HomeMy WebLinkAboutItem 07 Retirement Plan Amendment
AGENDA ITEM SUMMARY
Meeting Date:
Meeting Type:
Department:
Staff Contact:
Staff Phone No:
Estimated Time:
July 21, 2008
Regular of' !
Human Resources, . '
Ardis Belknap
726-3786
Consent Calendar
SPRINGFIELD
CITY COUNCIL
ITEM TITLE:
ACTION REQUESTED:
RETIREMENT PLAN AMENDMENT
Adopt the following resolution:
ATTACHMENTS:
DISCUSSION:
The Retirement Plan includes, among others, the disability accounts of four former participants in the
City's terminated Money Purchase Pension Plan (MPPP) and of one nonsworn former member of the
Springfield Police Association (SPA). These disability accounts are credited monthly (until the
participant attains age 60, dies, or is no longer disabled) with a percentage of the participant's monthly
earnings when disabled (7% for the former MPPP participants and 10% for the former SPA member).
These disability accounts are also credited with annual interest (7% for the former MPPP participants
and 9% for the former SPA member). These disability accounts will be paid when the participant
attains age 65 or dies before age 65. To allow these participants to receive their disability accounts
now, the amendment would allow the City Manager to amend the Retirement Plan to permit early
payment (during January through June of2009 and only with the participant's consent) of these
disability accounts.
A RESOLUTION OF THE CITY OF SPRINGFIELD AMENDING THE CITY OF
SPRINGFIELD, OREGON RETIREMENT PLAN.
Staff recommends the adoption of the attached resolution to allow the City
Manager to decide, based on the ability to stay within the stated financial impact,
whether the Retirement Plan should be amended to allow the City Manager to
amend the Retirement Plan to permit early payment (during January through June
of 2009 and only with the participant's consent) of the disability accounts of
nonsworn participants in the Retirement Plan.
Attachment A - Resolution
ISSUE STATEMENT:
Two of these five participants (both former MPPPparticipants) are no longer eligible for additional
credits of 7% of monthly earnings. They would receive the current amount of their disability accounts
and forfeit the right to future credits of 7% annual interest. The remaining three participants would
receive the current amount of their disability accounts, plus an additional amount determined by the
City Manager, and forfeit the right to future credits as a percentage of monthly earnings and annual
interest. For the former SPA member, this additional amount would include the present value of2%
annual interest on the disability account (because this participant would forego 9% annual interest,
compared with the 7%' annual interest foregone by the former MPPP participants). The City would
contribute to the Retirement Plan, in addition to the City's regular monthly contribution, an additional
amount equal to the additional amount the City Manager determines to pay to the participants.
FINANCIAL
IMPACT: The financial impact will include:
· The additional amount that the City would need to contribute to pay the distributions
(estimated to be approximately $20,000)
· The savings the City would make by discounting future contributions (about $5,000)
· The savings the City would make by not paying 7% interest on current accounts and future
contributions until the disabled retiree reaches age 65 (not calculated)
· And a minimal reduction in the City's obligation to pay future contributions and future interest
credits on any account balances that are withdrawn.
SPRINGFIELD
NO. 2008-
A RESOLUTION OF THE CITY OF SPRINGFIELD AMENDING THE CITY OF
SPRINGFIELD, OREGON RETIREMENT PLAN.
WHEREAS, the City of Springfield adopted the 2007 Restatement of the City of
Springfield; Oregon Retirement Plan (the Retirement Plan); and
WHEREAS, the City of Springfield desires to expand the City Manager's authority to
amend the Retirement Plan;
NOW, THEREFORE, BE IT RESOLVED by the Common Council of th~ City of Springfield
that, effective on the date of this resolution, Sections 13.2. through 13.6. of the 2007 Restatement
of the Retirement Plan (as the 2007 Restatement has been amended to date) are renumbered ,as
Sections 13.3. through 13.7. respectively and the following new Section 13.2. is added to the
2007 Restatement
13.2. ADDITIONAL AMENDMENT BY CITY MANAGER. Despite
Section 13 .1., the City Manager of the Employer may also amend this Plan, by a document signed
by the City Manager, to allow a Participant who has an Accrued Benefit pursuant to Section 5.I.c.
(about disability credits) or 7. (about disability credits for transferred Participants), and who was
not classified as a Public Safety Employee as of the' date of the Participant's Disability resulting in
such Accrued Benefit, to elect to receive distribution of the amount of such Accrued Benefit at any
time during January through June of2009.
/
a. The amount of such a distribution shall be determined by making no
credit under Section 5. or 7. to the Participant's Employer Contribution Account (the Account) for
the calendar month that includes the date of the distribution or for any later calendar month.
b. A Participant who elects to receive such a distribution and survives to
the date of the distribution forfeits all rights to additional credits under Sections 5. and 7. to the
Account and all other rights to distribution, to the Participant or the Participant's beneficiary, of the
Participant's Accrued Benefit pursuant to Section 5.1.c. or 7. If a Participant who elects to receive
such a distribution dies before the date of the distribution, the Participant's election to receive such
a distribution will be void.
c. A Participant's election to receive such a distribution must include an
express written waiver of the rights described in Section 13.2.b. above, an express written waiver
of, and indemnification against, all claims relating to the forfeiture of such rights, and such other
matters as the City Manager deems appropriate. The terms of the election, waivers,
indemnification, and other matters shall be determined in the City Manager's absolute discretion.
d. For any Participant who, but for electing to receive such a distribution
and surviving to the date of the distribution, would be eligible for additional credits under Section
5.1.c. or 7. or for a future credited rate of return of nine percent (9%) per annum under Section
5.1.d.(1) on the Participant's Accrued Benefit pursuant to Section 5.1.c., the amendment may (but
need not) credit an additional amount specified in the amendment ("additional credit") to the
Account (to be received in such distribution) in exchange for the Participant forfeiting additional
credits under Section 5.1.c. or 7. and two percentage points of the future credited rate of return of
nine percent (9%) per annum under Section 5.I.d.(I).
Attachment A
RESOLUTION NO. 2008-
Page 1
e. The amount of the additional credit, if any, shall be determined in the
City Manager's absolute discretion. In determining the amount of the additional credit, if any, the
City Manager may consider the benefits to the Participant of early distribution (including without
limitation the possibility the 'Participant might die or cease being Disabled or suffering a Disability ,
before age 60), the costs to and burdens on the Employer of early distribution, and such other
matters as the City Manager deems appropriate.
f. In adopting an amendment under this Section 13.2. and in determining
the amount of the additional credit, if any, the City Manager shall act on behalf of the City of
Springfield as Employer and not on behalf of the City of Springfield as Plan. Administrator, and so
shall not be required to act in the interests of Participants and their beneficiaries.
g. The distribution shall be in such one of the methods of distribution
described in Section 10A.a., 10A.b., or 10A.c. (or in a combination ofa lump sum distribution and
one of the methods of distribution described in Section 10A.b. or 10A.c.) as the Participant elects
in writing' to receive. The amount of the monthly payments to be provided by any annuity or
installment option shall be determined based on applying the amount of the Account as the
premium at the annuity purchase rate then made available to the Plan by the Insurance Company.
ADOPTED by the Common Council ,and approved by the Mayor of the City of
Springfield this 21st day of July, 2008.
ADOPTED by a vote of
for and
against. .
Mayor
ATTEST:
City Recorder
Reviewed and Approved as to
2~;U
-
~u~0f-
Office of City Attorney
July ~, 2008
Attachment A
RESOLUTION NO. 2008-
Page 2