HomeMy WebLinkAboutOrdinance 23516-12-2018ORDINANCE NO. 23516-12-2018
AN ORDINANCE AMENDING ARTICLE I OF CHAPTER 2.5
"EMPLOYEES' RETIREMENT FUND," OF THE CODE OF THE CITY OF
FORT WORTH (2015), AS AMENDED, TO ADD DEFINITIONS AND
INCORPORATE PENSION CHANGES TO THE EMPLOYEES'
RETIREMENT FUND, INCLUDING INCREASES IN CURRENT CITY
AND MEMBER CONTRIBUTIONS WITH SUCH INCREASES
CONTINGENT ON APPROVAL AT A VOTE OF THE MEMBERS;
PROVIDING THAT CERTAIN SECTIONS ARE ONLY EFFECTIVE
UPON THE SUCCESSFUL PASSAGE OF A CONTRIBUTION INCREASE
ELECTION; PROVIDING THAT THIS ORDINANCE IS CUMULATIVE;
PROVIDING A SEVERABILITY CLAUSE; PROVIDING THAT ALL
CONDITIONS PRECEDENT FOR THE ADOPTION OF THIS
ORDINANCE HAVE BEEN MET; PROVIDING A SAVINGS CLAUSE;
AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, Article 62431 of the Texas Revised Civil Statutes applies to the Employees'
Retirement Fund of the City of Fort Worth ("the Fund"); and
WHEREAS, Section 4.03 of Article 62431 of the Texas Revised Civil Statutes requires the
City Council to notify the Board of Trustees of the Fund ("Board") of the City Council's intent to
consider and vote on any amendment to the administrative rules governing the Fund that would
reduce a benefit provided by the retirement system; and
WHEREAS, the State constitution obligates the City and taxpayers of Fort Worth to honor
earned benefits for employees in the event the Fund becomes insolvent, meaning the City and
taxpayers have a critical interest in the fiscal soundness of the Fund and affordability of benefits
being offered; and
WHEREAS, the City controls, within Constitutional constraints and as may be limited by
collective bargaining or meet and confer agreements, the retirement benefits that are offered to
employees; and
WHEREAS, the Board has management oversight of the contributions remitted to the
Fund and legal authority over the Fund's investment strategy; and
WHEREAS, the City adopted amendments to the Retirement Ordinance increasing City
contributions to the Fund by 5% of payroll in 2007, and by 4% of payroll in 2010; and
WHEREAS, the City has previously made pension adjustments for Members in 2011,
2012 and 2014; and
WHEREAS, the Fund has reduced its assumed rate of return twice in the last five years and
has adopted more conservative and realistic actuarial assumptions over the last two years with the
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12-11-18 Retirement Ordinance Amendments Page I 1
result of all such changes being an increase in the projected unfunded liability of the Fund; and
WHEREAS, the Fund has not consistently met its assumed rate of return in recent years,
which has also contributed to an increase in the projected unfunded liability of the Fund; and
WHEREAS, on October 24, 2017, City Council adopted Ordinance No. 22977-10-2017,
modifying the calculation of the interest rate for refunds on contributions to the Fund to ensure
interest rates on payouts more accurately tracked and reflected actual current -market conditions;
and
WHEREAS, on December 12, 2017, City Council adopted Ordinance No. 23034-12-2017,
modifying the calculation of the interest rate for the re -purchase of prior credited service to reduce
the cumulative impact of such actions on the overall health of the Fund; and
WHEREAS, the City Council is considering additional changes to the Retirement
Ordinance to secure the long term sustainability of the Fund; and
WHEREAS, the Fund has had more than three consecutive annual actuarial valuations
that indicate an amortization period of greater than 40 years; and
WHEREAS, State law requires a governmental entity to submit a Funding Soundness
Restoration Plan (FSRP) to the State Pension Review Board when its fund has had three consecutive
actuarial valuations with an amortization period of greater than 40 years; and
WHEREAS, the state law mandating the FSRP requires that the plan's impact be projected to
reduce the amortization period to within 40 years no later than the tenth anniversary of the plan's
adoption; and
WHEREAS, due to risks posed to the City's long-term sustainability in terms of operations,
staffing, infrastructure, and tax -rate competitiveness, it is unreasonable to expect taxpayers to fund
the entire deficit that has resulted largely from insufficient investment returns; and
WHEREAS, independent third party actuaries have advised the City that contributions
alone will be insufficient to improve the financial condition of the fund without placing an unfair
burden on existing and future employees; and
WHEREAS, additional pension adjustments are necessary to comply with the FSRP; and
WHEREAS, the City currently allows certain unused accumulated sick and major medical
leave balances to be converted to service credit in calculating a member's benefit level even though
contributions are not made by the employee or the employer on those. balances;
WHEREAS, the City Council adopted Resolution No. 4947-06-2.018 to notify the Fund of
its intent to consider and vote on pension modifications; and
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12-11-18 Retirement Ordinance Amendments Page 12
WHEREAS, additional member contributions are also necessary to comply with the FSRP;
and
WHEREAS, the City Council has committed to increase City contributions if members vote
to approve an increase in Member contributions; and
WHEREAS, the City Council intends to adopt a resolution calling for an election of
Members to vote on current increases in Member contributions; and
WHEREAS, it is recommended that the City Council revise Chapter 2.5 to make certain
pension adjustments and contribution increases, with the contribution increases all being subject to
approval at a Member election.
NOW THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF FORT WORTH, TEXAS:
SECTION 1.
That Section 2.5-1, "Definitions," of the Code of the City of Fort Worth is hereby amended to
delete the current definition of "Normal Retirement Date" in its entirety and to add a new
definition for that term as well as other definitions as follows:
NORMAL RETIREMENT DATE.
Normal retirement date shall have the meaning set forth in the following sections:
(1) Section 2.5-22 for Group III members/Group III Police Members;
(2) Section 2.5-32 for Group IV members/Group IV Police Members;
(3) Section 2.5-42(a) for Group I members/Group I General Members;
(4) Section 2.5-52 for Group II members/Group II General Members;
(5) Section 2.5-62(a) for Group V members/Group V Firefighters; and
(6) Section 2.5-72(a) for Group VI members/Group VI Firefighters.
RETIREMENT BENEFIT. A pension for life, as provided in this chapter, payable each year in 12
equal monthly installments, beginning as of the date approved by the board in accordance with the
provisions of this chapter.
VESTED TERMINATED PENSION.
Vested terminated pension shall have the meaning as set forth in the following sections:
(1) Section 2.5-24(b) for Group III members/Group III Police Officers;
(2) Section 2.5-34(b) for Group IV members/Group IV Police Officers;
(3) Section 2.5-45(b) for Group I members/Group I General Members;
(4) Section 2.5-54(b) for Group II members/Group II General Members;
(5) Section 2.5-65(b) for Group V members/Group V Firefighters:; and
(6) Section 2.5-75(a) or (c) for Group VI members/Group VI Firefighters.
VESTED TERMINATED.
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Vested Terminated when used to describe a Member in any Group shall mean a Member who (i)
voluntarily or involuntarily separates from the city prior to retirement, (ii) is vested at the time of
separation, and (iii) does not receive a refund of any part of his contribution.
VESTED TERMINATED RETIREMENT DATE.
Vested terminated retirement date shall have the meaning set forth in the following sections:
(1) Section 2.5-22(b) for Group III members/Group III Police. Members;
(2) Section 2.5-32(b) for Group IV members/Group IV Police Members;
(3) Section 2.5-42(c) for Group I members/Group I General Members;
(4) Section 2.5-52(b) for Group Il members/Group II General Members;
(5) Section 2.5-62(c) for Group V members;/Group V Firefighters and
(6) Section 2.5-72(c) for Group VI members/Group VI Firefighters.
That Section 2.5-22(b) and Section 2.5-52(b) are amended to replace the title "Vested retirement
date" with the term "Vested terminated retirement date"
That Section 2.5-4, "Credited Service, "of the Code of the City of Fort Worth is hereby amended
to revise Section 2.5-4(a) to add paragraphs (4) and (5) to read as follows:
(4) Effective on or after December 12, 1994, any Member who is reemployed by the City
upon completion of service in the uniformed services (within the time frame provided
under the Uniformed Services Employment and Reemployment Rights Act of 1994,
as amended) shall be granted Credited Service for such uniformed service, provided
the Member makes the contributions (with no interest) to the Fund that the Member
would have been required to contribute if the Member had remained continuously
employed by the City throughout the period of uniformed service. Such payment
must be made during the period which commences withthe date of reemployment by
the City and which duration is three (3) times the period of the Member's service in
the uniformed services, not to exceed five (5) years. If a reemployed Member makes
such contributions, the City shall also make its corresponding contributions to the
Fund. This provision shall be construed consistently with the requirements of the
Uniformed Services Employment and Reemployment Act of 1994, as amended.
(5) Any Member whose employment was terminated involuntarily and was thereafter
reinstated as the direct result of an appeal or suit arising from the involuntary
termination shall be granted all Credited Service for the period of absence, provided,
however that contributions for Credited Service for such period of absence must be
made by the City and by or on behalf of the Member in accordance with Section 2.5-
3.
That Section 2.5-4, "Credited Service, "of the Code of the City of Fort Worth is hereby further
amended to delete Section 2.5-4(b) its entirety and to adopt a new 2.5-4(b) to read asfollows:
(b) Accumulated sick leave and major medical leave.
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Subject to all further terms and conditions of this Section 2.5-4(b), only that portion of
a person's accumulated sick leave and major medical leave that was earned prior to July
20, 2019 and that remains unused (or otherwise uncompensated to the member) as of the
date the person retires shall be taken into account in calculating that person's credited
service, provided, however, that such balance shall never be taken into account in
calculating the pension of a member receiving a line of duty disability pension.
(1) For accumulated sick leave and/or major medical leave earned prior to July 20, 2019:
a. Subject to the provisions of this section, at retirement and in calculating a vested
terminated pension, a Member shall have added to his or her credited service hours of
accumulated sick leave and/or major medical leave to the extent the official
personnel records of the city reflect that such leave was (i) earned prior to July 20, 2019
and (ii) not used by or otherwise compensated to the member, with leave that meets
both of these criteria being considered and referred to herein as "Qualified Leave."
For credited service purposes, Qualified Leave shall be converted into months using
the following formula:
i. The total number of hours of Qualified Leave divided by the annual
scheduled hours for the position from which the member is retiring multiplied
by 12. The resulting product represents the number of months in whole
numbers and/or a decimal portion of a month. Any whole number shall
constitute that number of months to be added to credited service. If the
resulting product contains a decimal value that is less than five tenths (0.50),
then no addition to credited service shall be made with respect to such
decimal value; however, if the resulting product contains a decimal value that
is five tenths (0.50) or greater, then an additional month of credited service
shall be provided for such decimal value.
b. Qualified Leave shall not be applied toward determining of retirement eligibility, but
only toward calculation of retirement benefits.
Group I General Members and Group III Police Members who have Qualified
Leave that was earned prior to October 1, 2013, will have the leave added to
credited service earned or purchased prior to October 1, 2013. Qualified Leave
earned on or after October 1, 2013 and before July 20, 2019 will be added to credited
service earned or purchased during that period.
d. Group I General Members and Group III Police Members who use sick leave and/or
major medical leave on or after July 20, 2019 will have the leave deducted as follows:
• first from accrued sick leave and/or major medical leave hours earned on or
after July 20, 2019 to the extent such leave is available for use,
• second from accumulated sick leave and/or major medical leave hours earned
prior to October 1, 2013 until such time as those hours are completely exhausted,
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12-11-18 Retirement Ordinance Amendments Page 15
and
• finally from accumulated sick leave and/or major medical leave hours earned
from October 1, 2013 through July 19, 2019 until such hours are completely
exhausted.
e. Group V Firefighters who have Qualified Leave that was earned prior to January 10,
2015, will have the leave added to credited service earned or purchased prior to
January 10, 2015. Qualified Leave earned on or after January 10, 2015 and before
July 20, 2019 will be added to credited service earned or purchased during that
period.
f. Group V Firefighters who use sick leave and/or major medical leave on or after
July 20, 2019 will have the leave deducted as follows:
• first from accrued sick leave and/or major medical leave hours earned on or after
July 20, 2019 to the extent such leave is available for use,
• second from accumulated sick leave and/or major medical leave hours earned
prior to January 10, 2015 until such time as those hours are completely exhausted,
and
• finally from accumulated sick leave and/or major medical leave hours earned
from January 10, 2015 through July 19, 2019 until such hours are completely
exhausted.
g. Group II General Members, Group IV Police Members, and Group VI Firefighters
who use sick leave and/or major medical leave on or after July 20, 2019 will have the
leave deducted as follows:
• first from accrued sick leave and/or major medical leave hours earned on or
after July 20, 2019 to the extent such leave is available for use, and
• second from accumulated sick leave and/or major medical leave hours earned
through July 19, 2019 until such time as those hours are completely exhausted.
(2) For accumulated sick leave and/or major medical leave earned on or after July 20,
2019:
a. Accumulated sick leave and/or major medical leave earned on or after July 20,
2019, will not be added to credited service at retirement.
That Section 2.5-42, "Retirement Dates for Group I Members," of the Code of the City of Fort
Worth is hereby repealed in its entirety and replaced with a new Section 2.5-42 to read as
follows:
§ 2.5-42 RETIREMENT DATES FOR GROUP I GENERAL MEMBERS.
(a) Normal retirement date for Group I General Members. A Group I General Member shall be
eligible for pension benefits on or after the Group I General Member's normal retirement
date, which shall be the last day of the month on which the earliest of the following
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12-11-18 Retirement Ordinance Amendments Page 16
occurs:
(1) The Group I General Member's years of age and all years of credited service total 80; or
(2) The date on which the Group I General Member reaches age 65, but in no event shall
such normal retirement date be prior to the fifth anniversary of the date the Group I
General Member joined the fund.
(b) OMITTED PER COUNCIL DIRECTION
(c) Vested Terminated Retirement Date for Group I General Members. A Vested Terminated
Group I General Member shall be eligible for pension benefits on or after the Group I
General Member's vested terminated retirement date, which shall be the last day of the
month on which the earliest of the following occurs:
(1) The Group I General Member's years of age plus years of credited service total 80 as if
the Vested Terminated member had remained employed by the City; or
(2) The date on which the Group I General Member reaches age 65.
(d) OMITTED PER COUNCIL DIRECTION
That Section 2.5-44, "Termination Benefits and Vesting, "of the Code of the City of Fort Worth
is hereby repealed in its entirety and replaced with a new Section 2.5-44 to read as follows:
§ 2.5-44 TERMINATION BENEFITS AND VESTING.
(a) Contribution refund prior to vesting. Any Group I General Member who is voluntarily or
involuntarily separated from the service of the city before the Group I General Member is
vested shall be entitled to receive the amount of the Group I General Member's
contributions plus regular interest less any amount previously paid to the Group I General
Member from the fund.
(b) Contribution refund after vesting in lieu of vested terminated pension. Any vested Group I
General Member who is voluntarily or involuntarily separated from the service of the city
may elect to receive a refund of the Group I General Member's contributions, plus regular
interest, less any amount previously paid to the Group I General Member from the fund,
either at the date of such separation or at any time thereafter prior to commencement of
retirement benefit, but by so doing, the Group I General Member shall forfeit all rights
under the fund and thereafter be entitled to no further benefits hereunder.
(c) Vested terminated pension.
(1) A Vested Terminated Group I General Member shall be entitled to receive a vested
terminated pension payable:
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a. In full, pursuant to § 2.5-45 (b)(1) and (2) ;or
b. In a reduced amount commencing on or after age 50 pursuant to §2.5-45(b)(5)
(2) A Vested Terminated Group I General Member must file a request for the
commencement of the vested terminated pension by completing such forms and
following such procedures as are established by the board. A vested terminated pension
shall be payable monthly on the first day of each month commencing with the month
following approval of the Group I General Member's vested terminated pension by the
board.
That Section 2.5-45, "Retirement Pension (Benefit)," of the Code of the City of Fort Worth is
hereby amended to delete subsections (b) and (c) in their entirety and to adopt new subsections
(b) and (c) to read as follows:
§ 2.5-45 RETIREMENT PENSION (BENEFIT).
(b) Pensions commencing on or after October 1, 2013 (known as Group I General Member
Standard Pension Benefit `B, " excluding Section 2.5-45(b)(5)).
(1) Pensions commencing upon normal retirement date or vested terminated retirement
date for Group I General Members hired and vested prior to July 1, 2011, whose
pension commences on or after October 1, 2013 (not subject to the earnings cap). A
vested Group I General Member hired and vested prior to October 23, 2007, who retires
on or after the Group I General Member's normal retirement date and requests
commencement of the Group I General Member's pension on or after October 1, 2013, or
a Group I General Member who terminates employment on or after October 1, 2013, and
prior to the Group I General Member's normal retirement date and who waits until such
vested terminated retirement date to apply for a pension, shall receive an annual life
pension, the amount of which shall be calculated by adding the following:
a. 3.0% of the Group I General Member's compensation base as defined by
§ 2.5-43(a)(1) multiplied by the Group I General Member's years of credited
service from date of hire until September 30, 2013; and
b. 2.5% of the Group I General Member's compensation base as defined by
§ 2.5-43(b) multiplied by the Group I General Member's years of credited
service from October 1, 2013 until date of termination.
(2) Pensions commencing upon normal retirement date or vested terminated retirement
date for Group I General Members who were hired prior to July 1, 2011 and were not
vested prior to October 23, 2007 and whose pension commences on or after October 1,
2013 (subject to the earnings cap). A Group I General Member hired prior to July 1,
2011, and not vested prior to October 23, 2007, who retires on or after the Group I
General Member's normal retirement date and requests commencement of the Group I
General Member's pension, and whose pension commences on or after October 1, 2013,
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12-11-18 Retirement Ordinance Amendments Page 18
or who terminates employment on or after October 1, 2013, but prior to his or her normal
retirement date and who waits until such vested terminated retirement date to apply for a
pension shall receive an annual life pension, the amount of which shall be calculated by
adding the following:
a. 3.0% of the Group I General Member's compensation base as defined by § 2.5-
43(a)(2) multiplied by the Group I General Member's years of credited service
from date of hire until September 30, 2013; and
b. 2.5% of the Group I General Member's compensation base as defined by § 2.5-
43(b) multiplied by the Group I General Member's years of credited service
from October 1, 2013 until date of termination.
(3) OMITTED PER COUNCIL DIRECTION
(4) OMITTED PER COUNCIL DIRECTION
(5) Early Retirement.
a. A Group I General Member can retire prior to their normal retirement date
with a reduced pension if:
i. The Group I General Member is age 50; and
ii. The Group I General Member has been a Member of the fund for
five years or more.
b. Early retirement pension calculation.
i. An Early Retirement pension shall be an annual life pension, the
amount of which shall be the specified percentage of the Group I
General Member's compensation base multiplied by the Group I
General Member's total years of credited service. For purposes of the
preceding sentence, the specified percentage of the Group I General
Member's compensation base shall be 2.75% for all credited service
earned or purchased prior to October 1, 2013, and 2.25% for credited
service earned or purchased on or after October 1, 2013. Early
Retirement pension shall be calculated using the specified percentage
and compensation base in effect at the time the Group I General
Member earned or purchased the credited service for all credited
service earned or purchased after October 1, 2013.
ii. In addition to the reduced multiplier described in subsection (5)(b)(i.)
above, a Member taking early retirement shall have his benefit
reduced by an amount equal to the product of 0.416666667%
multiplied times the number of months by which the commencement
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12-11-18 Retirement Ordinance Amendments Page 19
of the early retirement pension antedates the Group I General
Member's normal or vested terminated retirement date. This reduction
shall be applied to all parts of the benefit.
(6) Payable. The pension shall be payable monthly on the first day of each month
commencing with the month following the board's approval of the Group I General
Member's pension per 2.5-45 (b)(1) and (2) or (b)(5). The pension shall be payable
monthly.
(c) Alternative pension benefit. In lieu of the Group I General Member standard pension benefit
B, a Group I General Member may irrevocably elect with his or her spouse's consent
(where applicable), in advance of his or her retirement and pursuant to regulations and
requirements the board in its discretion may adopt, to receive an "alternative pension
benefit," and which shall be payable in two parts:
(1) Normal Retirement alternative pension benefit.
a. One part in a lump sum amount not less than 5% nor greater than 25% of the
actuarial equivalent of the Group I General Member's standard pension benefit
"B," which lump sum shall be payable on the date benefits commence under
subsection (c)(1)(b.) below; and
b. The remainder in an annual life pension, payable monthly on the first day of
each month commencing with the month following the board's approval of the
Group I General Member's pension.
(2) OMITTED PER COUNCIL DIRECTION
(3) Limitation on alternative pension benefit. The only people eligible for the alternative
pension benefit are members who take normal retirement and do not enroll in DROP.
That Section 2.5-54, "Credited Service," of the Code of the City of Fort Worth is hereby
amended to delete subsection (b)(3) in its entirety and to adopt a new subsection (b)(3) to read as
follows:
(3) In addition to the reduced multiplier described in subsection (b)(2) above, a
Member taking early retirement shall have his benefit reduced by an amount
equal to the product of 0.416666667% multiplied times the number of months by
which the commencement of the early retirement pension antedates the group II
member's normal retirement date.
That Section 2.5-62, "Retirement Dates," of the Code of the City of Fort Worth is hereby
repealed in its entirety and replaced with a new Section 2.5-62 to read asfollows:
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§ 2.5-62 RETIREMENT DATES FOR GROUP V FIREFIGHTERS.
(a) Normal retirement date for Group V Firefighters. A Group V Firefighter, shall be eligible
for pension benefits on or after the Group V Firefighter's normal retirementdate, which shall
be the last day of the month on which the earliest of the following occurs:
(1) The Group V Firefighter's years of age and all years of credited service total 80; or
(2) The date on which the Group V Firefighter reaches age 65, but in no event shall such
normal retirement date be prior to the fifth anniversary of the date the Group V
Firefighter joined the fund.
(b) OMITTED PER COUNCIL DIRECTION
(c) Vested terminated retirement date for Group V Firefighters. A Vested Terminated Group
V Firefighter, shall be eligible for pension benefits on or after the Group V Firefighter's
vested terminated retirement date, which shall be the last day of the month on which the
earliest of the following occurs:
(1) The Group V Firefighter's years of age plus years of credited service total 80 as if the
Vested Terminated Firefighter had remained employed by the City; or
(2) The date on which the Group V Firefighter reaches age 65.
(d) OMITTED PER COUNCIL DIRECTION
That Section 2.5-64, "Termination Benefits and Vesting, "of the Code of the City of Fort Worth is
hereby repealed in its entirety and replaced with a new Section 2.5-64 to read asfollows:
§ 2.5-64 TERMINATION BENEFITS AND VESTING.
(a) Contribution refund prior to vesting. Any Group V Firefighter who is voluntarily or
involuntarily separated from the service of the city before the Group V Firefighter is
vested shall be entitled to receive the amount of the Group V Firefighter's contributions
plus regular interest less any amount previously paid to the Group V Firefighter from the
fund.
(b) Contribution refund after vesting in lieu of vested terminated pension. Any vested Group V
Firefighter who is voluntarily or involuntarily separated from the service of the city may
elect to receive a refund of the Group V Firefighter's contributions, plus regular interest,
less any amount previously paid to the Group V Firefighter from the fund, either at the date
of such separation or at any time thereafter prior to commencement of retirement
benefit, but by so doing, the Group V Firefighter shall forfeit all rights under the fund and
thereafter be entitled to no further benefits hereunder.
(c) Vested terminated pension.
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Page 1 11
(1) A Vested Terminated Group V Firefighter shall be entitled to receive a vested
terminated pension payable:
a. In full, pursuant to § 2.5-65(b)(1) and (2); or
b. In a reduced amount commencing on or after age 50 pursuant to §2.5-
65(b)(5)
(2) A Vested Terminated Group V Firefighter must file a request for the commencement of
the vested terminated pension by completing such forms and following such procedures
as are established by the board. A vested terminated pension shall be payable
monthly on the first day of each month commencing with the month following approval
of the Group V Firefighter's vested terminated pension by the board.
That Section 2.5-65, "Retirement Pension for Group V Members," of the Code of the City of
Fort Worth is hereby amended to delete subsections (b) and (c) in their entirety and to adopt
new subsections (b) and (c) to read as follows:
§ 2.5-65 RETIREMENT PENSION FOR GROUP V MEMBERS.
(b) Pensions commencing on or after January 10, 2015 [known as Group V Firefighter
Standard Pension Benefit `B, " excluding Section 2.5-65(b) (5)].
(1) Pensions commencing upon normal retirement date or vested terminated retirement
date for Group V Firefighters hired and vested prior to October 23, 2007, whose
pension commences on or after January 10, 2015 (not subject to the earnings cap). A
vested Group V Firefighter hired and vested prior to October 23, 2007, who retires on or
after the Group V Firefighter's normal retirement date and requests commencement of
the Group V Firefighter's pension on or after January 10, 2015, or a Group V
Firefighter who terminates employment on or after January 105 2015, and prior to the
Group V Firefighter's normal retirement date and who waits until such vested
terminated retirement date to apply for a pension, shall receive an annual life pension,
the amount of which shall be calculated by adding the following:
a. 3.0% of the Group V Firefighter's compensation base as defined by § 2.5-
63(a)(1) multiplied by the Group V Firefighter's years of credited service from
date of hire until January 9, 2015; and
b. 2.5% of the Group V Firefighter's compensation base as defined by § 2.5- 63(b)
multiplied by the Group V Firefighter's years of credited service from January
10, 2015 until date of termination.
(2) Pensions commencing upon normal retirement date or vested terminated retirement
date for Group V Firefighters who were hired prior to January 10, 2015, but were not
vested by October 23, 2007 and whose pension commences on or after January 10,
2015 (subject to the earnings cap). A Group V Firefighter hired and not vested prior
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to October 23, 2007, who retires on or after the Group V Firefighter's normal
retirement date and requests commencement of the Group V Firefighter's pension, and
whose pension commences on or after January 10, 2015, or who terminates employment
on or after January 10, 2015, but prior to his or her normal retirement date and who
waits until such vested retirement date to apply for a pension shall receive an annual
life pension, the amount of which shall be calculated by adding the following:
a. 3.0% of the Group V Firefighter's compensation base as defined by § 2.5-
63(a)(2) multiplied by the Group V Firefighter's years of credited service from
date of hire through January 9, 2015; and
b. 2.5% of the Group V Firefighter's compensation base as defined by § 2.5- 63(b)
multiplied by the Group V Firefighter's years of credited service from January
10, 2015 until date of termination.
(3) OMITTED PER COUNCIL DIRECTION
(4) OMITTED PER COUNCIL DIRECTION
(5) Early Retirement.
a. A Group V Firefighter can retire prior to their normal retirement date with a
reduced pension if:
i. The Group V Firefighter is age 50; and
ii. The Group V Firefighter has been a Member of the fund for five
years or more.
b. Early retirement pension calculation.
An Early Retirement pension shall be an annual life pension, the
amount of which shall be the specified percentage of the Group V
Firefighter's compensation base multiplied by the Group V
Firefighter's total years of credited service. For purposes of the
preceding sentence, the specified percentage of the Group V
Firefighter's compensation base shall be 2.75% for all credited service
earned or purchased prior to January 10, 2015, and 2.25% for credited
service earned or purchased on or after January 10, 2015. Early
Retirement pension shall be calculated using the specified percentage
and compensation base in effect at the time the Group V Firefighter
earned or purchased the credited service for all credited service earned
or purchased after January 10, 2015.
ii. In addition to the reduced multiplier described in subsection (5)(b)(i.)
above, a Group V Firefighter taking early retirement shall have his
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 1 13
benefit reduced by an amount equal to the product of 0.416666667%
multiplied times the number of months by which the commencement
of the early retirement pension antedates the Group V Firefighter's
normal or vested terminated retirement date. This reduction shall be
applied to all parts of the benefit.
(6) Payable. The pension shall be payable monthly on the first day of each month
commencing with the month following the board's approval of the Group V
Firefighter's pension per 2.5-65 (b)(1) and (2) or (b)(5). The pension shall be payable
monthly.
(c) Alternative pension benefit. In lieu of the Group V Firefighter standard pension benefit B, a
Group V Firefighter may irrevocably elect with his or her spouse's consent (where
applicable), in advance of his or her retirement and pursuant to regulations and requirements
the board in its discretion may adopt, to receive an "alternative pension benefit," which
shall be payable in two parts:
(1) Normal Retirement alternative pension benefit.
a. One part in a lump sum amount not less than 5% nor greater than 25% of the
actuarial equivalent of the Group V Firefighter's standard pension benefit "B,"
which lump sum shall be payable on the date benefits commence under
subsection (c)(1)(b.) below; and
b. The remainder in an annual life pension, payable monthly on the first day of
each month commencing with the month following the board's approval of the
Group V Firefighter's pension.
(2) OMITTED PER COUNCIL DIRECTION
(3) Limitation on alternative pension benefit. The only people eligible for the alternative
pension benefit are firefighters who take normal retirement and do not enroll in DROP.
That Section 2.5-72, "Retirement Dates," of the Code of the City of Fort Worth is hereby
repealed in its entirety and replaced with a new Section 2.5-72 to read as follows:
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 1 14
§ 2.5-72 RETIREMENT DATES FOR GROUP VI FIREFIGHTERS.
(a) Normal retirement date for Group VI Firefighters A Group VI Firefighter, shall be
eligible for pension benefits on or after the Group VI Firefighter's normal retirement date,
which shall be the last day of the month on which the earliest of the following occurs:
(1) The Group VI Firefighter's years of age and all years of credited service total 80; or
(2) The date on which the Group VI Firefighter reaches age 65, but in no event shall such
normal retirement date be prior to the fifth anniversary of the date the Group VI
Firefighter joined the fund.
(b) OMITTED PER COUNCIL DIRECTION
(c) Vested terminated retirement date for Group VI Firefighters. A Group VI Firefighter, shall
be eligible for pension benefits on or after the Group VI Firefighter's vested terminated
retirement date, which shall be the last day of the month on which the earliest of the
following occurs:
(1) The Group VI Firefighter's years of age plus years of credited service total 80 as if the
Vested Terminated Firefighter had remained employed by the City; or
(2) The date on which the Group VI Firefighter reaches age 65, but in no event shall such
vested terminated retirement date be prior to the fifth anniversary of the date the Group
VI Firefighter joined the fund.
(d) OMITTED PER COUNCIL DIRECTION
That Section 2.5-74, "Termination Benefits and Vesting, "of the Code of the City of Fort Worth
is hereby deleted in its entirety and replaced with a new Section 2.5-74 to read as follows:
§ 2.5-74 TERMINATION BENEFITS AND VESTING.
(a) Contribution refund prior to vesting. Any Group VI Firefighter who is voluntarily or
involuntarily separated from the service of the city before the Group VI Firefighter is
vested shall be entitled to receive the amount of the Group VI Firefighter's contributions
plus regular interest less any amount previously paid to the Group VI Firefighter from the
fund.
(b) Contribution refund after vesting in lieu of vested terminated pension. Any vested Group
VI Firefighter who is voluntarily or involuntarily separated from the service of the city
may elect to receive a refund of the Group VI Firefighter's contributions, plus regular
interest, less any amount previously paid to the Group VI Firefighter from the fund, either at
the date of such separation or at any time thereafter prior to commencement of
retirement benefit, but by so doing, the Group VI Firefighter shall forfeit all rights under
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 1 15
the fund and thereafter be entitled to no further benefits hereunder.
(c) Vested terminated pension.
(1) A Vested Terminated Group VI Firefighter shall be entitled to receive a vested
terminated pension payable:
a. In full, pursuant to § 2.5-75(a); or
b. In a reduced amount commencing on or after age 50 pursuant to §2.5-75(c)
(2) A Vested Terminated Group VI Firefighter must file a request for the commencement of
the vested terminated pension by completing such forms and following such procedures
as are established by the board. A vested terminated pension shall be payable
monthly on the first day of each month commencing with the month following approval
of the Group VI Firefighter's vested terminated pension by the board.
That Section 2.5-75, "Retirement Pension," of the Code of the City of Fort Worth is hereby
repealed in its entirety and replaced with a new Section 2.5-75 to read as follows:
§ 2.5-75 RETIREMENT PENSION FOR GROUP VI MEMBERS.
(a) Pensions commencing upon normal retirement date or vested terminated retirement date for
Group VI Firefighters. A vested Group VI Firefighter under this division who retires on or
after the Group VI Firefighter's normal retirement date and requests commencement of the
Group VI Firefighter's pension, or a Group VI Firefighter who terminates employment
prior to the Group VI Firefighter'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 2.5% of the Group VI Firefighter's compensation base multiplied
by the Group VI Firefighter's total years of credited service, payable monthly on the first
day of each month commencing with the month following the board's approval of the Group
VI Firefighter's pension. This pension benefit shall be called the "Group VI Firefighter's
standard pension benefit."
(b) OMITTED PER COUNCIL DIRECTION
(c) Early Retirement.
(1) A Group VI Firefighter can retire prior to their normal retirement date with a reduced
pension if:
a. The Group VI Firefighter is age 50; and
b. The Group VI Firefighter has been a member of the fund for five years or
more.
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 1 16
(2) Early retirement pension calculation.
a. An Early Retirement pension shall be an annual life pension, the amount of
which shall be the specified percentage of the Group VI Firefighter's
compensation base multiplied by the Group VI Firefighter's total years of
credited service. For purposes of the preceding sentence, the specified
percentage of the Group VI Firefighter's compensation base shall be 2.25%;
b. In addition to the reduced multiplier described in subsection (c)(2)(a.) above,
a Group VI Firefighter taking early retirement shall have his benefit reduced
by an amount equal to the product of 0.416666667% multiplied times the number
of months by which the commencement of the early retirement pension
antedates the Group VI Firefighter's normal or vested terminated retirement
date. This reduction shall be applied to all parts of the benefit.
(d) Payable. The pension shall be payable monthly on the first day of each month commencing
with the month following the board's approval of the Group VI Firefighter's pension per
Section 2.5-75(a) and (c). The Pension shall be payable monthly. This retirement pension
shall be defined as the "Group VI Firefighter standard pension benefit B."
(e) Alternative pension benefit. In lieu of the Group VI Firefighter standard pension benefit B,
a Group VI Firefighter may irrevocably elect with his or her spouse's consent (where
applicable), in advance of his or her retirement and pursuant to regulations and requirements
the board in its discretion may adopt, to receive an "alternative pension benefit," which
shall be payable in two parts:
(1) Normal Retirement alternative pension benefit.
a. One part in a lump sum amount not less than 5% nor greater than 25% of the
actuarial equivalent of the Group VI Firefighter's standard pension benefit
"B," which lump sum shall be payable on the date benefits commence under
subsection (e)(1)(b.) below; and
b. The remainder in an annual life pension, payable monthly on the first day of
each month commencing with the month following the board's approval of the
Group VI Firefighter's pension.
(2) OMITTED PER COUNCIL DIRECTION
(3) Limitation on alternative pension benefit. The only people eligible for the alternative
pension benefit are Group VI Firefighters who take normal retirement and do not
enroll in DROP.
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 1 17
That upon the successful passage of a Member Contribution increase election as called by the
City Council on December 11, 2018, Section 2.5-3 "Contributions, " of the Code of the City of Fort
Worth is hereby deleted in its entirety and replaced with a new Section 2.5-3 to read as follows:
§ 2.5-3 CONTRIBUTIONS.
(a) Member contributions.
(1) Effective with the August 9, 2019 paycheck, and continuing until the date of actual
retirement or earlier termination of employment, Group I General Members shall
contribute to the fund 9.35% of their earnings. Additionally, effective with the August
9, 2019 paycheck, each individual Group I General member shall contribute to the
fund an additional 0.7% of earnings until the earliest of the following: 1) the member
retires; 2) the member terminates employment; or 3) the member has made additional
0.7% contributions for a period of time that is equal to the amount of credited service
the member earned or purchased prior to October 1, 2013.
(2) Effective with the August 9, 2019 paycheck and continuing until the date of actual
retirement or earlier termination of employment, Group II General Members shall
contribute to the fund 9.35% of their earnings.
(3) Effective with the August 9, 2019 paycheck, Group III and Group IV Police Members
shall contribute 10.53% of their earnings to the fund; effective with the first paycheck on
or after January 1, 2020, Group III and Group IV Police Members shall contribute
12.53% of their earnings to the fund; effective with the first paycheck on or after
January 1, 2021 and continuing until date of actual retirement or earlier termination of
employment, Group III and Group IV Police Members shall contribute 13.13% of their
earnings to the fund.
(4) Effective with the August 9, 2019 paycheck, Group V Firefighters and Group VI
Firefighters shall contribute 10.05% of their earnings to the fund; effective with the first
paycheck on or after January 1, 2020 and continuing until date of actual retirement or
earlier termination of employment, Group V and Group VI Firefighters shall
contribute 12.05% of their earnings to the fund.
(5) If, following a member's involuntary termination of employment, the city is required, as
the direct result of an appeal or suit arising from the involuntary termination, to
reinstate the member's employment, the member shall make the contribution described
in this section on any payment made by the city to the member as back pay, less interim
earnings, if any, with the city empowered to make such payment on the employee's
behalf in accordance with section 2.5-3(b)(2).
(6) Contributions by members reinstated following a military leave of absence are governed
by the Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. §§
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 118
4301-33, as provided for in §2.5-4(a)(4) of this division. These contributions shall be
made even if doing so would reduce a member's net cash compensation below the
minimum wage rate as prescribed by law.
(7) By accepting employment with the city, each member shall be deemed to consent and
agree to deductions made from the member's compensation, and payments to all such
members of compensation, less the deduction, shall constitute a full and complete
discharge of all claims and demands whatsoever for services rendered by such member
during the period covered by such payment, except as to the benefits provided by the
fund.
(8) The contributions of all members may be raised at any time from the amount stated in
this section to a higher amount in accordance with the procedures provided by Tex.
Revised Civil Statutes Article 62431.
(9) Both Group V and Group VI Firefighters will make contributions to the fund on built- in
overtime.
(10) For all pay periods beginning on or after July 20, 2019, all Members in all Groups will
contribute to the fund on all overtime.
(b) City contributions.
(1) For Group III and Group IV Police Members only, effective with the January 11, 2019
paycheck and with each paycheck thereafter, the city shall contribute to the fund
24.96% of their earnings. For all other members, effective with the January 11, 2019
paycheck and with each paycheck thereafter, the city shall contribute to the fund
24.24% of their earnings. Notwithstanding the foregoing, city contributions to the fund
shall be reduced for each fiscal year by the amount of benefits paid by the city, if any,
under the supplemental retirement ordinance. Subsection (a) shall not limit the right of
the governing body, through its budget appropriation, to contribute an additional amount
over and above the member's contribution in accordance with Tex. Revised Civil
Statutes Article 62431, as amended.
(2) If, following a member's involuntary termination of employment, the city is required, as
the direct result of an appeal or suit arising from the involuntary termination, to
reinstate the member's employment, the city shall make the contribution described in
this section on any payment by the city to the member as back pay, without reduction
for the member's interim earnings, if any. In addition, the city shall, on behalf of the
member, make the member's contribution described in this section 2.5-3 on any
interim earnings deducted from the back -pay award. Contributions made by the city on
behalf of members whose employment is reinstated following a military leave of
absence are governed by the Uniformed Services Employment and Reemployment
Rights Act, 38 U.S.C. §§ 4301-33, as provided for in subsection (a)(6) above.
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 1 19
(3) Effective for pay periods ending after April 1, 1999, the required member contributions
described in subsection (a) above and subsection (c) below shall be picked up by the city
and shall be treated as city contributions for federal income tax purposes. Such
contributions, although designated as member contributions, shall be paid by the city
on behalf of the members and in lieu of contributions by the members. The members
shall not have the option of receiving such contributions directly instead of having
such amounts paid by the city to the fund.
(4) Retirement contributions made on behalf of the members, as well as the city's
contributions to the fund, shall be paid by the city based on weekly workers'
compensation benefits (currently referred to as a temporary income benefits) paid to
those members, beginning for such amounts received by members on or afterJanuary 1,
2006.
(5) Although overtime will not be included in the definition of earnings for Group I
General Members and Group III Police Members effective October 1, 2013, the city
will continue to contribute its contribution on overtime for all Group I General
Members and Group III Police Members.
(6) Although overtime that is not built-in overtime will not be included in the definition of
earnings for Group V Firefighters effective January 10, 2015, the city will continue to
contribute its contribution on all overtime for all Group V Firefighters, and on built- in
overtime for all Group VI Firefighters.
(c)Automatic contribution increases/decreases.
(1) In addition to any and all member contributions under subsection 2.54(a) and any and all
City contributions under subsection 2.54(b), if the combined City and member
contributions based on then -existing contribution rates are less than the actuarially
determined contribution amount (ADC) for two consecutive years based on a closed 30 -
year funding of the unfunded liabilities and a discount rate that is consistent with the
average of rates reported by two independent sources that are agreed to by the City and
the Fund, both members and the City shall automatically be required to make further
contributions, defined herein as "Additional Increases," as more specifically governed
by this subsection (c). Additional Increases due from members shall be referred to as
"Additional Member Contribution Increases," and amounts due from the City shall be
referred to as "Additional City Contribution Increases." Changes to Additional
Increases will only be applied beginning with the first paycheck of a given calendar year
and will not be applied to any paychecks received prior to January 1, 2022.
(2) The amount of an Additional Increase applied in any given year will equal the difference
between the ADC from the Fund's most recent actuarial valuation and the then -current
combined City and member contributions. Any Additional Increase shall be shared by
both the members and the City, with the Additional City Contribution Increase equaling
one and one-half times that of the Additional Member Contribution Increase. In addition,
the following caps shall apply:
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 120
a. Annual Caps. The Additional Member Contribution Increase applied in any
given calendar year may not exceed 0.8% of earnings over the member
contribution rates that were applied in the previous calendar year. Accordingly,
the Additional City Contribution Increase applied in any given calendar year
may not exceed 1.2% of earnings over the member contribution rates that were
applied in the previous calendar year.
b. Aggregate Caps. The Additional Member Contribution Increase applied in any
given calendar year may never exceed 1.6% of earnings over the member
contribution rates specified in subsection 2-5(a) for the same calendar
year. Accordingly, the Additional City Contribution Increase applied in any
given calendar year may never exceed 2.4% of earnings over the City
contribution rates specified in subsection 2-5(b) for the same calendar year.
(3) If two consecutive valuations by the Fund's actuary indicate that some or all of the
Additional Increase is no longer required to meet the ADC, then the Additional Increase
may be unilaterally reduced by City Council by that actuarially determined unrequired
percentage, with the amount of such reduction to be allocated 40% to member
contributions and 60% to City contributions, so that, for example, if it is determined that
the total Additional Increase needed to meet the ADC can be decreased by 1%, then the
Additional Member Contribution Increase would be decreased by 0.4% and the
Additional City Contribution Increase would be decreased by 0.6%.
That in the event the election for a Member contribution increase fails, the amendment provided
for in this Section 2 and all other references to the automatic risk sharing increases shall be null
and of no effect and Section 2.5-3 will continue in effect with the language as it exists immediately
prior to the adoption of this ordinance.
May [�c
That Section 2.5-8, "Cost of Living Adjustment, " of the Code of the City of Fort Worth is hereby
deleted in its entirety and replaced with a new Section 2.5-8 to read asfollows:
§ 2.5-8 COST OF LIVING ADJUSTMENT.
(a) History. In 1999, city council adopted Ord. 13842, which established a simple 2% cost- of -
living adjustment for all members. In 2007, city council adopted Ord. 17839-10-2007, which
established an ad hoc cost -of -living adjustment for all city employees hired on or after
December 31, 2007, and all members who were not vested as of December 31, 2007. All
members who were vested as of December 31, 2007, all retired members, and all
beneficiaries were allowed to make a selection to either stay with the 2% simple cost -of -
living adjustment or to receive the ad hoc cost -of -living adjustment. The members who did
not make a selection were automatically defaulted into the 2% cost -of -living adjustment. In
2011, city council adopted Ord. 19599-03-2011, which eliminated the cost- of -living
adjustment for Group II General Members. In 2012, city council adopted Ord. 20471-10-
2012, which eliminated the cost -of -living adjustment for Group IV Police Members,
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 121
implemented the 2% cost -of -living adjustment for all service earned or purchased after
October 1, 2013, for Group I and Group III Police Members, allowed Group I General
Members and Group III Police Members who were subject to the ad hoc cost -of -living
adjustment to select the 2% cost -of -living adjustment for past years of service, and
allowed beneficiaries who were subject to the ad hoc cost -of -living adjustment to select
the 2% cost -of -living adjustment for future COLA adjustments. Active firefighters, and
those firefighters who retired or separated from employment during the term of the April
13, 2010, collective bargaining agreement between the city and the Fort Worth Professional
Firefighters Association IAFF Local 440, were not eligible to participate in the 2012
selection. On September 16, 2014, the city council adopted Ord. 21459-09-2014, which
eliminated the cost -of -living adjustment for Group VI Firefighters. On October 21, 2014,
city council adopted Ord. No. 21510-10-2014, which implemented the 2% cost -of -living
adjustment for all service earned or purchased on or after January- 10, 2015 for Group V
Firefighters. Group V Firefighters who were subject to the ad-hoc cost -of -living -adjustment
were also allowed to select the 2% cost -of living adjustment for past years of service.
(b) Group II General Members, Group IV Police Officers, and Group VI Firefighters.
Group II General Members, Group IV Police Officers and Group 'VI Firefighters (and their
beneficiaries) are not eligible to receive a cost -of -living adjustmient on their pension
amount.
(c) Group I General Members, Group III Police Officers, and Group V Firefighters.
Group I General Members, Group III Police Officers, and Group V Firefighters (and their
beneficiaries) are not entitled to a cost -of living adjustment for any credited service earned
or purchased on or after July 20, 2019.
(d) Group I General Members, Group III Police Officers, and Group V Firefighters who have
not retired or entered the DROP by January 1, 2021.
The following provisions apply to Group I General Members, Group III Police Officers and
Group V Firefighters who have not retired or entered the drop effective January 1, 2021:
(1) The ad-hoc cost -of -living adjustment and the 2% Simple Cost -of -Living Adjustments
are eliminated for all past years of service.
(2) The ad-hoc cost of living adjustment and the 2% Simple Cost -of -Living Adjustment are
eliminated for all future years of service.
(3) Group I General Members, Group III Police Members and Group V Firefighters who
have not retired or entered the DROP by January 1, 2021 may receive a variable cost -
of -living adjustment to be calculated as follows:
a. Upon retirement, on or after the first day of each January a cost -of -living
adjustment or 13th paycheck may be made in accordance with subsection
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 122
(d)(3)(c.) based on that portion of the base pension of a member for all credited
service earned or purchased prior to July 20, 2019 (hereinafter called pro -rata
base pension), with the amount of such cost -of -living adjustment or 13th paycheck
to be in an amount not to exceed 4% of the member's pro -rata base pension,
provided, however, that such cost -of -living adjustment or 13th paycheck may be
made only if both of the following conditions are met:
i. The actuarially determined contribution (ADC), based on a closed 30 -year
funding of the unfunded liabilities, has been equal to or less than the fixed
contribution (the contribution in place before any automatic increases under
Section 2.5-3(c)) for the last two consecutive calendar years based on both
actuarial and market values of assets; and
ii. The Fund's actuary determines that funding the full cost of the 13th paycheck
or cost -of -living adjustment is not anticipated to cause the ADC to exceed
the fixed contribution (the contribution in place before any automatic
increases under Section 2.5-3(c)) for the calendar year in which the 13th
paycheck or cost -of -living adjustment will apply.
b. A cost -of -living adjustment or 13th check cannot be granted under subsection
(d)(3)(a.) if either of the following circumstances exist:
i. Any contributions under the automatic risk -sharing provisions of Section
2.5-3(c) are being made in the then -current calendar year or are determined
to be required for the following calendar year, including reduced -rate
contributions under Section 2.5-3(c)(3); or
ii. The assumed rate of return as determined by the Board is higher than the
average of the assumed rates of return as reported by two independent
sources that have been agreed to by the City and the Board.
c. No later than April 30 of each year, the Board shall, based on Fund performance
for the two immediately preceding years, advise the City Council of the Board's
decision regarding whether to grant a variable cost -of -living adjustment or a 13th
paycheck for the following calendar year, and the City Council shall ratify such
decision if the decision is fully in compliance with subsections (d)(3)(a.) and
(d)(3)(b.).
(4) To be eligible for a cost -of -living adjustment for a particular year, either the member
or any survivor must have been receiving benefits by September 30th of the prior year.
(e) Retirees and Beneficiaries eligible to receive a Cost -of -Living Adjustment who are receiving
payments or who have retired on or before July 19, 2019; Group I General Members, Group
III Police Members, and Group V Firefighters who retire or enter the DROP on or before
January 1, 2021; and Members who receive an In the Line of Duty Disability Retirement or
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 123
In the Line of Duty Death Retirement.
The following provisions apply to:
• Retirees and beneficiaries eligible to receive a cost -of -living adjustment, who
are receiving payments or who have retired on or before July 19, 2019;
Group I General Members, Group III Police Members, and Group V
Firefighters who retire or enter the DROP on or before January 1, 2021; and
• Members who receive an In the Line of Duty Disability Retirement or In the
Line of Duty Death Retirement.
(1) The 2% simple cost -of -living adjustment
a. The 2% simple cost -of -living is applicable to the following:
i. Retirees and Beneficiaries who are eligible to receive a cost -of -living
adjustment, who are already receiving payments on January 1, 2021, and
who selected or defaulted to the 2% cost -of -living adjustment following
the 2007, 2012, and 2014 selection processes;
ii. Credited Service through July 19, 2019 for Group I General Members,
Group III Police Members, Group V Firefighters, and Vested Terminated
Members in any of those Groups who retire or enter the DROP on or
before January 1, 2021 and who selected or defaulted to the 2% cost -of -
living adjustment following the 2007, 2012, and 2014 selection processes;
iii. Credited Service through July 19, 2019 for Group I General Members,
Group III Police Members, and Group V Firefighters who retire on
disability retirement due to an in the line of duty disability, and who
selected or defaulted to the 2% cost -of -living adjustment following the
2007, 2012, and 2014 selection processes;
iv. Credited Service through July 19, 2019 for Beneficiaries of Group I
General Members, Group III Police Members, and Group V Firefighters
who selected or defaulted to the 2% cost -of -living -adjustment following
the 2007, 2012, and 2014 selection processes;
V. Credited service earned or purchased from October 1, 2013 through July
19, 2019 for Group I General Members and Group III Police Members
who retire or enter the DROP on or before January 1, 2021, and have the
Ad hoc cost -of -living adjustment for service prior to October 1, 2013;
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 124
vi. Credited service earned or purchased from January 10, 2015 through July
19, 2019 for Group V Firefighters who retire or enter the DROP on or
before January 1, 2021, and have the Ad hoc cost -of -living adjustment for
credited service prior to January 10, 2015;
vii. Credited service earned or purchased from October 1, 2013 through July
19, 2019 for Group I General Members and Group III Police Members
who retire on disability retirement due to an in the line of duty disability
and who have the Ad hoc cost -of -living adjustment for credited service
prior to October 1, 2013;
viii. Credited service earned or purchased from January 10, 2015 through July
19, 2019 for Group V Firefighters who retire on disability retirement due
to an in the line of duty disability and who have the ad hoc cost -of -living
adjustment for credited service prior to January 10, 2015;
ix. Credited service earned or purchased from October 1, 2013 through July
19, 2019 for beneficiaries of Group I General Members and Group III
Police Members who had the Ad hoc cost -of -living adjustment for
credited service prior to October 1, 2013, if the member is killed in the
line of duty; and
X. Credited service earned or purchased from January 9, 2015 through July
29, 2019 for beneficiaries of Group V Firefighters who had the Ad hoc
cost -of -living adjustment for credited service prior to January 10, 2015, if
the member is killed in the line of duty.
b. Calculation of the 2% simple cost -of -living adjustment. Upon retirement, on the first
day of each January a cost -of -living adjustment shall be made on that portion of the
base pension of the member that is subject to the 2% cost -of -living adjustment, as
described in subsection (e)(1)(a.), by increasing the amount of the actual pension by
2% of that portion of the base pension, unless otherwise provided herein. To be
eligible for a cost -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.
Ordinance No. 23516-12-2018
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(2) Ad hoc cost -of -living adjustment
a. The Ad hoc cost -of -living adjustment is applicable to the following:
i. Credited service through September 30, 2013, for Group I General Members
and Group III Police Members who retire or enter the DROP on or before
January 1, 2 02 1, who had the Ad hoc cost -of -living adjustment, and who did
not select to receive the 2% cost -of -living adjustment during the 2012
selection process;
ii. Credited service through January 9, 2015, for Group V Firefighters who
retire or enter the DROP on or before January 1, 2021, who had the Ad hoc
cost -of -living adjustment, and who did not select to receive the 2% cost -of -
living adjustment during the 2014 selection process;
iii. Credited Service through September 30, 2013, for Group I General
Members and Group III Police Members who retire on disability retirement
due to an in the line of duty disability, who had the Ad hoc cost -of -living
adjustment, and who did not select to receive the 2% cost -of -living
adjustment during the 2012 selection process;
iv. Credited Service through September 30, 2013 for beneficiaries of Group I
General Members and Group III Police Members if the member is killed in
the line of duty and the member had the Ad hoc cost -of -living adjustment
and did not select to receive the 2% cost -of -living adjustment during the
2012 selection process;
v. Credited Service through January 9, 2015 for Group V Firefighters who
retire on disability retirement due to an in the line of duty disability, who
had the Ad hoc cost -of -living adjustment, and who did not select to receive
the 2% cost -of -living adjustment during the 2014 selection process;
vi. Credited Service through January 9, 2015 for beneficiaries of Group V
Firefighters if the Group V Firefighter is killed in the line of duty, and the
Group V Firefighter had the Ad hoc cost -of -living adjustment and did not
select the 2% cost -of -living adjustment during the 2014 selection process;
and
vii. Members and Beneficiaries who are eligible to receive a cost -of -living
adjustment, who are already receiving payments on January 1, 2021, who
had the Ad hoc cost -of -living adjustment, and who did not select the 2%
cost -of -living adjustment during the 2012 or 2014 selection process.
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 126
b. Calculation of the ad hoc cost -of -living adjustment. Upon retirement, on the first
day of each January, an Ad hoc cost -of -living adjustment may be made on that
portion of the base pension of the member that is subject to the Ad hoc cost -of -
living adjustment, as described in subsection (e)(2)(a.), pursuant to this subsection
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.
ii. Based on the information provided by the actuary, the board shall:
1. Grant a compounded Ad hoc cost -of -living adjustment of 4%, if the
actuary certifies that the amortization period required to pay off the
unfunded actuarial accrued liability of the fund, after granting the
4% cost -of -living adjustment, would be 18.0 years or less;
2. Grant a compounded Ad hoc cost -of -living adjustment of 3%, if the
actuary certifies that the amortization period required to pay off the
unfunded actuarial accrued liability of the fund, after granting the
3% cost -of -living adjustment, would be between 18.1 and 24.0
years;
3. Grant a compounded Ad hoc cost -of -living adjustment of 2%, if the
actuary certifies that the amortization period required to pay off the
unfunded actuarial accrued liability of the fund, after granting a 2%
cost -of -living adjustment, would be between 24.1 and 28.0 years;
4. Grant no Ad hoc 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 28.1 years or more.
c. Increased contributions made in conjunction with the automatic risk -sharing
provision of Section 2.5-3(c) cannot be used in determining the amortization period
for granting an Ad hoc cost -living adjustment.
d. To be eligible for a cost -of -living adjustment for a particular year, either the member
or any beneficiary must have been receiving benefits by September 30" of the prior
year.
(f) DROP Participants.
(1) If a Member enters the DROP and remains in the DROP for two or more years, they
will be entitled to receive a cost of living adjustment for their years in the DROP as if
the Member retired on the date they entered in the DROP. Members who do not
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 127
remain in the DROP for at least two years are not entitled to a cost of living adjustment
for their time in the DROP. If the cost of living adjustment takes the form of a 13th
paycheck, the amount of the paycheck shall be based on the Member's DROP pension
amount (excluding impact of any potential Qualified Leave under Section 2-5.4(c)), and
the cumulative balance of all such 13th paychecks shall be payable to the Member in a
lump sum following the date of actual retirement.
(2) A Group I Member, Group III Police Member, or Group V Firefighter who enters the
DROP on or before January 1, 2021, but does not remain in the DROP for two years is
still eligible to receive a cost -of -living on their pension, although they would not be
eligible to receive a cost -of -living adjustment for their years in the DROP. If a member
does not remain in the DROP for two years, then the member must be receiving pension
benefits by September 30" to be eligible to receive a cost -of -living adjustment on their
pension the next year.
That upon the successful passage of a Member Contribution increase election as called by the City
Council on December 11, 2018, Section 2.5-9 "Deferred Retirement Option Program (DROP)," of
the Code of the City of Fort Worth is amended to replace the third sentence of subsection 2.5-9(d)
with the following:
Credits to a member's DROP account will continue to be made until the member's actual
retirement, provided, however, that amounts will be credited to a member's DROP account for
a maximum of f-rve six years.
That in the event the election for a Member contribution increase fails, the amendment provided for
in this Section 4 shall be null and of no effect, and Section 2.5-9 will continue in effect with the
language as it exists immediately prior to the adoption of this ordinance.
SECTION 5.
That upon the successful passage of a Member Contribution increase election as called by the
City Council on December 11, 2018, the amendment to Section 2.5-9 provided for under Section 4 of
this Ordinance will apply starting with the pay period that begins July 20, 2019 to any Member who
meets at least one of the following criteria: (a) is currently in the DROP, and his DROP has not expired
prior to July 20, 2019; (b) is currently in the DROP, his DROP expires prior to July 20, 2019, the
Member continues to work after expiration of his DROP, and the Member is an active employee as of
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 128
July 20, 2019; or (c) enters the DROP on or after July 20, 2019.
SECTION 6.
That this ordinance shall be cumulative of all provisions of ordinances of the Code of the City of
Fort Worth, Texas (2015), as amended, except where the provisions of this ordinance are indirect
conflict with the provisions of such ordinances and such Code, in which event conflicting provisions of
such ordinances and such Code are herebyrepealed.
That it is hereby declared to be the intention of the City Council that the phrases, clauses,
sentences, paragraphs and sections of this ordinance are severable, and, if any phrase, clause, sentence,
paragraph or section of this ordinance shall be declared unconstitutional by the valid judgment or decree
of any court of competent jurisdiction, such unconstitutionality shall render the entire section invalid
and section will revert back to the section in effect prior to the passage of this ordinance. Otherwise,
such unconstitutionality shall not affect any of the remaining phrases, clauses, sentences, paragraphs and
sections of this ordinance, since the same would have been enacted by the City Council without the
incorporation in this ordinance of any such unconstitutional phrase, clause, sentence, paragraph or
section.
That 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.
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments Page 129
SECTION 9.
That all provisions of this ordinance, save and except the amendments to Section 2.5-
3 and Section 2.5-9 provided for under Section 2 and Section 4 of this ordinance, shall take effect
upon adoption.
If the election to increase member contributions is successful, then the amendments to
Section 2.5-3, "Contributions," contained in Section 2 of this Ordinance, and to Section 2.5-9,
"Deferred Retirement Option Program (DROP)," contained in Section 4 of this Ordinance shall be
effective as of the date on which the Board of the Employees' Retirement Fund of the City of Fort
Worth approves the amendment by a majority vote.
If the election to increase member contributions is unsuccessful, then the amendments to
Section 2.5-3, "Contributions," contained in Section 2 of this Ordinance, and to Section 2.5-9,
"Deferred Retirement Option Program (DROP)," contained in Section 4 of this Ordinance shall
not be effective, and Section 2.5-3, "Contributions," and Section 2.5-9, "Deferred Retirement
Option Program (DROP)," shall continue in effect with the language as it exists immediately prior
to the adoption of this ordinance.
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Senior Assistant City Attorney
Adopted & Effective: December 11, 2018
Ordinance No. 23516-12-2018
12-11-18 Retirement Ordinance Amendments
ATTET:
ary J. Ka
City Secretary
Page 130
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 12/1.112018 - Ordinanoe No.,21§16-12-201$ Sz a U1,
No. 50086124018 ,.
CONTINUED FROM A PREVIOUS WEEK
DATE: Tuesday, November 13, 2018
LOG NAME: 14PENSIONAMENDMENTS
REFERENCE NO.: G-19423
SUBJECT:
Adopt Ordinance Amending Chapter 2.5, Retirement, Article 1, Employees' Retirement Fund, of the City
Code to Make Pension Modifications, to Increase Contributions for Participating Members of the Fort Worth
Employees' Retirement Fund Contingent on a Successful Vote by the Participating Members to Increase
Contributions, and to adopt Resolution calling a Special Election of the Participating Members of the Fort
Worth Employees' Retirement Fund to vote to increase their contributions to the Fund (ALL COUNCIL
DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council:
1. Adopt the attached ordinance amending Chapter 2.5, Retirement, Article I, Employees' Retirement
Fund, of the City Code to:
a. Make pension modifications for active and retired members of the Fort Worth Employees'
Retirement Fund ;
b. Increase City and Member contributions contingent upon a successful election of Participating
Members of the Fund to approve the increases; and
2. Approve the attached Resolution calling for an election by Participating Members of the Fort Worth
Employees' Retirement Fund to vote to increase their contributions to the Fund.
DISCUSSION:
In 2015 the City Manager formed a Pension Review Committee to define and assess the long-term
sustainability of the Fort Worth Employees' Retirement Fund (the Fund), and evaluate options to improve
the current position of the Fund. Members of the committee include: Michael Glynn (Fire), Rick Van
Houten (Police), Manny Ramirez (Police), Joelle Mevi (Fort Worth Employees' Retirement Fund), Todd
Cox (Fort Worth Employees' Retirement Fund), Glenn Balog (General Employees), Marsha Anderson
(Retirees), Laura Alexander (the City of Fort Worth financial advisor), and Mike Ward (citizen
representative).
Due to the financial reality that the Fund is poised to run out of money by 2050 without significant
changes, the purpose of the Committee was to:
• Discuss and agree on how long-term sustainability will be defined;
• Evaluate the competitiveness of the City's pension plan in the context of total compensation with the
goal of maintaining competitive recruitment and retention;
Logname: 14PENSIONAMENDMENTS Page 1 of 4
• Evaluate the pension marketplace to include other Texas stand-alone plans and the Texas
Municipal Retirement System; and
• Submit a report to the mayor and City Council detailing the results of the evaluation and identifying
options that the City Manager may recommend to the City Council to improve the condition of the
Fund.
The overarching goal of the proposed solution had to meet financial obligations to taxpayers; ensure
employees' and retirees' ability to rely on their pensions; and recruit and retain top talent for the
organization.
The Committee began meeting in November 2015 and adopted the following guiding principles:
1. Reforms should be sustainable and structured to lessen the need for further interventions
2. Costs should be shared equitably between the City and its employees;
3. Costs should be shared equitably between employee groups;
A. Employee groups should contribute fairly based on the cost structure of their group
B. Employees should contribute fairly based on the benefit structure of their service
4. Further reductions in benefits for future service should be avoided at this time in order to
maintain competitive compensation and secure retirement, but if recommendations are not
implemented then this may be required; and
5. Manage the risk of the plan and improve the overall financial condition on a go -forward basis.
After almost three years of meetings, the Pension Review Committee was unable to reach a consensus
on a plan to address the pension issues. On August 17, 2018, the City Manager presented his
recommendation to the City Council. Following additional presentations and deliberation, City Staff is
recommending that the City Council adopt amendments to the Retirement Ordinance to do the following:
Pension Modifications for Current Retirees or members approved for retirement as of November
13,2018 with 25 years or more of service and their beneficiaries:
1. Effective with the January 1, 2020 pension checks, eliminate the future award of the 2% simple and the
Ad Hoc Cost of Living Adjustments (COLA);
2. Create a 2% COLA on up to $30,000 on the base pension; and
3. Create a 1 % COLA on the base pension in excess of $30,000.
Pension Modifications for Current Retirees or members approved for retirement as of November
13, 2018 with fewer than 25 years of service and their beneficiaries:
1. Effective with the January 1, 2020 pension checks, eliminate the future award of the 2% simple and the
Ad Hoc Cost of Living Adjustments (COLA); and
2. Create a 1 % COLA on the base pension.
Pension Modifications for Group I. Group III and Group V members who have not retired or been
approved for retirement as of November 13. 2018 and their beneficiaries:
1. Eliminate the future award of the 2% simple and the Ad Hoc Cost of Living Adjustments (COLA); and
2. Create a 1 % COLA on the base pension for service earned through June 21, 2019. There is no COLA
for service on or after June 22, 2019.
Minimum retirement age for Group I, Group II, Group V and Group VI members:
1. Maintain a minimum retirement age of 55 for Group II members; and
2. Add a minimum retirement age of 55 for future service of Group I, Group V and Group VI members for
Logname: 14PENSIONAMENDMENTS Page 2 of 4
service earned beginning on June 22, 2019.
Elimination of Service Credit for Unused Major Medical sick leave/sick leave for all Members:
Eliminate service credit for accruals of unused major medical sick leave/sick leave earned on or after
December 22, 2018 from the pension calculation for credited service.
Contribution Modifications:
1. For the pay period beginning June 22, 2019, increase contributions for Group I General Members
by 1.1 % of earnings, plus an additional .7% each year for the number of years of credited service the
Group I General Member has prior to October 1, 2013;
2. For the pay period beginning June 22, 2019, increase contributions for Group II General Members
by 1.1 % of earnings;
3. For the pay period beginning June 22, 2019, increase contributions for Group III and Group IV Police
Members by 4.7% of earnings to be phased in over three years;
4. For the pay period beginning June 22, 2019, increase contributions for Group V and Group VI
Firefighters by 3.8% of earnings to be phased in over two years; and
5. Increase the City's contributions by 4.5% of payroll upon a successful election by the Participating
Members of the Fund to approve an increase in Member contributions. City contributions will be
effective retroactively for the pay period beginning on December 22, 2018. Any City contribution for
the period prior to the employee election, and as necessary for contributions for service through
June 21, 2019, may be made as a lump sum to the Fund as directed by the City.
Staff s recommendations are based on the following key attributes:
• Preserves 1% COLA for all current retirees with less than 25 years of service and for past service for
active employees, and preserves the 2% COLA on base pensions up to $30,000 for retirees with 25
years of service or more
• Begins to smooth out benefits for active employees by suspending COLA's for future service for
members that have a high 3 years of service pension calculation; and
• Reasonable contribution increases for employees, with phasing in of employee contribution increases
for Police Officer and Firefighters.
The attached resolution will call the special election for Participating Members to vote to approve an
increase in their contributions to the Fund. The City' s contribution increase is contingent upon a
successful vote by the Members to increase their contributions.
This M&C does not request approval of a contract with a business entity.
FISCAL INFORMATION / CERTIFICATION:
The Director of Finance certifies that funds are available, as appropriated, in the various operating
budgets and will require departments to implement cost-saving measures to absorb 1.5% of the increase
into existing appropriations.
FUND IDENTIFIERS (FIDs):
TO
Fund
Department
ccoun
Project
Program
ctivity
Budget
Reference #
moun
ID
I
ID
Year
Chartfield 2
FROM
Logname: 14PENSIONAMENDMENTS Page 3 of 4
Departmentccoun Project
ID r ID
CERTIFICATIONS:
Submitted for City Manager's Office b3L.
Originating Department Head:
Additional Information Contact:
Budget Reference #
Yew I (Chartfield 21
Susan Alanis (8180)
Brian Dickerson (7783)
Brian Dickerson (7783)
Logname: 14PENSIONAMENDMENTS Page 4 of 4