HomeMy WebLinkAboutOrdinance 17839-10-2007ORDINANCE NO. 17839-10-2007
AN ORDINANCE AMENDING CHAPTER 2, ARTICLE VI, DIVISION 1,
ENTITLED "EMPLOYEES' RETIREMENT FUND," OF THE CODE OF
THE CITY OF FORT WORTH (1986), AS AMENDED, AMENDING
SECTION 2-210(b) TO CHANGE COST OF LIVING ADJUSTMENT TO
ALLOW FOR THE SELECTION OF AN AD HOC COST OF LIVING
ADJUSTMENT FOR VESTED EMPLOYEES, RETIREES, AND THOSE
RECEIVING BENEFITS FROM THE RETIREMENT FUND, AND
MAKING THE AD HOC COST OF LIVING ADJUSTMENT
MANDATORY FOR NON VESTED MEMBERS ANI) FUTURE
EMPLOYEES; PROVIDING THAT THIS ORDINANCE IS
CUMULATIVE; PROVIDING A SEVERABILITY CLAUSE; PROVIDING
THAT ALL CONDITIONS PRECEDENT FOR THE ADOPTION OF THIS
ORDINANCE CLAUSE AND PROVIDING AN EFFECTIVE DATE;
AMENDING SECTION 2-211(8) TO CHANGE THE SALARY
REQUIREMENT FOR A DISABILITY INCOME ASSET TO THE
SALARY A MEMBER WOULD HAVE EAP:NED HAD HE/SHE
REMAINED EMPLOYED WITH THE CITY OF FORT WORTH IN THE
SAME POSITION; AND AMEN7ING SECTION 2-212(d) TO ALLOW
THE SURVIVING BENEFICIARY OF A VESTED TERMINATED
MEMBER WHO DIES PRIOR TO PENSION COMMENCING, AND
WHOSE AGE PLUS YEARS OF SERVICE TO THE CITY OF FORT
WORTH DH) NOT EQUAL SIXTY-FIVE YEARS TO CHOOSE A
REFUND OF CONTRIBUTIONS, A SURVIVOR'S BENEFIT TO
COM1VVdENCE ON THE DATE THE MEMBER WOULD HAVE BEEN
ELIGIBLE TO RECEIVE A PENSION, OR AN IMMEDIATE BENEFIT
AT AN ACTUARIALLY REDUCE RATE.
WHEREAS, the City of Fort Worth City Council ("City Council") adopted
Ordinance No. 13543, as amended by Ordinance Nos. 13672, 13673, 13674, 13842,
14641, 15334, 15528, 15862, 16967-OS-2006, and 169969-OS-2006, and as codified as
Chapter 2, Article VI, Division 1 of the Code of the City of Fort Worth, collectively
called the "Employees Retirement Fund Ordinance"; and
WHEREAS, the City Council desires to address the Employees' Retirement
Fund unfunded liability; and
WHEREAS, the City Council desires to increase benefits for members of the
Employees' Retirement Fund; and
WHEREAS, the following changes to the Retirement Ordinance would address
the Retirement Fund's unfiuzded liability and increase benefits at a minimum cost to the
Fund.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT
WORTH, TEXAS:
SECTION 1.
That Chapter 2, Article VI, Division 1, Section 2-210 ("Retirement Pension") of
the Retirement Ordinance is amended by deleting Section (b) "Cost of Living
Adjustment" in its entirety and substituting the following language in lieu thereof:
(b) Cost-of-living adjustment. All members of the Fund who will have five
years of service or more as of December 31, 2007, and all members and
beneficiaries currently receiving benefits (including disability retirement),
will make a one time election, as to whether they want to receive an annual
two (2) percent simple cost of living adjustment or be entitled to receive an
ad hoc compounded cost of living adjustment to their pension benefit. The
election will be administered by the Board of the Retirement Fund, and must
be held prior to December 1, 2007. Once the member or beneficiary has
made an election, the election is irrevocable and binding on the member,
beneficiaries and any and all survivors and beneficiaries who may be entitled
to benefits under this ordinance. For purposes of the ad hoc cost of living
election, a member is deemed to be vested if the actual amount of time
purchased pursuant to a buy back agreement when added to the member's
actual years of service equal or exceed five years. Members and beneficiaries
who fail to make an election will, automatically receive the two (2) percent
simple cost of living adjustment.
(1) For members with five years of service or more as of December 31,
2007, wlzo elect the two (2) percent cost of living adjustment, for persons
receiving benefits (including disability retirement) on December 31,
2007, under the Retirement Ordi~zance wlzo elect the guaranteed simple
two (2) percent cost of living adjustment, and for members and
beneficiaries wlio fail to make an election:
Upon retirement, on the first day of each January a cost-of-
living adjustment shall be made on the base pension of
members of the fund who elected the 2% cost of living
adjustment or who failed to make any election, and are
receiving benefits (including disability retirement), and to their
survivors (including children), by increasing the amount of the
actual pension by two (2) percent of the base pension, unless
otherwise provided herein. To be eligible for acost-of--living
adjustment for a particular year, either the member or any
survivor must have been receiving benefits by September 30 of
the prior year.
(2) For employees who begin service with the City after December 31,
2007, including members returning to service with the City of Fort Wortlt,
members with less than five years of service with the City of Fort Worth
ott December 31, 2007, members witlz five years of service or more as of
December 31, 2007, wlzo elect the ad Itoc cost of living adjustment, and for
persons receiving benefits (including disability retirement) on December
31, 2007, under the Retirement Ordinance wlto elect the ad Izoc cost of
living adjustment:
Upon retirement, on the first day of each January thereafter, an ad
hoc cost of living adjustment may be made on the pension of members
who are subject to the ad hoc cost of living adjustment pursuant to
Section 2-210(b)(2). The decision to authorize an ad hoc cost of living
adjustment will to be determined as follows:
a. Prior to December 31 of each year, the Fund's actuary shall
make a written report to the Board certifying the amortization
period required. to pay off the unfunded actuarial accrued
liability of the fund. Based on the information provided by the
actuary, the Board shall:
i. grant a compounded 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, is 18.0 years or less;
ii. grant a compounded 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, is between 18.1 and 24.0 years;
iii. grant a compounded 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, is between 24.1 and 28.0 years;
iv. grant no cost of living adjustment if the actuary
certifies that the amortization period required to pay off
the unfunded actuarial accrued liability of the fund is
28.1 years or more.
SECTION 2
That Chapter 2, Article VI, Division 1, Section 2-210 ("Retirement Pension") of
the Retirement Ordinance is amended by deleting Section (c) "Commencement of
Benefits" in its entirety and substituting the following language in lieu thereof:
(c) DROP and Cost of Living Adjustment. If a member elects the ad hoc cost
of living adjustment and by December 31, 2007, the member has completed
at least two (2) years of service after making a DROP election, the member's
initial pension benefit upon retirement will also receive a cost of living
adjustment for the DROP period before the member made the ad hoc cost of
living election as set forth in 2-210(b)(2). The ad hoc cost of living
adjustment will apply for the member's remaining DROP period.
If a member elects the two (2) percent cost of living adjustment, and by
December 31, 2007, the member has completed at least two (2) years of
service after making the DROP election, the member's initial pension benefit
upon retirement will also receive a cost of living adjustment for the entire
DROP period as set forth in 210(b)(1).
A member who makes a DROP election but who does not complete at least
two (2) years of service after making the DROP election will only be eligible
to receive a cost of living adjustment after the member's retirement, based
on the member's cost of living election as set forth in Section 2-210 (b)(1) or
Section 2-210 (b) (2).
SECTION 3
That Chapter 2. Article VI, Division 1, Section 2-211 ("Disability Pension") of the
Retirement Ordinance is amended by deleting Section (g) "Report of Earned Income or Net
Earnings from Self-Employment" in its entirety and substituting the following language in
lieu thereof.
(g) Report of Earned Income or Net Earnings From Self-Employment Any disabled
member who has not attained normal retirement date or special retirement date and
who is receiving a disability pension shall submit to the executive director prior to May
1 of each year following disability retirement a copy of the member's signed income
tax return filed for the preceding year, with all attachments thereto, along with all tax
returns and attachments for all of the member's affiliated entities, including, but not
limited to, partnerships, corporations or other entities in which the member, or any
relative, owns any interest, including community or separate property, and for which
the member performs any services, whether compensated or not, as proof of the
member's earned income and net earnings from self-employment for that year
obtained from any occupation or employment. At the end of the first year of disability
retirement and by May 1 of each subsequent year, a disabled member shall also
submit to the executive director an affidavit on the executive director's approved form
swearing that the member's earned income and net earnings from self-employment are
fully disclosed on the tax returns provided to the executive director and that the
disabled member has not received any other compensation, directly or indirectly, for
services rendered by the disabled member, nor performed any services for which the
member received no compensation except as disclosed in the affidavit, including
amounts paid to other affiliated entities for the benefit of the disabled member or to
any relative of the disabled member. If the Internal Revenue Service has approved an
extension to fde a tax return and the tax return has not been filed by May 1, the
member shall provide the executive director with a copy of the extension by May 1,
and a copy of the tax return with all attachments and the related affidavit, within two
(Z) weeks after the tax return has been fled.
If the member's total receipt of earned income, net earnings from self-employment,
and city disability retirement benefits exceed the annualized base hourly rate of pay
the member would have made during that same tax year had he or she remained
employed by the City in the same position then, as soon as practicable, the board shall
reduce the amount of disability benefits to be paid to the member. In reducing a
member's disability pension due to such excess earnings, the board shall consider the
member's then current earnings, and attempt to recover the cumulative excess
earnings and preclude excess earnings in the future. In the event that a member's
disability pension is reduced in excess of the amount required, the board shall pay such
excess to the member. For purposes of section 2-211(g), base hourly rate of pay shall
not include overtime, acting, assignment, holiday, longevity, educational incentive,
safety award, incentive, shift differential or any other special or premium pay.
The board shall withhold a member's disability pension upon the member's failure to
submit on a timely basis the required income tax returns with all attachments thereto
and related documents. If the member subsequently provides the required
documentation by the end of the calendar year in which the return was due, the board
shall cause the member's disability pension to be .reinstated, subject to the other
provisions of this division and including the payment of any previously withheld
amounts, without interest. If the member fails to provide the required documentation
by the end of the calendar year in which the return was due, the member's disability
pension shall be terminated and the member shall not be entitled to any payment for
the period during which the documentation was not provided.
For purposes of section 2-211(g), any amounts paid to a member's affiliated entity in
connection with the performance of services by the member shall constitute "earned
income," and any attempt to circumvent the limitations under this division on earned
income and net earnings from self-employment through the use of affiliated entities
shall be grounds for the board to terminate the member's disability pension.
SECTION 4
That Chapter 2. Article VI, Division 1, Section 2-212 ("Death Benefits") of the
Retirement Ordinance is amended by deleting Section (d) "After Vested Termination" in its
entirety and substituting the following language in lieu thereof.
(d) If a terminated member entitled to a pension under the provisions of section 2-208
dies before the member's pension commences, the member's designated beneficiary, or
if none, the member's estate shall receive an amount equal to the member's total
contributions to the fund, plus regular interest (at the regular interest rate in effect on
the date of such payment). If the vested member's years of age and years of credited
service total at least sixty-five (65) as of the date of the member's termination, the
member's eligible dependents shall receive the benefit specified under section 2-212(b),
based on the pension to which the member would have been entitled as of the date of
the member's death, in lieu of the payment of contributions plus regular interest. If
the member's years if age and service did not total at least sixty-five (65) as of the date
of the member's termination, the member's eligible dependents may choose between
the refund of contributions, the payment of the survivor benefit at the date the
member would have been eligible to draw the benefit, or an immediate benefit at an
actuarially reduced rate.
If such terminated member dies after the member's pension commences, the member's
eligible dependents shall receive the benefit specified under section 2-212(b).
SECTION 5
This ordinance shall be cumulative of all provisions of ordinances and of the Code
of the City of Fort Worth, Texas (1986), as amended, except where the provisions of this
ordinance are in direct conflict with the provisions of such ordinances and such Code, in
which event conflicting provisions of such ordinances and such Code are hereby repealed.
SECTION 6.
It is hereby declared to be the intention of the City Council that the sections,
paragraphs, sentences, clauses and phrases 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 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.
SECTION 7.
The City Council fmds that all acts, conditions and things required by provisions
of the Constitution of Texas and Charter and Ordinances of the City of Fort Worth
precedent to and in the adoption of this Ordinance have been done, have happened and
have been performed in proper and lawful time.
SECTION S.
This ordinance shall be in full force and effect from and after its adoption.
ADOPTED this 16th day of October, 2007.
~~ _
~'\~
Marty Hendrix
City Secretary
APPROVED AS TO FORM AND LEGALITY:
is Colerrlan Brown
.ant City Attorney
Cif of Fort 1~/orth, 7"exas
Mayor and Council Communication
COUNCIL ACTION: Approved on 10/16/2007 -Ord. No.# 17839-10-2007
DATE: Tuesday, October 16, 2007
LOG NAME: 12RETIREBENEFIT
REFERENCE NO.: G-15931
SUBJECT:
Adopt Ordinance Amending Section 2-21-(b) Concerning Cost of Living Adjustment, Section 2-211
(g) Related to Salary Offset to Disability Retirement, Section 2-212(d) To Change Payment
Alternatives for Beneficiary of a Vested Terminated Deceased Member
RECOMMENDATION:
It is recommended that the City Council:
1. Approve an amendment to Section 2-210(b) of the Retirement Ordinance requiring an ad hoc cost of
living adjustment for non-vested and future employees of the City, and permitting vested employees,
retirees and those currently receiving benefits under the Retirement Ordinance to make a one time,
irrevocable, election between a two percent cost of living adjustment and the ad hoc cost of living
adjustment. The Ad Hoc cost of living adjustment will range from zero to four percent, based on the
amortization period required to pay off the unfunded liability of the Retirement Fund. Vested members,
retirees, and those receiving benefits under the Plan who don't make an election will receive the guaranteed
two percent cost of living adjustment currently provided under the Retirement Ordinance;
2. Approve an amendment to Section 2-211(g) of the the Retirement Ordinance changing the salary
requirement for a disability income offset from the salary at the time a disability pension was granted to the
salary the member would have earned had s/he remained employed with the City in the same position; and
3. Approve an amendment to Section 2-212(d) of the Retirement Ordinance allowing the beneficiary of a
vested terminated member who dies prior to pension commencing to receive either a refund of
contributions, a payment of the survivor benefit at the date the member would have been eligible to draw
the benefit, or an immediate benefit at an actuarially reduced rate.
DISCUSSION:
In an effort to address the unfunded liability of the Employees' Retirement Fund, the staff recommends the
passage of the attached ordinance which will provide for cone-time, irrevocable election of an ad hoc cost
of living adjustment by retirees, person receiving benefits pursuant to the Retirement Ordinance, and
vested member to occur prior to December 1, 2007. The ad hoc cost of living adjustment will be mandatory
for non-vested and future employees of the City of Fort Worth. The ad hoc cost of living adjustment will
range from zero to four percent, based on the amortization period to pay off the Fund's unfunded liability.
The disability income offset and the surviving beneficiary options are benefit increases recommended by
the Board of Trustees of the Employees' Retirement Fund. The disability income offset would increase the
base salary used to determine if a member's disability benefits should be reduced. Currently, the base
salary used is the salary at the time of the member's disability combined with any cost of living
adjustments. Under the proposed amendment, the base salary used to determine offsets would be the
salary the member would have earned had s/he continued to be employed by the City in the same position.
Logname: 12RETIREBENEFIT Page 1 of 2
The surviving beneficiary option allows the survivor of a member with a vested termination who died before
pension commenced, to choose between receiving a refund of contributions, a survivor benefit at the date
the member would have been eligible to draw the benefit, or an immediate benefit at an actuarially reduced
rate. Currently, the surviving beneficiary would only be entitled to a refund of contributions.
FISCAL INFORMATION/CERTIFICATION:
The Finance Director certifies that this ordinance will have no material effect on city funds.
TO Fund/AccountlCenters
FROM Fund/Account/Centers
Submitted for City Manager's Office b~
Originating Department Head:
Additional Information Contact:
Karen Montgomery (6222)
David Yett (7623)
Laetitia Browri (6639)
Logname: 12RETIREBENEFIT Page 2 of 2