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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