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HomeMy WebLinkAbout2006 09 27 Other Handout Given Out By Manager McLemore Date: September 27, 2006 The attached was distributed during the September 27, 2006 City Commission Workshop by Manager McLemore. COMMISSION WORKSHOP PENSION PLAN 9/27/06 SUGGESTED AGENDA I. Welcome II. Introductions III. Fiduciary Responsibility IV. Winter Springs Plan Evolution V. Alternative Plans a. Types of Plans i. Defined Contribution ii. Defined Benefit iii. Hybrid b. Types of Defined Benefit Plans i. Citywide ii. General Government c. Local Law Plans I. Unified Police and Fire II. Police Only Ill. Fire Only iv. General Employees d. Chapter Plans i. Unified Police and Fire 11. Police Only Ill. Fire Only iv. General Employees e. State Retirement VI. Questions & Answers VII. Wrap-up VIII. Consensus to got to Phase B - Feasibility / Desirability. IX. Adjournment Mayor Bush Mayor Bush Jim Linn/Guest Ron McLemore Guest/Resource Guest/Resource Guest/Resource Guest/Resource Guest/Resource Mayor Bush Commission Mayor Bush Phase I Orientation September 27, 2006 Goals: Evolution of Retirement Plan Current Winter Springs Plan Alternative Plans Journey to the Promised Land The Retirement Gospels of Winter Springs According to McLemore Commom Terms Defined Contribution Plan Defined Benefit Plan Hybrid Floor Offset Plan Common Terms Defined Contribution Plan What is Defined is the Amount of Contribution Individual Employee Accounts Benefit Funded Solely by Amount Contributed to the Individual Account Plan Capacity is Determined Solely by Contributions and Earnings Common Terms Defined Benefit Plan What is Defined is Benefits Pooled Plan Trust Account Benefit Funded by Contribution to the Trust Account Plan Capacity is Determined by Acturial Calculation and Legal Mandates to comply with Acturial Determiniation of Required Contributions Common Terms Floor Offset Combined Benefit and Defined Contribution Plan Employee Receives Greater Value of the Defined Benefit or the Defined Contribution at Retirement "In the Beginning" There was Total Darkness There was Light 2% Defined Contribution Plan That Was Good There was more Light 4% Defined Benefit That Was Better Even more Light 6% Defined Benefit That Was Better Still There was Rest...Lots of Rest "More Light" January 1996: 1st McLemore Mandate Retirement Improvement Plan Do Something Soon Study of Defined Contribution Plan September 9, 1996: Commission Approved an Increase from Contribution Rates for the Defined Contribution Plan from 6 to 8% 7% Employer 1% Employee ___________ 8% Total "Building a Better Chariot" September 1996: 2nd McLemore Mandate: Commission Wanted Long-Term Plan Commission Was Biased in Favor of Defined Contribution Plan due to Concerns about: Escalating Benefits and Benefit Cost Disability Scams Loss of Control Distance From Employees But Willing to Look at Alternatives Incremental Implementation "Wandering Around in the Wilderness" "The Golden Calf" & "The 8 Commandments" 1. Thou Shalt Not Follow the Herd- Make it Unique to our Needs. 2. Treat Your Neighbor as You Would Yourself - Equal Benfits For All Employees. 3. Thou Shalt Not Complicate - Keep it Simple Stupid...And Understandable Would Help, too. 4. There Shalt Be No Other Retirment Gods Before Us - No OUtside Authority Standing between the Commission and its Employees. 5. Thou Shalt Not Waste - Keep it basic, Affordable, Fiscally Sound, Minimize Overhead. 6. Thou Shalt Not Forget Who Pays the Bill - Tazpayers Should be Involved to Reflect What the Taxpayers Are Willing to Fund for its Employees. 7. Thou Shalt Not Forget Who Does the Work - Employees Encouraged to Attend Pension Board Meetings and Commission Meetings to be informed and Provide Input. Oh Yeah... 8. Love your Mayor & Commissioners With All Your Heart and Soul. "Wandering Around in the Wilderness" "Looking for the River Jordan" Staff and Consultants Looking and Analyzing Reviewed All Options Cost- Desirability Employees Looking and Voting Mandatory- Floor Offset Police-Fire - Local law Plans "Wandering Around in the Wilderness" "Looking for the River Jordan" Elected Officials Looking and Deciding Chose Floor Offset United Citywide Equal Benefits to All Employees Defined Benefit 2% Benefit- 30 Year Max Normal Retirement 55/10 Disability Insurance Coordination 6% Contribution 15 Year Funding "Wandering Around in The Wilderness" "Looking for the River Jordan" Elected Officials Looking and Deciding (cont') Defined Contribution 4% Contribution Participating Allocation Employer 8% Employee 2% Total 10% Maintain SunTrust RFP for Trust Manager Empoy Pension Attorney to Develope Plan Document "Wandering Around in the Wilderness" "Be It Ordained" March 23, 1998 Commission Adopts Floor Offset, Ordinance 697 Retirement Committee to Administer - Employer to Administer Commission Chooses Hybrid Approach Employer to Adminsiter Advisory Board of Taxpayers Employees Encouraged to Participate as non-voting Ex Officio Members "Wandering Around in the Wilderness" - Hallelujuah!! "The 8 Commandments Fulfilled" 1. Unique Floor Offset - D.C. and B.B 2. Treated Everyone Equal. 3. Simple - United Structure. 4. Full Commission Control - No Outside Interference - No Barriers Between Commission and Employees. 5. No Waste- Efficient with Centralized Management, Affordable, Low Overhead, Fiscally Sound with 15 Year Funding and Goal to Reduce to Zero Year Amortization. 6. Taxpayer Advisory Board. 7. Employees Allowed to Vote on Plan and Encouraged to Attend Advisory Board as Non-Voting Ex Officio Members. Oh Yeah... 8. Everyone Loved Their Mayor & Commissioners With All Their Hearts and Souls. "Crossing Into the Promised Land" November 10, 2003: Commission Adopts Full Defined Benefit Plan Defined Contribution and Defined Benefit Assests merged into one Defined Benefit Trust 3% Benefit Forward - 2% Benefit Backwards Other Plan Design Provisions Stay the Same Commission Continues Hybrid Administration Employer Plan Administrator Taxpayer Advisory Committee Employees Encouraged to Participate in Advisory Committee as Non-Voting Ex Officio Members. 8 Commandments Remain In Place "More Milk & Honey" August 30, 2004: Commission Approves 3% retro 4 Year Incremental Increase in Retro Implementation October 1, 2005 2.2.5 Retro October 1, 2006 2.50 Retro October 1, 2007 2.75 Retro October 1, 2007 3.00 Retro 4 Year Incremental Increase in Contribution October 1, 2004 9.5 3.0 12.5 October 1, 2005 11.0 3.0 14.0 October 1, 2006 11.5 3.0 14.5 October 1, 2007 12.0 3.0 15.0 "Stewardship of the Commandments" August 23, 2006: Commission Approves Additional 1% Contribution Actuarial Evaluation Demonstrates Current Status Funding - Amortization of Unfunded Liability 10 years Contributions 15% Projected Worst Case Funding- Amoritization of Unfunded Liability 15 Years Contributions 16% "Return to the Wilderness" Commission Approves Resolution 2006-52 Expressed Desire to Revisit Plan Options Orientation - September 27, 2006 Besides.... "At least we won't have to worry if our pension plans are any good." ....Age You'll Be Able To Retire - Up 4 1/2... Maybe We Should Stop Worrying About Our Pensions After All... Social Security Pays 3 to 2 A Retirement Plan... Not a Retirement Plan...