HomeMy WebLinkAbout1998 01 13 City of Winter Springs Proposed Pension Plan Design Features.~,., ~,
CITY OF WINTER SPRINGS
PROPOSED PENSION PLAN DESIGN FEATURES
Plan Type:
Vesting Period
Waiting Period and
Entry Date:
Normal Retirement:
Early Retirement:
The plan adopted by the City is a "Floor Off Set Plan."
This type plan maintains a defined benefit plan and a defined contribution plan. The
employee receives the greater benefit from either plan.
After 7 years continuous service with the City you are fully vested.
After 6 months satisfactory service with the City you are eligible to enter the plan on
the first day of the month following satisfactory eligibility requirements.
Age 65
Under the new plan an employee can retire at age 55 and completion of 10 years
service with no actuarial reduction.
or
With 25 years service an employee below the age 55 can retire early but will be required
to take an actuarial reduction. This means the employee's benefit will be reduced below that of
full retirement based upon an actuarial evaluation.
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CIT'~ OF WINTER SPRINGS
PROPOSED PENSION PLAN DESIGN FEATURES
Continued
Retirement Benefits: Employees will receive the greater benefit from either the defined contribution or the defined
benefit plan. Below is an example to show what a new employee could receive from both plans after
working 30 years for the City.
Defined Contribution Plan
Based upon actuarial assumptions used to construct the plan, an employee with 30
years continuous service could have an account value capable of providing the employee with a yearly
annuity equal to approximately 80% of the average of the employee's three years highest earnings.
Ex_ ample
An employee with 30 years service and his/her average highest three consecutive year earnings is
$30,000, the employee's annual benefit could be approximately $24,000 yearly or $2,000 per month
calculated as follows:
$30,000 x 80% _ $24,000 per year
$24,000 per year _ 12 months = $2,000 per month
Defined Benefit Plan:
This plan is constructed to give a new employee a yearly pension equal to 2% per year of the average of
the employee's three years highest earnings up to 30 years of service.
Example
An employee with 30 years service and his or her average three highest consecutive year
earnings is $30,000, the employee's annual benefit would be approximately $18,000 yearly or $1,500
per month calculated as follows:
$30,000 x 30 years x 2% _ $18,000 per year
$18,000 per year - 12 months = $1,500 per month
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CITY OF WINTER SPRINGS
PROPOSED PENSION PLAN DESIGN FEATURES
Continued
Buy In: An employee can purchase unlimited years of prior governmental and military service at
the appropriate actuarially computed value.
Death Benefits: The employee's survivor is entitled to tl~e current value of the employee's net accumulated benefit at
the time of death from either the defined benefit plan or the defined contribution plan.
Disability: Employees are covered for work and non-work related disabilities. Any employee who
becomes disabled will receive 60% of their annual salary after a 6 month waiting period.
Contributions: The City will contribute 8% of payroll into the plan. The employee will contribute 2%
of their pay into the plan.
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COMPARISON OF PENSION
PLAN DESIGN FEATURES
PROPOSED CURRENT
Vesting 7 Years 10 years
Vesting 1 year - 0% 1 year - 0%
Vesting 2 years - 0% 2 years - 0%
Vesting 3 years - 20% 3 years - 0%
Vesting 4 years - 40% 4 years - 40%
Vesting 5 years - GO% 5 years - 50%
Vesting 6 years - 80% 6 years - 60%
Vesting 7 years - 100% 7 years - 70%
Vesting 8 years - 80%
Vesting 9 years - 90%
Vesting 10 years - 100%
Waiting Period 6 months 1 year +
Plan Entry Date First day of month First day of month
after 6 months of Service after 1 year of Service
Normal Retirement Age 65
Early Retirement Age 55 and 10 years of Service None
No actuarial deduction
or
25 years of Service below age 55 None
actuarially reduced
Benefit Computations Average of 3 highest consecutive years W-2 Wages
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. ; , , COMPARISON OF PENSION
PLAN DESIGN FEATURES -CONTINUED
PROPOSED
Benefits Greater of 2% per Year up to
30 years or value of D.C. account
Survivor Benefits Yes
Death Benefits Greater of 2% per year up to
30 years or value of the D.C. account
Disability Work and Non-work related
60% of annual salary
Contributions City 8%
Employee 2%
Prior Service Unlimited purchase of prior governmental
and military service at actuarial rate
CURRENT
Value of D.C. account
Yes
Value of D.C. account
None
City 7%
Employee 1%
None
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