HomeMy WebLinkAboutResolution 3934-11-2010 A Resolution
NO. 3934-11-2010
TO NOTIFY THE BOARD OF TRUSTEES OF THE EMPLOYEES' RETIREMENT
FUND OF THE CITY OF FORT WORTH THAT THE FORT WORTH CITY COUNCIL
INTENDS TO CONSIDER AND VOTE ON AMENDMENTS TO THE RETIREMENT
ORDINANCE FOR NON-CIVIL SERVICE EMPLOYEES HIRED ON OR AFTER
MARCH 1, 2011, THAT WILL REDUCE A NON-ACCRUED BENEFIT
PROVIDED BY THE RETIREMENT SYSTEM
WHEREAS, Article 62431 of the Texas Revised Civil Statutes applies to the
Employees' Retirement Fund of the City of Fort Worth, 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 Employees' Retirement
Fund of the City of Fort Worth of City Council's intent to consider and vote on any
amendment to the administrative rules governing the Retirement Fund of the City of Fort
Worth that would reduce a benefit provided by the retirement system, and
WHEREAS, The City Council intends to consider and vote at a meeting to be held
on or after February 15, 2011, on amendments to the Retirement Ordinance that that will
reduce a non-accrued benefit provided by the retirement system for Non-Civil Service
Employees who are hired on or after March 1, 2011.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF FORT WORTH, TEXAS:
That this Resolution serve as Notification to the Board of Trustees of the
Employees' Retirement Fund of the City of Fort Worth that the Fort Worth City
Council intends to consider and vote on amendments to the Retirement Ordinance
that would reduce a non-accrued benefit provided by the retirement system for
Non-Civil Service Employees hired on or after March 1, 2011 by:
1. increasing the vesting period from five (5) years to ten (10) years;
2. changing the definition of earnings to base pay only;
3. changing the compensation base for determining benefits from
highest three-year average to highest five-year average;
4. changing the multiplier for normal retirement from 3.0% to 2.5%,
for early retirement from 2.75% to 2.25%, and for disability
retirement from 2.75% to 2.25%;
5. changing the vested termination benefit for normal retirement to
when the member's age plus actual years of service with the City
of Fort Worth total eighty-five (85);
0 TWO
RESOLUTION NO. 3934-11-2010
6. eliminating the DROP;
7. increasing the minimum age requirement for early retirement to
fifty-five (55); and
8. changing the normal retirement date to when a member's age plus
years of service total eighty-five (85) with a minimum age of fifty-
five (55) at retirement.
Adopted this 16th day of November 2010.
ATTEST: APPROVED
�( CITY COUNCIL
NOV 16 2010
Marty Hendrix, City Secretary �-N ,
C*of Wary of the
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City of Fort Worth, Texas
Mayor and Council Communication
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DATE: Tuesday, November 16, 2010 REFERENCE NO.: G-17116
LOG NAME: 12PENSION BENEFITS
SUBJECT:
Adopt a Resolution Notifying the Board of Trustees of the Employees' Retirement Fund of the City of Fort
Worth that the City Council Intends to Consider and Vote on Amendments to the Retirement Ordinance for
Non-Civil Service Employees Hired On or After March 1, 2011, That Will Increase the Vesting Period,
Change the Definition of Earnings, Change the Compensation Base for Determining Benefits, Lower the
Multiplier, Change Vested Termination Benefits, Eliminate the DROP, Increase the Minimum Age
Requirement for Early Retirement, and Change the Normal Retirement Date
RECOMMENDATION:
It is recommended that the City Council adopt the attached resolution notifying the Board of Trustees of
the Employees' Retirement Fund of the City of Fort Worth that the City Council intends to consider and
vote on amendments to the Retirement Ordinance for Non-Civil Service Employees hired on or after
March 1, 2011, that will increase the vesting period, change the definition of earnings, change the
compensation base for determining benefits, lower the multiplier, change vested termination benefits,
eliminate the DROP, increase the minimum age requirement for Early Retirement and change the normal
retirement date.
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
over$3 billion by the year 2040. In order to curb the growth of that liability, benefit reductions for non Civil
Service employees, hired on or after March 1, 2011 need to be made.
These benefit reductions include: increasing the vesting period, changing the definition of earnings,
changing the compensation base for determining benefits, changing the multiplier, changing vested
termination benefits, eliminating the DROP, increasing the minimum age requirement for early retirement
and changing the normal retirement date. These ordinance amendments will not apply to Civil Service
Police and Fire employees, but it would be part of the negotiations with Police during Meet and Confer
contract negotiations and with Fire during Collective Bargaining contract negotiations.
Since the recommended ordinance amendments are benefit reductions for Non-Civil Service employees
hired on or after March 1, 2011, Section 62431 of the Texas Revised Civil Statutes, which applies to the
Retirement Fund, requires the City Council to provide 90 days notice to the Board of Trustees of the
Employees' Retirement Fund of the City of Fort Worth of the City Council's intent to consider and vote on
the benefit reductions. If adopted, this resolution would serve as notice to the Board of Trustees of the
ERF of City Council's intent to consider and vote the above ordinance amendments at a meeting of the
City Council to be held on or after February 15, 2011.
FISCAL INFORMATION /CERTIFICATION:
Logname: 12PENSION BENEFITS Page 1 of 2
The Financial Management Services Director certifies that that this action will have no material effect on
City funds.
FUND CENTERS:
TO Fund/Account/Centers FROM Fund/Account/Centers
CERTIFICATIONS:
Submitted for City Manager's Office by- Karen Montgomery (6222)
Originating Department Head: David Yett (7623)
Additional Information Contact: Laetitia Brown (6639)
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