HomeMy WebLinkAboutIR 9498 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9498
To the Mayor and Members of the City Council July 10, 2012
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SUBJECT: RESOLUTIONS NOTIFYING EMPLOYEES' RETIREMENT FUND OF
rF PROPOSED BENEFIT CHANGES
The City Council agenda for July 10, 2012, contains three resolutions providing 90-day notice to
the Employees' Retirement Fund Board that the City Council is considering reductions to the
benefits provided by the Fund. The City Council intends to consider the associated ordinance
changes on October 16, 2012. It is anticipated that any adopted changes would be effective on or
after January 1, 2013, depending on the timing of the cost-of-living adjustment selection process
and the administrative effort required to implement any changes.
As a reminder, the proposed changes are intended for the Police Officers and General
Employees only since the Fire Fighter benefits are currently protected by a Collective Bargaining
Agreement. Negotiations with the Fire Fighters will commence in October of this year.
In summary, the resolutions are:
1. Cost-of-Living Adjustments (COLA):
Police Hired Before Police Hired on Generals Hired Before Generals hired on
111113 or After 111113 7/1/11 or after 7/1/11
Past Future Past Future (already adopted)
Service Service Service Service
Selection 2% 0% Selection 2%simple 0%
for those simple for those
on ad hoc on ad hoc
COLA to COLA to
revert to revert to
2%simple 2%simple
The selection process would occur in the Fall after the adoption of related ordinances. All
retirees and members in the Deferred Retirement Option Plan will be allowed to participate
in the selection process.
2. Benefit Reductions
The resolutions reflect the proposed benefit changes as outlined previously for the City
Council. In addition, they maintain the death and disability benefits for in the line of duty
incidents for current employees. All other reductions for retirements prior to the normal
retirement date are reflected. A summary of the changes for each group is outlined in the
table on the next page.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9498
To the Mayor and Members of the City Council July 10, 2012
`�` Page 2 of 4
r
SUBJECT: RESOLUTIONS NOTIFYING EMPLOYEES' RETIREMENT FUND OF
rF PROPOSED BENEFIT CHANGES
Police Hired Before Police Hired on Generals Hired Before Generals hired on
111113 or After 111113 7/1/11 or after 7/1/11
Past Future Past Future (already adopted
Service Service Service Service unless marked *)
Compensation High 3 High 5 High 5 High 3 High 5 High 5
Base
Normal 3% 2.5% 2.5% 3% 2.5% 2.5%
Multiplier
Vested 2.75% 2.25% 2.25% 2.75% 2.25% 2.25%
Termination plus plus plus penalty plus plus penalty plus penalty
Drawing penalty penalty penalty
Benefits
Before
Normal
Retirement
Date
Death in Line 3% 3% 2.5% 3% 3% 2.5%*
of Dut-
Disabilit-v in 2.75% 2.75% 2.25% 2.75% 2.75% 2.25%
Line of Duty
Death Not in 2.75% 2.25% 2.25% 2.75% 2.25% 2.25%*
the Line of
Dut-
Disabilit-v Not 2.75% 2.25% 2.25% 2.75% 2.25% 2.25%
in the Line of
Dut-
ON-ertime in Yes No No Yes No No
Pension
Calculation
ON-ertime N/A No No N/A No Yes but frozen for
Cash Account fixture
contributions*
Suixivor 75% 75% Voluntaiv 75% 75% Voluntaiv
Actuarially Actuarialh_-Neutral
Neutral
Minimum N/A(25 N/A(25 N/A(25 and out) N/A N/A 55
Retirement and out) and out)
Age
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9498
To the Mayor and Members of the City Council July 10, 2012
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SUBJECT: RESOLUTIONS NOTIFYING EMPLOYEES' RETIREMENT FUND OF
rF PROPOSED BENEFIT CHANGES
In addition to the base benefit changes outlined above, the following are provided for:
• For future Police Officers, "double-credit" to achieve the Rule of 80 for post-employment
years for employees who separate from the City prior to retirement eligibility is eliminated.
This was already addressed for General employees hired after July 1, 2011
• The current ordinance allows vested terminated employees to have pensions calculated
with the formula in place at the time they begin drawing a benefit rather than the formula
in place at the time of termination. The change will ensure their rights to benefits already
earned are protected.
• Effective October 23, 2007, all non-vested and future employees became subject to a
12% cap on the year-over-year increases in the high-3 calculation for pension. As a result,
all employees hired on or after October 23, 2002 (except Generals hired after July 1,
2011) could continue to be subject to this provision for high-3 calculations for service
occurring prior to January 1, 2013. Staff stipulated that it is the intent to continue this
provision but is studying the financial and administrative impact with the Employees'
Retirement Fund to make a final recommendation for the ordinances.
• Current pension calculations include any compensation for which contributions are made
by the employee and the City. Currently, this includes vacation sell-back and wellness pay
which are voluntary and increase pay for reasons other than work performed. Staff is
recommending that these two pays be explicitly excluded in the ordinance for Generals
hired after July 1, 2011 and Police Officers hired after January 1, 2013, if applicable in the
future.
3. Fort Worth Police Officers' Association Proposal
On Friday, June 29, 2012, the City received a formal proposal from the Fort Worth Police
Officers' Association (POA) that proposes a series of contribution increases in lieu of many
of the benefit changes. However, they have also proposed a handful of benefit changes for
new Police Officers related to vesting period, minimum age to draw benefits and a cap on
the maximum pension benefits. In addition, they have proposed to apply the 12% year-
over-year cap for compensation base increases in the benefit calculation for future service
of existing Police Officers. While these proposals are not consistent with the current
proposal of the City Manager's Office, staff intends to study the financial consequences
and engage in discussions with the POA on their merit. As a result, staff also recommends
providing notice to the ERF Board that the City Council is considering these options for
both Police Officers and General Employees in the event that they become viable
alternatives.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9498
To the Mayor and Members of the City Council July 10, 2012
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SUBJECT: RESOLUTIONS NOTIFYING EMPLOYEES' RETIREMENT FUND OF
rF PROPOSED BENEFIT CHANGES
Separately, the City Council has indicated a concern about the long-term appropriateness
of a 0% COLA for new General Employees hired on or after July 1, 2011 and new Police
Officers hired on or after January 1, 2013. While that issue and how to fund it is being set
aside until a later date, the POA expresses support for a COLA for new employees but
with a 5-7 year deferral at the beginning of retirement. This will be taken into consideration
at a later date and does not require additional notice to the ERF Board at this time.
If you have any questions, please call Assistant City Manager, Susan Alanis, at 817.392.8180.
Tom Higgins
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS