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HomeMy WebLinkAboutOrdinance 19423-11-2010 ORDINANCE NO. 19423-11-2010 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 2-204 TO INCREASE THE CITY'S CONTRIBUTIONS TO THE RETIREMENT FUND; AMENDING SECTION 2-212 PROVIDING FOR AN ACTUARIALLY NEUTRAL SURVIVIOR BENEFIT FOR EMPLOYEES WHO ARE NOT MARRIED AT THE TIME OF RETIREMENT; AMENDING SECTION 2-210 PROVIDING FOR A MEMBER TO RECEIVE THE AMOUNT CREDITED TO THEIR DROP ACCOUNT IF THE MEMBER IS TERMINATED FROM CITY EMPLOYMENT PRIOR TO COMPLETION OF ONE YEAR IN THE DROP PROGRAM; PROVIDING THAT THIS ORDINANCE IS CUMULATIVE; PROVIDING A SEVERABILITY CLAUSE; PROVIDING THAT ALL CONDITIONS PRECEDENT FOR THE ADOPTION OF THIS ORDINANCE CLAUSE AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Fort Worth City Council ("City Council") adopted Ordinance No. 13543, as amended, and 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, under the Employees Retirement Fund Ordinance, the City will make contributions to the Retirement Fund; and WHEREAS, the City Council desires to improve the funded status of the Retirement Fund and provide for an increase in member benefits; and WHEREAS, in order to accomplish City Council's intention, the City Council desires to increase its contribution to the Fund, allow members of the Fund who have elected to participate in the Deferred Retirement Option Program (DROP) to access the amount credited to the member's DROP Account in the event the member is terminated prior to completion of one year -1- in the DROP, and to provide for an actuarially neutral survivor benefit for any current active employee that is unmarried at the time of retirement, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: SECTION 1. Chapter 2, Article VI, Division 1, Section 2-204, ("City's Contribution") of the Retirement Ordinance is amended by deleting Section (a) and substituting the following language in lieu thereof: (a) For police officer members only, effective October 1, 2010, the City shall contribute to the fund twenty and forty-six one hundredths (20.46) percent of their earnings. For all other members, effective October 1, 2010, the City shall contribute to the fund nineteen and seventy-four one hundredths (19.74) percent of their earnings. Notwithstanding the foregoing, City Contribution 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. Section 2-203 shall not limit the right of the City Council, through its budget appropriation, to contribute an additional amount over and above the members' contribution in accordance with article 62431 of the Texas Revised Civil Statutes, as amended. SECTION 2. Chapter 2, Article VI, Division 1, Section 2-210, ("Retirement Pension") of the Retirement Ordinance is amended by: 1. Deleting(a)(4)(d) and substituting the following language in lieu thereof: (d) The DROP account. A member's DROP account is an individual account established on behalf of the member into which a monthly amount will be credited once the DROP election is effective ("DROP account"). The monthly amount credited to the member's DROP account will be equal to the monthly pension benefit that the member would have initially received if the member had retired from the city and commenced receipt of pension benefits. Credits to a member's -2- 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 five (5) years. No withdrawals may be made from the DROP account. A member will receive his or her DROP account in a lump sum distribution at the time the member's pension benefits commence upon retirement, or, if elected by the member, the DROP account will be distributed in installments, as provided in section 2-210(a)(4)k. 2. Deleting Section(a)(4)(e) "Required service to receive DROP account." 3. Deleting(a)(4)(g) and substituting the following language in lieu thereof: (g) Monthly pension and cost-of-living adjustments. Upon retirement following an effective DROP election, the member's base pension will be the monthly pension benefits that the member had earned at the time the DROP election became effective. Thus, the member's earnings and credited service following the DROP election will not be included in calculating the member's base pension and monthly pension benefits. If (and only if) a member completes at least two (2) years of service with the city after his or her DROP election is effective, then the monthly pension benefit that the member initially receives upon retirement will be adjusted for intervening cost-of-living adjustments under section 2- 210(b), as if the member's monthly pension benefit had commenced at the time the DROP election became effective. Further, such a member shall receive a cost-of-living adjustment on the following January 1, regardless of whether the member's pension benefits had commenced by September 30. Notwithstanding the preceding provisions of this section 2- 210(a)(4)g., when a member's monthly pension is initially scheduled to commence at retirement or death, the member's monthly pension (and base pension) shall be -3- recalculated by adjusting the member's credited service for the member's then accumulated sick leave and major medical leave (if any) pursuant to section 2-205(b). SECTION 3. Chapter 2, Article VI, Division 1, Section 2-212, ("Death Benefits") of the Retirement Ordinance is amended by: 1) Deleting Section (c) "After Retirement" and substituting the following language in lieu thereof (1) After Retirement Upon the death of a retired member, the surviving widow or widower shall be entitled to receive a monthly pension, the amount of which shall be seventy-five (75) percent of the pension being paid to the member, provided that the member and surviving widow or widower had been married for at least one (1) year immediately prior to the member's retirement. Notwithstanding the preceding sentence, a surviving widow or widower who was not married to the deceased member for at least one (1) year immediately prior to the member's retirement shall be eligible to receive a monthly pension if the member has elected to receive a reduced monthly pension, on a form and subject to procedures developed by the executive director, within six (6) months after the member's completion of two (2) years of marriage to the member's spouse. The member's reduced monthly pension shall be actuarially determined in a manner that is actuarially neutral to the fund, based on actuarial tables in effect on the date of the member's election to receive a reduced monthly pension. If such an election has been made, the member's surviving widow or widower shall receive a monthly pension for life equal to seventy-five -4- (75) percent of the member's reduced monthly pension. Upon the death of a retired member who was not married at retirement, a beneficiary designated by the member at retirement may be eligible to receive a monthly pension if the member has elected to receive a reduced monthly pension, on a form and subject to procedures developed by the executive director. The member's reduced monthly pension shall be actuarially determined in a manner that is actuarially neutral to the fund, based on actuarial tables in effect on the date of the member's election to receive a reduced monthly pension. If such an election has been made, the unmarried member can elect, at retirement, for his/her designated beneficiary to receive a monthly pension for life equal to either one hundred (100) percent of the member's reduced pension, seventy-five (75) percent of the member's reduced monthly pension, fifty (50) percent of the member's reduced pension, or (25) percent of the member's reduced pension. Each dependent child under eighteen (18) years of age of such deceased member shall be entitled to receive monthly pension, the amount of which shall be one hundred dollars ($100.00); provided, however, that if there is no surviving widow, widower or designated beneficiary that shall be entitled to a monthly pension pursuant to the terms of this division, all such dependent children shall share equally a monthly pension, the amount of which shall be seventy-five (75) percent of the pension being paid to the member at the time of his or her death. 2) Deleting Section (e) "General Provisions" and substituting the following language in lieu thereof -5- (e) General provisions. If a deceased member leaves no widow, widower, designated beneficiary, children or dependent parents eligible to receive a benefit hereunder, the member's total contributions, plus regular interest (at the regular interest rate in effect on the date of any such payment) less any amount previously paid to him or her from the fund, shall be paid to the member's estate. Payments to a child shall be made whether or not a widow, widower, designated beneficiary survives and shall continue after the death of a widow or widower, but shall cease upon the earliest of such child's death, marriage or attainment of age eighteen (18). Payments to a dependent parent shall cease upon such parent's death. For purposes of this division, a parent will be deemed to be dependent if the member provides over half of the parent's support. Payments to a widow or widower shall continue after remarriage, but shall cease upon the death of the widow or widower. Payments to a widow or widower forfeited due to remarriage under prior provisions of this section will be reinstated upon written request by the widow or widower, but no retroactive payments can be made. After payments cease, any excess of the member's total contributions, plus regular interest at date of death over disability and/or death benefits paid shall be paid to the member's estate. Except as provided in section 2-212(d), death benefit coverage during service breaks in excess of ninety (90) consecutive calendar days shall be limited to members who are absent due to service-connected injury incurred while in the line of duty. Benefits hereunder shall be payable on the first day of each month commencing with the month following the one (1) in which the member's death occurs. The board shall determine all questions of dependency, and their determination shall be final and -6- conclusive on all parties. All unmarried, legitimate and legally adopted children under the age of eighteen (18) years, in the absence of determination to the contrary, shall be considered dependent. SECTION 4. This ordinance shall be cumulative of all ordinances of the City of Fort Worth, which shall remain in full force and effect except to the extent that provisions of this Ordinance are in direct conflict with the provisions of such other ordinances, in which case the conflicting provisions of such other ordinances are hereby repealed. SECTION 5. If any provision, section, paragraph, sentence, clause or phrase of this ordinance be declared invalid or unconstitutional, the same shall not affect any other portion or provision hereof, and all other provisions shall remain valid and unaffected by any invalid portion if any, and the City Council now says that if it had known at the time of the passage of this ordinance that any portion of said ordinance was invalid, it would not have adopted such invalid ordinance. SECTION 6. The City Council finds that all acts, conditions and things required by provisions of the Constitution of Texas and Charter and Ordinances of the City of Fort Worth precedent to and in the adoption of this Ordinance have been done, have happened and have been performed in proper and lawful time. SECTION 7. This ordinance shall be in full force and effect from and after its adoption. AND IT IS SO ORDAINED: -7- ADOPTED: November 9, 2010 EFFECTIVE: November 9, 2010 APPROVED AS TO FORM AND LEGALITY: ,,,bi�y: Laetitia Coleman Brown Assistant City Attorney -8- City of Fort Worth, Texas Mayor and Council Communication COONCtL ACTION Approved on 111912010 - Ord. N '�0423-'1'f-2�1f� DATE: Tuesday, November 09, 2010 REFERENCE NO.: G-17105 LOG NAME: 122010RETORDCHANGES SUBJECT: Adopt an Ordinance Amending Chapter 2, Article VI, Division 1 "Employees' Retirement Fund" to Increase the City's Contribution to the Retirement Fund, Effective October 1, 2010, and to Add an Actuarially Neutral Survivor Benefit for Unmarried Employees and Eliminate the One-Year DROP Service Requirement, Effective November 9, 2010 RECOMMENDATION: It is recommended that the City Council adopt an ordinance amending Chapter 2, Article VI, Division 1 "Employees' Retirement Fund" to increase the City's Contribution to the Retirement Fund, Effective October 1, 2010, and to add an actuarially neutral survivor benefit for unmarried employees and eliminate the one-year DROP service requirement, effective November 1, 2010, by amending the following Sections" 1. Section 2-204: City Contribution 2. Section 2-210: Retirement Pension 3. Section 2-212: Death Benefit DISCUSSION: City's Contribution to the Retirement Fund In an effort to address the unfunded liability of the Retirement Fund, the City Council approved an increase in the City's Contribution to the Retirement Fund as part of the FY2011 Budget. The amendment to the Retirement Ordinance will reflect the increase adopted by the City Council. Survivor Benefit The current ordinance provides for a 75 percent lifetime surivior benefit for the widow/widower of a retiree upon the retiree's death, provided that the retiree was married for at least one year prior to retiring. If the retiree was married for less than one year prior to retiring, the retiree's widow/widower would be entitled to a lifetime survivor benefit, provided that the retiree accepts a reduced monthly pension that is actuarially neutral. There is no provision in the current ordinance for employees who are not married at retirement to select a beneficiary for a lifetime survivor benefit. The attached ordinance amendment would allow current active employees who are not married at retirement to designate an individual to receive a survivor benefit, provided that the retiree accepts a reduced monthly pension. The retiree may select an actuarially neutral survivor benefit of 25%, 50%, 75% or 100%. The survivor benefit for married employees will remain the same. Logname: 122010RETORDCHANGES Page 1 of 2 DROP Service Requirement The attached ordinance will eliminate the one-year service requirement to receive the proceeds of the DROP account. All amendments to the Retirement Ordinance will be effective upon passage by City Council. FISCAL INFORMATION / CERTIFICATION: The Financial Management Services Director certifies that funds are available in the current operating budgets, as appropriated, of the participating funds for the contribution increase. The remaining changes 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: ALL ACMs (6222) Originating Department Head: David Yett (7623) Additional Information Contact: David Yett (7623) Logname: 122010RETORDCHANGES Page 2 of 2