Loading...
HomeMy WebLinkAbout2005-10-11 General Employees pension Board workshop City Commission meeting Minutes MINUTES OF GENERAL EMPLOYEES PENSION BOARD WORKSHOP DANIA BEACH CITY COMMISSION TUESDAY, OCTOBER 11, 2005 - 5:00 P.M. 1. Call to Order Mayor Castro called the Workshop to order at 5:04 p.m. 2. Roll Call Present: Mayor: Anne Castro Vice-Mayor: Patricia Flury Commissioners: Bob Anton Commissioner: C.K. McElyea City Manager: Ivan Pato City Attorney: Thomas Ansbro City Clerk: Louise Stilson Absent: Commissioner: John Bertino Commissioner McElyea motioned to excuse Commissioner Bertino; seconded by Vice- Mayor Flury. The motion carried on the following 4-0 Roll Call vote: Commissioner Anton Yes Vice-Mayor Flury Yes Commissioner McElyea Yes Mayor Castro Yes 3. Discussion of Recommended Changes to the General Employees Retirement System Chuck Cook, Chairman of the General Employees Pension Board, acknowledged they requested this workshop and hired an Actuary to perform a study of the Pension Plan. Mr. Palmquist is here to provide only the facts in hopes of finding a resolution to the pension issue. He acknowledged the FRS has a larger risk pool, portability, and a 3% COLA; however, we have no control over it and the multiplier is 1.6%. The benefit of our plan is that it has been stable and viable. He noted the Board sent recommendations to the Commission to modify the plan: elimination of the 16.08% supplement for new employees; reduce the yearly multiplier to 2.5%; and increase the retirement age to 62. These changes would bring us in line with the FRS, the Fire Department Retirement Plan, and other retirement plans. Steve Palmquist noted he has worked with the General Employees Retirement Plan since the City got rid of the insurance company; he also works with the City Police and Fire Pension Plan. He acknowledged that we were talking about changing benefits for new employees only; current employees would remain in the current plan. He indicated the City cost for the General • Employee Pension Plan would come down to 11% of payroll after twelve to fifteen years, or more; the FRS cost today is about 8% of payroll, however, it will eventually rise to 11% of payroll. He noted the Board recommendations: eliminating the 16% supplement, raising the retirement age, and reducing the multiplier should bring the City cost to 15% over the same twelve to fifteen year period. The current City cost is 31% of payroll. He indicated the Commission could only make changes through Collective Bargaining with the General Employees Union. Mayor Castro asked for a comparison of the FRS Plan and the City Plan when it came time for retirement. Mr. Palmquist distributed a copy of their report to the Commission and pointed out the pages that showed the comparisons between the different plans. He acknowledged he did not go through all the benefits in FRS and compare them to the City Plan; he only highlighted areas where there was a significant difference between FRS benefits and City benefits. He indicated the City's current plan is considerably better than the FRS, however FRS has pensionable compensation, a 3% COLA, and employees do not contribute to the plan. He estimated the City's present plan would be better if an employee started today and retired at the age of 62. He estimated it would be a close call on how it would come out for new employees if the Board recommendations were implemented. He noted he could provide the information at a later date. Mayor Castro asked if current employees would be hurt if new employees went to FRS. ® Mr. Palmquist responded not directly, but in his experience what happens when you have a lower tier of benefits for new hires, the people who already have the higher benefits have a much harder time trying to convince people to add to it than the people who have the lower benefits. He feels through negotiations they would have a harder time getting an increase. Mayor Castro asked if someone who left Dania Beach after ten years of employment could take their Pension with them. Mr. Palmquist responded yes; they are vested and their pension earned during that time would be paid at retirement age. If an employee leaves before being vested they can only take their own money out (3.66%plus 16.08%). Finance Director Patricia Varney explained that she did a calculation of the City Pension Plan and the FRS. In her calculation, at the end of ten years, an employee would be better in the City plan; however, at the end of twenty years it would be better to be in the FRS. Vice-Mayor Flury commented the proposal is pretty good, but she wants to share her basic concern on the issue. When the Firefighters Contract comes up in two years, we may be looking at four Pension Plans. City Manager Pato responded there will always be two plans. He indicated the FRS plan is very good for high risk employees; and in his perspective the best option for the City is to someday • have all future hires in the FRS. Minutes of General Employees Pension Board Workshop 2 Dania Beach City Commission Tuesday, October 11,2005—5:00 p.m. ® Commissioner Anton commented we need to look at the 3.7% employee contribution and anticipate that it will probably increase at some point. He thinks the FRS could eventually be a benefit and the City would have three Pension Plans. The key to FRS is that it is noncontributory for the employee and completely portable to any other agency that is part of the FRS system. He indicated what concerns the Commission is the question that should the City go to the FRS no future contributions would be made to the current Pension Plan. He noted that State Law directs the City to keep the Plan solid. Mr. Palmquist commented to him it is not a numbers thing; it is a matter of philosophy. Mayor Castro argued if you do a 457, you actually have more control than a Pension Board of the City because you manage your own portfolio. She asked if there was any detriment to the General Employees if we went to FRS, and if there were any strong administration requirements. Mr. Palmquist responded FRS sends the employees a report every July and the City does not get involved. Mayor Castro opened the workshop to the public. William Johnson, City employee, commented the 3.66% employee contribution is not accurate because the City pays 16.08% of the employee contribution, and therefore the employee contribution is 19.74%. Chuck Cook thanked the Commission for the consideration and information. He had one last thought to share in that when you pay money into the FRS, part of that money is for administrative costs. He indicated if employees continued in our Plan at lower benefits, we would continue with the costs we currently have to administer the Plan. In his opinion, the City plan is local and not controlled by someone in Tallahassee. Elizabeth Judd, Council 79 AFSCME Representative for the General Employees, commented they are involved with all pensions throughout South Florida and the FRS. She finds most employees that have their own Pension System are happier. They recently had problems with FRS and their investments in Enron and have not received any responses from them even though they represent thousands of members. She indicated if vesting were reduced to six years it would increase portability for most employees because the average number of years for employees to stay with an employer is seven. She indicated the employees would not invest the 3.7% of their own money and most employees barely get out the door before they are deceased. She thinks the current system is good and the 2.5 multiplier is viable in terms of consideration. She indicated other municipal administrators are unhappy with FRS. She commented FRS is moving to change the investment plan and a lot of people are taking their money out of FRS and no one knows what will happen to the system. Vice-Mayor Flury thanked Chuck Cook for his work and noted this is a very good option, but she hopes everybody understands the decision is not going to be made on only this option versus • FRS. Minutes of General Employees Pension Board Workshop 3 Dania Beach City Commission Tuesday,October 11,2005—5:00 p.m. • 4. Adjournment Mayor Castro adjourned the Workshop at 6:01 p.m. CITY OF DANIA BEACH ATTEST: ANNE CASTRO MAYOR-COMMISSIONER LLOUISE STILSON �J�U 'CITY CLERK Approved: November 8, 2005 • • Minutes of General Employees Pension Board Workshop 4 Dania Beach City Commission Tuesday, October 11,2005—5:00 p.m.