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HomeMy WebLinkAboutOrdinance 19599-03-2011ORDINANCE NO. 19599-03-2011 AN ORDINANCE AMENDING CHAPTER 2, ARTICLE VI, DIVISION 1, ENTITLED "EMPLOYEES RETIREMENT FUND," OF THE CODE OF THE CITY OF FORT WORTH (1986), AS AMENDED, AMENDING SECTION 2-201 TO ADD THE TERM FIRE FIGHTER; AMENDING THE FOLLOWING SECTIONS FOR EMPLOYEES HIRED ON OR AFTER JULY 1, 2011, WHO ARE NOT POLICE OFFICERS OR FIRE FIGHTERS: SECTION 2-206 TO CHANGE THE REQUIREMENT FOR NORMAL RETIREMENT AND VESTED RETIREMENT DATES; SECTION 2-207 TO CHANGE THE COMPENSATION BASE AND IMPLEMENT AN OVERTIME CASH BALANCE ACCOUNT; SECTION 2-208 TO CHANGE THE MULTIPLIER FOR VESTED TERMINATION PENSION; SECTION 2-210 TO CHANGE THE MULTIPLIER FOR STANDARD PENSION BENEFIT, AND TO ELIMINATE THE COST OF LIVING ADJUSTMENT UPON RETIREMENT; SECTION 2-211 TO CHANGE THE MULTIPLIER FOR DISABILITY PENSION; AND SECTION 2-212 TO CREATE AN ACTUARIALLY NEUTRAL SURVIVOR BENEFIT; PROVIDING THAT THIS ORDINANCE IS CUMULATIVE; PROVIDING A SEVERABILITY CLAUSE; PROVIDING THAT ALL CONDITIONS PRECEDENT FOR THE ADOPTION OF THIS ORDINANCE CLAUSE AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Fort Worth City Council ("City Council") adopted by Ordinance Chapter 2, Article VI, Division 1 of the Code of the City of Fort Worth, collectively called the "Employees Retirement Fund Ordinance"; and WHEREAS, the City Council desires to improve the funded status of the Retirement Fund; and WHEREAS, the City Council has provided ninety-day notice to the Board of the Employees Retirement Fund of its intention to reduce retirement benefits for Non-Civil Service Employees hired on or after July 1, 2011, in order to accomplish City Council's goal of improving the funded status of the Retirement Fund; BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: CF.f Ti(lN 1 Chapter 2, Article VI, Division 1, Section 2-201, ("Definitions") of the Retirement Ordinance is amended by adding the following definition: Fire Fighter shall mean any member of the Fort Worth Fire Department who was hired in substantial compliance with Chapter 143 of the Local Government Code, or as modified by the provisions of the City's Collective Bargaining Agreement with the Fort Worth Professional Firefighters Association IAFF Local 440, and any Fire Fighter Trainee who is employed by the City for the sole purpose of attending the City of Fort Worth Fire Department's training academy. SECTION 2. Chapter 2, Article VI, Division 1, Section 2-206, ("Retirement Dates") of the Retirement Ordinance is amended by deleting it in its entirety and substituting the following language in lieu thereof: (a) For Police Officers, Fire Fighters, and Members Hired Prior to July 1, 2011 Who Are Not Police Officers or Fire Fighters: (1) Normal retirement date. A member as identified above shall be eligible for pension benefits on or after the member's normal retirement date which shall be the last day of the month in which the earliest of the following occurs: (i.) The member's years of age and years of credited service total eighty (80); or (ii.) The later of (i) the date on which the member reaches age sixty- five (65) or (ii) the fifth anniversary of the date the member joined the fund. (2) Special retirement date. A police officer member shall be eligible for pension benefits on or after such member's special retirement date which shall be the last day of the month in which such member's years of credited service total twenty-five (25). -2- (3) Vested retirement date. A vested member who is voluntarily or involuntarily separated from the service of the city shall be eligible for pension benefits on or after such member's vested termination date which shall be the last day of the month in which the member reaches age fifty (50), or, if earlier, the last day of the month in which the member would have attained his or her normal retirement date had the member remained employed by the city. (b) For Members Hired On or After July 1, 2011, Who Are Not Police Officers Or Fire Fighters: (1) For purposes of Section 2-206(b) a member is defined as a member hired on or after July 1, 2011, who is not a police officer or fire fighter (2) Normal retirement date. A member hired on or after July 1, 2011, who is not a police officer or a fire fighter shall be eligible for pension benefits on or after the member's normal retirement date which shall be the last day of the month in which the member reaches age fifty-five (55), and in which the earliest of the following occurs: (i.) The member's years of age (minimum age of 55) and years of credited service total eighty (80); or (ii.) The later of (i) the date on which the member reaches age sixty- five (65) or (ii) the fifth anniversary of the date the member joined the fund. (3) Vested retirement date. A vested member hired on or after July 1, 2011, who is not a police officer or a fire fighter, who is voluntarily or involuntarily separated from the service of the city prior to their normal retirement date shall be eligible for pension benefits on or after such member's vested termination date which shall be the last day of the month in which the member reaches age fifty-five (55), and in which the member's years of age (minimum age of 55) and years of service total eighty (80). SECTION 3. Chapter 2, Article VI, Division 1, Section 2-207, ("Compensation base for determining benefits") of the Retirement Ordinance is amended by deleting it in its entirety and substituting the following language in lieu thereof: Sec 2-207. -Compensation base for determining benefits. (a) For All Members Hired and Vested Before October 23, 2007: Pension, death, disability and vested termination benefits shall be based upon the member's compensation base which shall mean the average annual earnings -3- which were paid to the member by the city for employment with the city during any five (5) calendar years in which he or she had the highest annual earnings. If a member's last day of employment with the city is on or after January 1, 1999, "three (3)" shall be substituted for "five (5)" in the preceding sentence, and the calculation of the member's compensation base will be subject to any applicable limits on annual earnings set forth in section 2.207(b). If a member has less than five (5) (or, if applicable, three (3)) calendar years of employment, the member's compensation base shall be determined by the executive director under uniform, non-discriminatory procedures that are consistently applied. For compensation base purposes, any lump sum payments of earnings for any prior time period, whether awarded to the member by a court, administrative body or settlement agreement, shall be retroactively attributed to the calendar year in which it would otherwise have been received by the employee from the city for services rendered. For purposes of computing the compensation base for a member who has made an effective DROP election, the member's compensation base shall be calculated using the member's earnings prior to the effective date of the DROP election. (b) For All Members Hired Prior to October 23, 2007, Who Had Less than Five Years of Service as of October 23, 2007; For Police Officers and Fire Fighters Hired After October 23, 2007; and For Members Hired After October 23, 2007 and Prior to July 1, 2011, Who Are Not Police Officers or Fire Fighters: (1) For purposes of 2-207(b) a member is defined as all members hired prior to October 23, 2007, who had less than five years of service as of October 23, 2007, police officers and fire fighters hired after October 23, 2007, or members hired after October 23, 2007 and prior to July 1, 2011. (2) Pension, death, disability and vested termination benefits shall be based upon the member's compensation base which shall mean the average annual earnings which were paid to the member by the city for employment with the city during any three (3) calendar years in which he or she had the highest annual earnings. If a member has less than three (3) calendar years of employment, the member's compensation base shall be determined by the executive director under uniform, non-discriminatory procedures that are consistently applied. For compensation base purposes, any lump sum payments of earnings for any prior time period, whether awarded to the member by a court, administrative body or settlement agreement, shall be retroactively attributed to the calendar year in which it would otherwise have been received by the employee from the city for services rendered. For purposes of computing the compensation base for a member who has made an effective DROP election, the member's compensation base shall be calculated using the member's earnings prior to the effective date of the DROP election. (3) For a member whose last day of employment with the city is on or after January 1, 1999, and whose benefits commence on or after December 31, 2008, a member's compensation base shall be calculated as follows: -4- a. The fund shall determine the four (4) calendar years in which the member had the highest annual earnings. Of such four (4) years, the year in which the member had the lowest annual earnings shall serve as the base year. The base year shall not be included as one (1) of the three (3) calendar years for purposes of the compensation base calculation. b. The first annual earnings to be used in the calculation of the member's compensation base shall be the actual annual earnings from the calendar year with the third highest annual earnings of the four (4) calendar years identified in subsection (1) of this section 2.207(b), provided that if such annual earnings are from a calendar year beginning on or after January 1, 2008, the amount to be used in the calculation of the compensation base for the first year shall not exceed one hundred twelve (112) percent of the annual earnings for the base year. c. The second annual earnings to be used in the calculation of the member's compensation base shall be the actual annual earnings from the calendar year with the second highest annual earnings of the four (4) calendar years identified in subsection (1) of this section 2.207(b), provided that if such annual earnings are from a calendar year beginning on or after January 1, 2008, the amount to be used in the calculation of the compensation base for the second year shall not exceed one hundred twelve (112) percent of the annual earnings used that are attributable to the year described in subsection (2) of section 2-207(b). d. The third annual earnings to be used in the calculation of the member's compensation base shall be the actual annual earnings from the calendar year with the highest annual earnings of the four (4) calendar years identified in subsection (1) of this section 2.207(b), provided that if such annual earnings are from a calendar year beginning on or after January 1, 2008, the amount to be used in the calculation of the compensation base for the third year shall not exceed one hundred twelve (112) percent of the annual earnings used that are attributable to the year described in subsection (3) of section 2-207(b). e. The average of the three (3) amounts determined in accordance with subsections (2) through (4) of this section 2-207(b) will be the average annual earnings for purposes of the member's compensation base. (c) For Members Hired On or After July 1, 2011, Who Are Not Police Officers or Fire Fighters: (1) For purposes of Section 2-207(c), a member is defined as a member hired on or after July 1, 201 1, who is not a police officer or a fire fighter -5- (2) For a member hired on or after July 1, 2011, who is not a police officer or a fire fighter, pension, death, disability and vested termination benefits shall be based upon the member's compensation base which shall mean the average annual earnings, excluding overtime, which were paid to the member by the city for employment with the city during any five (5) calendar years in which he or she had the highest annual earnings (excluding overtime), subject to any applicable limits on annual earnings set forth in section 2.207(b)(3). If a member has less than five (5) calendar years of employment, the member's compensation base shall be determined by the executive director under uniform, non-discriminatory procedures that are consistently applied. For compensation base purposes, any lump sum payments of earnings for any prior time period, whether awarded to the member by a court, administrative body or settlement agreement, shall be retroactively attributed to the calendar year in which it would otherwise have been received by the employee from the city for services rendered. For purposes of computing the compensation base for a member who has made an effective DROP election, the member's compensation base shall be calculated using the member's earnings (excluding overtime) prior to the effective date of the DROP election. (3) Both City contributions and Member Contributions "picked up" by the City on overtime will not be included in the compensation base for determining retirement benefits. Member Contributions on overtime will be placed in a Cash Balance Account for each member to be administered by the Fund. A Member will be eligible to receive the proceeds in the cash balance account upon termination of employment from the City of Fort Worth. SECTION 4. Chapter 2, Article VI, Division 1, Section 2-210, ("Retirement Pension") of the Retirement Ordinance is amended by deleting subsection (a)(1)(a) "Standard Pension Benefit" in its entirety and substituting the following language: (a) Commencement of retirement pensions and adjustment to prior pensions. (1) Pensions commencing upon normal retirement date. a. Standard Pension Benefit (i) For Police Officers, Fire Fighters, and Members Hired Prior to July 1, 2011, Who Are Not Police Officers or Fire Fighters: 1) For purposes of Section 2-210(a)(1)(a.)(i.), a member is defined as a police officer, fire fighter, -6- and a member hired prior to July 1, 2011, who is not police officers or fire fighter. 2) A vested member who retires on or after the member's normal retirement date and requests commencement of the member's pension, or a member who terminates employment prior to the member's normal retirement date and who waits until such normal retirement date to apply for a pension, shall receive an annual life pension, the amount of which shall be three (3.0) percent of the member's compensation base multiplied by the member's total years of credited service to date of actual retirement, payable monthly on the first day of each month commencing with the month following the board's approval of the member's pension. This pension benefit shall be called the "standard pension benefit." (ii) For Members Hired On or After July 1, 2011, Who Are Not Police Officers or Fire Fighters: 1) For purposes of 2-210(a)(1)(a.)(ii.), a member is defined as a member hired on or after July 1, 2011, who is not a police officer or a fire fighter. 2) A vested member hired on or after July 1, 2011, who is not a police officer or a fire fighter, who retires on or after the member's normal retirement date and requests commencement of the member's pension, or a member who terminates employment prior to the member's normal retirement date and who waits until such normal retirement date to apply for a pension, shall receive an annual life pension, the amount of which shall be two and fifty one-hundredths percent (2.50%) of the member's compensation base multiplied by the member's total years of credited service to date of actual retirement, payable monthly on the first day of each month commencing with the month following the board's approval of the member's pension. This pension benefit shall be called the "standard pension benefit." -7- SECTION 5. Chapter 2, Article VI, Division 1, Section 2-210, ("Retirement Pension") of the Retirement Ordinance is amended by deleting subsection (b) "Cost of Living Adjustment" in its entirety and substituting the following language: (b) Cost of Living Adjustment. (1) 2007 Cost of Living Selection All members of the fund who will have five (5) years of service or more as of December 31, 2007, and all members and beneficiaries currently receiving benefits (including disability retirement), will make a one (1) time election, as to whether they want to receive an annual two (2) percent simple cost of living adjustment or be entitled to receive an ad hoc compounded cost of living adjustment to their pension benefit. The election will be administered by the board of the retirement fund, and must be held prior to December 1, 2007. Once the member or beneficiary has made an election, the election is irrevocable and binding on the member, beneficiaries and any and all survivors and beneficiaries who may be entitled to benefits under this ordinance. For purposes of the ad hoc cost of living election, a member is deemed to be vested if the actual amount of time purchased pursuant to a buy back agreement when added to the member's actual years of service equal or exceed five (5) years. Members and beneficiaries who fail to make an election will automatically receive the two (2) percent simple cost of living adjustment (2) Two percent (2%) Cost of Living Adjustment: a. The two percent cost of living adjustment is applicable to the following members and beneficiaries: (i) Members with five (5) years of service or more as of December 31, 2007, who selected the guaranteed two (2) percent cost of living adjustment in the election conducted pursuant to Section 2-210(b)(1); (ii.) Members and beneficiaries (including those receiving disability retirement and survivors [including children]) receiving benefits on December 31, 2007, under the retirement ordinance who elected the guaranteed two (2) percent cost of living adjustment in the election conducted pursuant to Section 2-210(b)(1) ;and (iii) Members and beneficiaries who failed to make a selection during the election conducted pursuant to Section 2- 210(b)(1). -s- b. Calculation of the 2% cost of living adjustment: Upon retirement, on the first day of each January acost-of-living adjustment shall be made on the base pension of a member subject to the two percent (2%) cost of living adjustment pursuant to Section 2-210(b)(2)(a) by increasing the amount of the actual pension by two (2) percent of the base pension, unless otherwise provided herein. To be eligible for acost-of-living adjustment for a particular year, either the member or any survivor must have been receiving benefits by September 30 of the prior year. (3) Ad Hoc Cost of Living Adjustment: a. The Ad Hoc Cost of Living Adjustment is applicable to the following members and beneficiaries: (i.) Members who begin service with the City between December 31, 2007 and June 30, 2011, including members returning to service with the City of Fort Worth; (ii.) Members with less than five (5) years of service with the City of Fort Worth on December 31, 2007; (iii.) Members with five (5) years of service or more as of December 31, 2007, who selected the ad hoc cost of living adjustment in the election conducted pursuant to Section 2- 210(b)(1); and (iv) Members and beneficiaries (including those receiving disability retirement and survivors [including children]) receiving benefits on December 31, 2007, under the retirement ordinance who selected the ad hoc cost of living adjustment in the election conducted pursuant to Section 2- 210(b)(1). b. Calculation of the Ad Hoc Cost of Living Adjustment: Upon retirement, on the first day of each January thereafter, an ad hoc cost of living adjustment may be made on the pension of members who are subject to the ad hoc cost of living adjustment pursuant to section 2-210(b)(3)(a). The decision to authorize an ad hoc cost of living adjustment will be determined as follows: (i) Prior to December 31 of each year, the Fund's actuary shall make a written report to the board certifying the amortization period required to pay off the unfunded actuarial accrued liability of the fund. Based on the information provided by the actuary, the board shall: 1. Grant a compounded cost of living adjustment of four (4) percent, if the actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the fund, -9- after granting the four (4) percent cost of living adjustment, is eighteen (18.0) years or less; 2. Grant a compounded cost of living adjustment of three (3) percent, if the actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the fund, after granting the three (3) percent cost of living adjustment, is between eighteen and one-tenth (18.1) and twenty-four (24.0) years; 3. Grant a compounded cost of living adjustment of two (2) percent, if the actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the fund, after granting a two (2) percent cost of living adjustment, is between twenty-four and one-tenth (24.1) and twenty-eight (28.0) years; 4. Grant no cost of living adjustment if the actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the fund is twenty-eight and one-tenth (28.1) years or more. (4) DROP and cost of living adjustment. a. If a member elects the ad hoc cost of living adjustment and by December 31, 2007, the member has completed at least two (2) years of service after making a DROP election, the member's initial pension benefit upon retirement will also receive a cost of living adjustment for the DROP period before the member made the ad hoc cost of living election as set forth in 2-210(b)(3). The ad hoc cost of living adjustment will apply for the member's remaining DROP period. b. If a member elects the two (2) percent cost of living adjustment, and by December 31, 2007, the member has completed at least two (2) years of service after making the DROP election, the member's initial pension benefit upon retirement will also receive a cost of living adjustment for the entire DROP period as set forth in 2- 210(b)(2). c. A member who makes a DROP election but who does not complete at least two (2) years of service after making the DROP election will only be eligible to receive a cost of living adjustment after the member's retirement, based on the member's cost of living election as set forth in section 2-210(b)(2) or section 2-210(b)(3). -10- (5) For Members Hired On or After July 1, 2011, Who Are Not Police Officers or Fire Fighters: Members hired on or after July 1, 2011, and their beneficiaries will not be eligible to receive a cost of living adjustment upon retirement. SECTION 6. Chapter 2, Article VI, Division 1, Section 2-211, ("Disability Pension") of the Retirement Ordinance is amended by deleting subsections (d) and (e) in their entirety and substituting the following language in lieu thereof: (d) Disability in line of duty (1) For Police Officers, Fire Fighters and Members Hired Prior to July 1, 2011, Who Are Not Police Officers or Fire Fighters: a. For purposes of Section 2-211(d)(1) a member is defined as a police officer, fire fighter, and/or a member hired prior to July 1, 2011, who is not a police officer or fire fighter b. If a member as defined in Section 2-211(d)(1)(a.), whether or not vested, becomes disabled as above defined while in line of duty, the member shall receive an annual life pension, the amount of which shall be the specified percentage of the member's compensation base multiplied by the member's total years of credited service which would have accrued if the member had worked to the member's normal retirement date, but not less than two hundred fifty dollars ($250.00) per month. For purposes of the preceding sentence, the specified percentage of the member's compensation base shall be two and seventy-five one-hundredths (2.75) percent, unless the member is already eligible to retire on or after the member's normal retirement date, in which case the specified percentage shall be three (3.0) percent. (2) For Member Hired On or After July 1, 2011, Who Are Not Police Officers or Fire Fighters: a. For purposes of Section 2-211(d)(2), a member is defined as a member hired on or after July 1, 2011, who is not a police officer or a firefighter. b. If a member as defined by Section 2-211 (d)(2)(a.), whether or not vested, becomes disabled as above defined while in line of duty, the member shall receive an annual life pension, the amount of which shall be the specified percentage of the member's compensation base multiplied by the member's total years of credited service which would have accrued if the member had worked to the member's normal retirement date, but not less than two hundred fifty dollars ($250.00) per month. For purposes of the preceding sentence, the specified percentage of the member's compensation base shall be two and twenty-five one-hundredths (2.25) percent, unless the member is already eligible to retire on or after the member's normal retirement date, in which case the specified percentage shall be two and fifty one-hundredths (2.50) percent. (e) Disability not in line of duty ~ 1) For Police Officers, Fire Fighters and Members Hired Prior to July 1, 2011, Who Are Not Police Officers or Fire Fighters: a. For purposes of Section 2-211(e)(1)(b.) a member is defined as a police officer, fire fighter, and/or a member hired prior to July 1, 2011, who is not a police officer or fire fighter. b. If a member as defined in Section 2-211(e)(1)(a.), becomes disabled as above defined while not in line of duty, the member shall receive an annual life pension, the amount of which shall be the specified percentage of the member's compensation base multiplied by the member's total years of credited service to date of actual retirement. For purposes of the preceding sentence, the specified percentage of the member's compensation base shall be two and seventy-five one-hundredths (2.75) percent, unless the member is already eligible to retire on or after the member's normal retirement date, in which case the specified percentage shall be three (3.0) percent. If a member becomes disabled while not in the line of duty before the member is vested, then such member shall be entitled to receive a contribution refund in accordance with Section 2-208(a). (2) For Police Officers, Fire Fighters and Members On or After July 1, 2011, Who Are Not Police Officers or Fire Fighters: a. For purposes of Section 2-211(e)(2)(b.) a member is defined as a police officer, fire fighter, and/or a member hired on or after July 1, 2011, who is not a police officer or fire fighter. b. If a vested member as defined by Section 2-211 (e)(1)(a.), becomes disabled as above defined while not in line of duty, the member shall receive an annual life pension, the amount of which shall be the specified percentage of the member's compensation base multiplied by the member's total years of credited service to date of actual retirement. For purposes of the preceding sentence, the specified percentage of the member's compensation base shall be two and twenty-five one-hundredths (2.25) percent, unless the member is already eligible to retire on or after the member's -12- normal retirement date, in which case the specified percentage shall be two and fifty one hundredths (2.50) percent. If a member becomes disabled while not in the line of duty before the member is vested, then such member shall be entitled to receive a contribution refund in accordance with Section 2-208(a). SECTION 7. Chapter 2, Article VI, Division 1, Section 2-212, ("Death Benefits") of the Retirement Ordinance is amended by deleting subsection (c) "After retirement" in its entirety and substituting the following language in lieu thereof: (c) After Retirement (1) For Police Officers, Fire Fighters and Members Hired Prior to July 1, 2011, Who Are Not Police Officers and Fire Fighters: a. For purposes of Section 2-212 (c)(1)(b.), a member is defined as a police officer, fire fighter, and/or a member hired prior to July 1, 2011, who is not a police officer or fire fighter. b. Upon the death of a member as defined in Section 2-212(c)(1)(a.), the surviving widow or widower shall be entitled to receive a monthly pension, the amount of which shall be seventy-five (75) percent of the pension being paid to the member, provided that the member and surviving widow or widower had been married for at least one (1) year immediately prior to the member's retirement. Notwithstanding the preceding sentence, a surviving widow or widower who was not married to the deceased member for at least one (1) year immediately prior to the member's retirement shall be eligible to receive a monthly pension if the member has elected to receive a reduced monthly pension, on a form and subject to procedures developed by the executive director, within six (6) months after the member's completion of two (2) years of marriage to the member's spouse. The reduced monthly pension shall be actuarially determined in a manner that is actuarially neutral to the fund, based on actuarial tables in effect on the date of the member's election to receive a reduced monthly pension. If such an election has been made, the surviving widow or widower shall receive a monthly pension for life equal to seventy-five (75) percent of the member's reduced monthly pension. Upon the death of a retired police officer or a fire fighter member who was not married at retirement, a beneficiary designated by a member at retirement may be eligible to receive a monthly pension if the member has elected to receive a reduced monthly pension, on a form and -13- subject to procedures developed by the executive director. The member's reduced monthly pension shall be actuarially determined in a manner that is actuarially neutral to the fund, based on actuarial tables in effect on the date of the member's election to receive a reduced monthly pension. If such an election has been made, the member's designated beneficiary shall receive a monthly pension for life equal to seventy-five (75) percent of the member's reduced monthly pension. (2) For Members Hired On or After July 1, 2011, Who Are Not Police Officers or Fire Fighters: a. For purposes of Section 2-212 (c)(2)(b.) and (c.), a member is defined as a member hired on or after July 1, 2011, who is not a police officer or fire fighter. b. Members who are married at retirement Upon the death of a retired member as defined by Section 2- 212(c)(2)(a)the spouse of the member may be eligible to receive a monthly pension if the member has elected to receive a reduced monthly pension, on a form and subject to procedures developed by the executive director of the Employees Retirement Fund. The member's reduced monthly pension shall be actuarially determined in a manner that is actuarially neutral to the fund, based on actuarial tables in effect on the date of the member's election to receive a reduced monthly pension. The member can elect for his or her spouse to receive either seventy-five percent (75%) or fifty percent (50%) of the member's reduced monthly pension. c. Members who are not married on date of retirement: Upon the death of a retired member as defined by Section 2- 212(c)(2)(a), who was not married at retirement, a beneficiary designated by the member at retirement may be eligible to receive a monthly pension if the member has elected to receive a reduced monthly pension, on a form and subject to procedures developed by the executive director. The member's reduced monthly pension shall be actuarially determined in a manner that is actuarially neutral to the fund, based on actuarial tables in effect on the date of the member's election to receive a reduced monthly pension. The member can elect for his or her designated beneficiary to receive either seventy-five percent (75%) or fifty percent (50%) of the member's reduced monthly pension. -14- SECTION 8. Chapter 2, Article VI, Division 1, Section 2-208, ("Termination benefits and vesting") of the Retirement Ordinance is amended by deleting it in its entirety and substituting the following language in lieu thereof: (a) For Police Officers, Fire Fighters, and Members Hired Prior to July 1, 2011 Who Are Not Police Officers or Fire Fighters: (1) Contribution refund prior to vesting. Any member who is voluntarily or involuntarily separated from the service of the city before the member is vested shall be entitled to receive the amount of the member's contributions plus regular interest (at the regular interest rate in effect on the date of such payment) less any amount previously paid to the member from the fund. (2) Vested termination pension. a. A vested member who is voluntarily or involuntarily separated from the service of the city shall be entitled to receive a vested termination pension payable: (i) in full on the date when the member would have otherwise attained normal retirement date had the member remained employed by the city, or (ii) in a reduced amount commencing on or after age fifty (50). A member must file a request for the commencement of the vested termination pension by completing such forms and following such procedures as are established by the board. A vested termination pension shall be payable monthly on the first day of each month commencing with the month following approval of the member's vested termination pension by the board. b. A vested termination pension shall be an annual life pension, the amount of which shall be the specified percentage of the member's compensation base multiplied by the member's total years of credited service to date of such voluntary or involuntary separation from the service of the city. For purposes of the preceding sentence, the specified percentage of the member's compensation base shall be two and seventy-five one-hundredths (2.75) percent, unless the member has attained his or her normal retirement date prior to the date the member's pension payments begin, in which case the specified percentage shall be three (3.0) percent. A vested termination pension shall be calculated using the "multiplier" ("specified percentage") in effect at the time the vested termination pension commences (rather than at the time the member's employment with the city terminates). c. The amount of reduction for early commencement of a vested termination pension prior to the member's normal retirement date -15- shall be five-twelfths (5/12) percent for each month by which commencement of the pension antedates the member's normal retirement date had the member remained employed by the city. (3) Contribution refund after vesting in lieu of vested termination pension. Any vested member who is voluntarily or involuntarily separated from the service of the city may elect to receive a refund of the member's contributions, plus regular interest (at the regular interest rate in effect on the date of such payment) less any amount previously paid to the member from the fund, either at the date of such separation or at any time thereafter prior to commencement of retirement income, but by so doing, the member shall forfeit all rights under the fund and thereafter be entitled to no further benefits hereunder. (b) For Members Hired On or After July 1, 2011, Who Are Not Police Officers or Fire Fighters: (1) Contribution refund prior to vesting. Any member hired on or after July 1, 2011, who is not a police officer or fire fighter who is voluntarily or involuntarily separated from the service of the city before the member is vested shall be entitled to receive the amount of the member's contributions plus regular interest (at the regular interest rate in effect on the date of such payment) less any amount previously paid to the member from the fund. (2) Vested termination pension. a. A vested member hired on or after July 1, 20011, who is not a police officer or fire fighter who is voluntarily or involuntarily separated from the service of the city shall be entitled to receive a vested termination pension payable: (i) in full pursuant to Section 2-206(b)(3), or (ii) in a reduced amount commencing on or after age fifty (50). A member must file a request for the commencement of the vested termination pension by completing such forms and following such procedures as are established by the board. A vested termination pension shall be payable monthly on the first day of each month commencing with the month following approval of the member's vested termination pension by the board. b. A vested termination pension shall be an annual life pension, the amount of which shall be the specified percentage of the member's compensation base multiplied by the member's total years of credited service to date of such voluntary or involuntary separation from the service of the city. For purposes of the preceding sentence, the specified percentage of the member's compensation base shall be two and twenty-five one-hundreds (2.25) percent, unless the member has attained his or her normal retirement date prior to the date the member's pension payments begin, in which case the specified percentage shall be two and fifty one hundredths (2.50) percent. A vested termination pension shall be calculated using the "multiplier" ("specified percentage") in effect at the time -16- the vested termination pension commences (rather than at the time the member's employment with the city terminates). c. The amount of reduction for early commencement of a vested termination pension prior to the member's normal retirement date shall be five-twelfths (5/12) percent for each month by which commencement of the pension antedates the member's normal retirement date had the member remained employed by the city. (3) Contribution refund after vesting in lieu of vested termination pension. Any vested member who is voluntarily or involuntarily separated from the service of the city may elect to receive a refund of the member's contributions, plus regular interest (at the regular interest rate in effect on the date of such payment) less any amount previously paid to the member from the fund, either at the date of such separation or at any time thereafter prior to commencement of retirement income, but by so doing, the member shall forfeit all rights under the fund and thereafter be entitled to no further benefits hereunder. SECTION 9. This ordinance shall be cumulative of all ordinances of the City of Fort Worth, which shall remain in full force and effect except to the extent that provisions of this Ordinance are in direct conflict with the provisions of such other ordinances, in which case the conflicting provisions of such other ordinances are hereby repealed. SECTION 10. If any provision, section, paragraph, sentence, clause or phrase of this ordinance be declared invalid or unconstitutional, the same shall not affect any other portion or provision hereof, and all other provisions shall remain valid and unaffected by any invalid portion if any, and the City Council now says that if it had known at the time of the passage of this ordinance that any portion of said ordinance was invalid, it would not have adopted such invalid ordinance. SECTION 11. -17- The City Council finds that all acts, conditions and things required by provisions of the Constitution of Texas and Charter and Ordinances of the City of Fort Worth precedent to and in the adoption of this Ordinance have been done, have happened and have been performed in proper and lawful time. SECTION 12. This ordinance shall be in full force and effect from and after its adoption. AND IT IS SO ORDAINED: ADOPTED AND EFFECTNE: March 22, 2011 APPROVED AS TO FORM AND LEGALITY: (/ By/ Laetiti~ Coleman Brown Assistant City Attorney -18- City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 3122/201't -;Ord. No. 19599-03-2Q't1 as Amended DATE: Tuesday, March 22, 2011 REFERENCE NO.: G-17245 LOG NAME: 12PENSION BENEFITS 2011 SUBJECT: Adopt Ordinance Amending Chapter 2, Article VI, Division 1, of the City Code, Entitled Employees Retirement Fund by Amending Section 2-201 to Add a Definition of Fire Fighter, and to Amend the Following Sections for Employees Hired On or After July 1, 2011, Who Are Not Police Officers or Fire Fighters, Section 2-206 to Change the Requirements for Normal Retirement and Vested Retirement Dates, Section 2-207 to Change the Compensation Base and Implement an Overtime Cash Balance Account, Section 2-208 to the Change the Multiplier for Vested Termination Pension, Section 2-210 to the Change the Multiplier for Standard Pension Benefit and to Eliminate the Cost of Living Adjustment, Section 2-211 to Change the Multiplier for Disability Pension, and Section 2-212 to Create an Actuarially Neutral Survivor Benefit RECOMMENDATION: It is recommended that the City Council: 1. Adopt an amendment to Chapter 2, Article VI, Division 1 of the City Code, Entitled Employees Retirement Fund amending Section 2-201 to add the term and definition for fire fighter. 2. Adopt the following amendments to Chapter 2, Article VI, Division 1 of the City Code, Entitled Employees Retirement Fund to Apply to Employees Hired On or After July 1, 2011, Who Are Not Police Officers or Fire Fighters: a. Amend Section 2-206 to change the requirements for normal retirement and vested retirement dates; b. Amend Section 2-207 to change the compensation base for determining the retirement benefit and to implement an overtime cash balance account; c. Amend Section 2-208 to change the multiplier for vested termination pension; d. Amend Section 2-210 to change the multiplier for standard pension benefits and to eliminate the cost of living adjustment; e. Amend Section 2-211 to change the multiplier for disability pension; and f. Amend Section 2-212 to create an actuarially neutral survivor benefit. DISCUSSION: Based on the market value of assets as of January 1, 2010, and using the most recent actuarial valuation, the Employees Retirement Fund had an unfunded liability of $717 million, which is projected to grow to Logname: 12PENSION BENEFITS 2011 Page 1 of 2 over $3 billion by the year 2040. In order to curb the growth of that liability, staff recommended that benefit reductions for Non-Civil Service Employees (Employees who are not police officers or fire fighters) be made. On November 16, 2010, the City Council approved a resolution notifying the Board of Trustees of the ERF that City Council intended to vote on amendments to the Retirement Ordinance for Non-Civil Service Employees hired on or after March 1, 2011, that would increase the vesting period, change the definition of earnings, change the compensation base for determining benefits, lower the multiplier for normal retirement, lower the multiplier for early retirement, lower the multiplier for disability retirement, change vested termination benefits, eliminate the DROP, increase the minimum age requirement for early retirement, and change the normal retirement date. On December 7, 2010, the City Council approved a resolution notifying the Board of Trustees of the ERF that City Council intended to vote on an amendment to the Retirement Ordinance for Non-Civil Service Employees that would eliminate the cost of living adjustment. After discussion with the staff of the ERF, and based on information received from the ERF's actuary as well as information received from the actuary hired by the City, the decision was made to submit for Council consideration the following ordinance amendments that would apply to employees hired on or after July 1, 2011, who are not police officers or fire fighters: 1. Add a definition for fire fighter; 2. Require a minimum age for normal retirement of 55 years of age; 3. Require that the years of service and the age of the employee add to 80 (with a minimum age of 55) for a vested terminated employee to be eligible for retirement; 4. Eliminate overtime from the compensation base for determining retirement benefits; 5. Establish an overtime cash balance account that an employee can access after termination from the City; 6. Lower the multiplier to 2.75 percent for standard pension benefit; 7. Eliminate the cost of living adjustment on all retirement related benefits; 8. Lower the multiplier for disability pension and vested termination pension to 2.5 percent 9. Create a voluntary actuarially neutral survivor benefit for either a spouse or a designated beneficiary depending on the marital status of the employee at retirement. FISCAL INFORMATION /CERTIFICATION: The Financial Management Services Director certifies that the proposed changes are designed to improve the long term funded status of the Retirement Fund, which may have a positive impact of City funds in the future. FUND CENTERS: TO Fund/Account/Centers CERTIFICATIONS: Submitted for City Manager's Office by: Originating Department Head: FROM Fund/Account/Centers ALL ACMs (6222) Sarah Fullenwider (7606) Laetitia Brown (6639) Additional Information Contact: Karen Montgomery (6222) Logname: 12PENSION BENEFITS 2011 Page 2 of 2