen. Mr. Laursen distributed a copy of the current PAC Policy and Procedures manual. It was recommended that he highlight areas PAC needs to address. Chair Hooper noted an IME and examinations by two specialists currently are required. He questioned if those requirements should be changed. An employee can qualify for only one Pension. ~ mpac12b.95 4 12112/95 . " ~ mM #4 - Discussion of Selection Process for 7th Member , ~ It was noted the 7th member needs to understand the responsibility of the position. It was felt the selection should not be political. In response to a suggestion, it was noted the member would not need actuary or trust field expertise as City professionalS take care of those issues. The PAC is responsible for protecting the pension. It was suggested the 7th member should have experience in employee- employer relations. Ms. Dougall-Sides pointed out the 7th member must be appointed by six members. Consensus was for PAC members to submit recommendations for the 7th member to the City Manager's office before January 11, 1996. In answer to a question, Ms. Dougall-Sides said Committee members are required to file a financial disclosure statement. She will verify if both City and State forms are required. ITEM #5 - Discussion of Meeting Dates & Times (~ It was suggested that PAC meetings be held once a month on the second Thursday. Mr. Laursen said Payroll assumes new employees will be accepted into the Pension Plan and deducts contributions immediately. In the un\ikely event an employee is rejected by the Plan, the City would return the contributions and change the employee to Social Security coverage. Concern was expressed an application could be tied up for several months if the Committee only meets once monthly. It was noted special meetings could be scheduled. Mr. Laursen said the Pension Trustees will not need to meet regularly as the PAC will have authority regarding Pension requests. Consensus was for PAC to meet on the second Thursday of each month. The next meeting was scheduled for Thursday, January 11, 1996, at 9:00 a.m. It was suggested two meetings in January may be required. ITEM #6 - Discussion of Other Related PAC Issues In answer to a question, Mr. Laursen said employees have no option regarding joining the Pension Plan. If they meet the criteria, they must join the plan. Employees hired after 1986, contribute to Medicare. Chair Hooper submitted his written resignation from the PAC effective January 2, 1996. An election will be scheduled to choose his replacement. It was questioned at what point an employee's medical information becomes Public Record. Ms. Dougall-Sides said the City Attorney is making a determination regarding that issue and will forward it to Committee members. Concern was ~ mpac12b.95 5 12/12/95 .... ":', '~:" ,__,;'; l. .,':, , ~ ','~'.~'~' I'~"d ~ :~.. "/'. ,', :', '.,; ': .' . ",l., . . I ",.' . :...... . ,.'.:,'~,' : " ,', ;<".: i;: i)~'~;'~;:\";:;/'::':.'<;', " ~:--'. , ! e' ,., ,r) expressed that some medical records include psychological evaluations and could be damaging if released to the public. It was noted new forms would be required regarding the reassignment of employees who might otherwise qualify for a job-connected disability. Mr. Laursen will present drafts of forms to the Committee and list what PAC needs to address. In answer to a question. Mr. Laursen said all new employees receive a benefit book at Orientation. He reported a new employee handbook is being printed. Chair Hooper noted the PAC will need to review forms from all current pensioners in January. Mr. Laursen said the PAC is responsible for that review. ITEM #7 - Adiournment Chair Pension Advisory Com The meeting adjourned at 11 :01 a.m. ""': t . .\ ..',i " f';":''''\ C; mpac12b.95 e 12/12/95 ___..........__.... ~T'. ~ ....'- ..~.._,,~-- ..........h:.-.J.... ~.'... .""".-1l.lHt...."".~,. .......i.~. e.-""'_I.........<>-'~ ... . ,~, ~'....., tJ, ...~....;dl:.~.~:.;.:i~~il,\t,lte ~:'...~~I~~~;-Ir , ,:,,"-""" :,' ,'...... .. ..,' : ,'\.,-: "./,'.'..,'..,,: .,' .',' .".(,I"",'.,...:".:.:"';'.:::,'<>,:\~.:."~,<:'.:,';':_'::",.,:<'<'::'.':~~'.::,'-'.:,'..:_..::,",:': , , ',.' , . '~ ' .,.. ':i " ,',': :.... ."...". ' ,':' '.. : ""';' . ' I ,', l' ';", ". ' , ," , .' ' ~ :,. : '..,', ~j, - . . -..iIfr~, '.