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12/06/1996 TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING December 2, 1996 The City Commission, meeting as the Board of Trustees of the Employees' Pension Fund, met in regular session at City Hall, Monday, December 2, 1996 at 1:10 P.M., with the following members present: Rita Garvey Chairperson J. B. Johnson Trustee Robert Clark Trustee Ed Hooper Trustee Karen Seel Trustee Also Present were: Elizabeth M. Deptula City Manager Pamela K. Akin City Attorney Cynthia E. Goudeau City Clerk ITEM #2 - Minutes: Trustee Hooper moved to approve the minutes of the November 4, 1996, meeting. The motion was duly seconded and carried unanimously. ITEM #3 - Request for Acceptance into Membership: The City Manager presented the recommendation of the Pension Advisory Committee to approve membership for the employee(s) listed below: a) John Schodtler b) Yvonne Reyniers c) James E. McBride d) Dave Shenk e) Michael Duff f) Larry K. Jacoby g) Rodger Gaston h) Dan Dede i) Mark Murray j) Claudette Pascoe k) Jack DeShazo l) Deborah Jensen m) Patrick Davis n) Rory A. Brodil o) Rose Castilla p) Travis Booker q) Cameron Hill r) Jeanette Terry s) Mahshid Arasteh t) David Dalton u) Lynette Counts Trustee Johnson moved to accept the recommendation of the Pension Advisory Committee. The motion was duly seconded and carried unanimously. ITEM #4 - Ratify $6,040 expenditure paid from 8/95 through present and approve additional $3,900 for Coopers & Lybrand to assist City with administration of Employees’ Pension Plan until effective date of an Administration Services contract The changes to the Employees’ Pension Plan that went into effect January 1, 1996 changed the plan to an IRS qualified plan which can be quite complicated to administer. Staff determined the service of a Third Party Administrator was required. An RFP was issued to bring an administrator on board by January 1, 1996, however, the bids received were not determined to be adequate and staff decided to administer the plan until a new RFP could be issued and an administrator hired. Coopers and Lybrand is the actuary for the Plan and has been providing additional consultant work related to the negotiations and implementation of pension plan changes. The fees for this work were approved by the Trustees. Unfortunately, the administration of the plan required expertise from a consultant and Coopers and Lybrand was asked to perform some tasks related to calculations of retirement options, buy-back calculations, withholding and tax reporting requirements, early retirement issues, etc. Staff now believes the administration work performed by Coopers and Lybrand is outside the scope of the previous Trustee approval, and additional Trustee approval must be received. Payments have already been made to Coopers and Lybrand in the amount of $6,040 and an invoice is awaiting payment totaling $1,390 for work performed through October 15, 1996. Additional invoices can be anticipated for an amount not to exceed $2,510 until a contract for administrator goes into effect.. Funding is available in the Employees’ Pension Fund. Trustee Johnson moved to ratify the $6,040 expenditure paid from 8/95 through present and approve an additional $3,900 for Coopers & Lybrand to assist the City with administration of the Employees’ Pension Plan until the effective date of an Administration Services contract. The motion was duly seconded and carried unanimously. ITEM #5 - Approve hiring Coopers & Lybrand to act as City’s Third Party Administrator for Pension Services at an est. $29,000; approve est. $1,000 for related internal printing costs Effective 1/1/96, the Employees’ Pension Plan was changed to a qualified pension plan. The plan was also changed to allow retiring employees to choose one of six optional manners of receiving pension payments and to designate their beneficiaries. Due to these modifications and the on-going changes in federal law regarding pensions and taxes, staff is requesting the services of Coopers & Lybrand be approved to provide options-counseling for retiring pension plan participants and to provide pension/tax law advice for city staff. Coopers & Lybrand proposes to do the following: develop a customized pre-retirement planning workbook for a one-time cost of $5,000; prepare a Summary Plan Description (SPD) for a one-time cost of $2,000; provide individual pension plan benefit statements for an annual cost of $1,000; calculate pension benefit estimates for $150 per estimate (for eligible employees); conduct pre-retirement seminars at a cost of $240 per hour; provide options counseling for up to 1 hour per retiring employee at $100 per hour; calculate actual pension benefit amount for $150 per calculation; and provide pension and related tax law advice to city staff at the rate of $240 per hour. The total estimated cost for the first year would be approximately $30,000: $7,000 for workbooks and SPD - a one-time cost; $1,000 for individual statements; $4,000 for seminars - estimated at 4 seminars, approximately 4 hours each; $14,000 for employee calculations and counseling - estimated at 35 retiring employees (35 x as much as $400) ($400 - $150/estimate + $150/final calculation + $100 for 1 hour’s counseling); $3,000 for staff advice - estimated at 12.5 hours @ $240 per/hour; and $1,000 for printing documents - costs incurred by City not payable to Coopers. Funding is available in the Pension Fund for these costs. Discussion ensued regarding the services to be provided and the rates being charged. In response to questions, it was indicated a determination will be made regarding whether outsourcing these services is cost effective. Concerns were expressed regarding tax advise being given. It was indicated this will be opinions regarding tax law given to staff by a qualified attorney. A concern was expressed that the pension fund should not pay for advise regarding social security and medicare. Ms. Rice indicated this will be an effort to encapsulate all information in one place, not day to day advise. In response to a concern that this not be considered “an open telephone line to run up a bill”, it was indicated Coopers & Lybrand is aware they are responsible for any excess charges. It was emphasized this is a one year agreement. In response to a question, it was reported, annual benefit statements are not currently provided. A responsibility of the third party administrator will be to provide this for an estimated $1,000 per year. Trustee Seel moved to approve hiring Coopers & Lybrand to act as the City’s Third Party Administrator for Pension Services at an estimated $29,000 and to approve an estimated $1,000 for related internal printing costs. The motion was duly seconded and carried unanimously. ITEM #6 - Other Business: - None. ITEM #7 - Adjournment: The meeting adjourned at 1:23 p.m.