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HomeMy WebLinkAbout2007 03 12 Regular 611 City's Pension Plan COMMISSION AGENDA ITEM 611 Consent Informational Public Hearin Re ular x March 12, 2007 Regular Meeting MGR. f ~/DEPT. Authorization REQUEST: City Manager requesting the City Commission to consider the merits of a proposed additional benefit to the City's Pension Plan and to take action it deems appropriate. PURPOSE: This agenda item is needed to present a proposed additional pension benefit to the City Commission for their consideration. CONSIDERA TIONS: In accordance with my previous correspondence to you of March 2, 2007, I am providing the following recommended language to amend the City's proposed Pension Plan Document. This language has been reviewed by our Pension Attorney. This proposal is being presented to the Board of Trustees at their March 8, 2007 meeting for their consideration. Their recommendation will be provided to the Commission on Friday, March 9, 2007. PROPOSED AMENDMENT Amend Section 4.01 of the proposed Pension Plan Document as follows (new added language IS underlined) : (A) Eligibility for Normal Retirement. A Member who is actively employed by the City at the Normal Retirement Date may retire with an unreduced benefit at any time thereafter, and the benefit shall be calculated based on the Member's credited service and average final compensation at the date of separation from employment. In addition, a Member with at least thirty (30) years of credited service who is determined to be disabled under the provisions of the City's long term disability insurance policy prior to the Normal Retirement Date may retire with an unreduced benefit, and the benefit shall be calculated based on the Member's credited service and average final compensation at the date of separation from employment. Disability is defined by the City's Long-term Disability Insurance Policy to include: 1. You are unable to perform with reasonable continuity the material duties of you own occupation, and 2. You suffer a loss of at least 20% of you indexed predisability earnings when working in you own occupation. This new benefit provides a low cost method for addressing a situation similar to that of Fire Chief Tim Lallathin. FUNDING: As calculated by the City Actuary, the total additional first-year cost of this new benefit is $75,000 or 0.5% of payroll. A decision must be made as to who pays for this additional benefit cost. Options are as follows: 1. Employee pays 100% of the incremental cost of this new benefit. 2. City pays 100% of the incremental cost of this new benefit. 3. Some combination of City and employee sharing in the incremental cost of the new benefit. The current policy direction of the City Commission is that the City will fund the actuarial soundness of the Plan and that all new benefits will be the cost of employees. RECOMMENDATION: Recommend the City Commission consider the merits of this proposed additional benefit to the City's Pension Plan and: 1. Make a decision as to whether or not this proposed additional benefit should be implemented. 2. Make a decision as to who should pay for this proposed additional benefit. A TT ACHMENTS: 1. City Manager memo of March 2,2007. COMMISSION ACTION: CITY OF WINTER SPRINGS, FLORIDA 1126 EAST STATE ROAD 434 WINTER SPRINGS, FLORIDA 32708-2799 Telephone (407) 327-5957 Facsimile (407) 327-6686 Ronald W. McLemore City Manager MEMORANDUM TO: FROM: DATE: SUBJ: Mayor & City Commission, Board of Trustees Ron McLemore, City Manager March 2, 2007 Pension Plan Amendment For the past two months I have been working with your pension plan attorney and actuary to develop a policy for addressing the very unique situation that we have with Fire Chief Tim Lallathin. This is a far more complicated issue than it might appear due to the necessity of coordination with our short term and long term disability policies, the need to protect the plan from the costly disability abuses that have become far too common in public pension plans, and the need to create a policy which can be applied equally to all members of the pension plan. I will be presenting that policy to the Pension Advisory Committee at their Thursday, March 8,2007, meeting. The recommended policy will be completed in time for me to provide you with copies on Monday, March 5, 2007.