HomeMy WebLinkAboutIR 7471 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7471
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To the Mayor and Members of the City Council June 5, 1990
Subject:
RECOMMENDATION ON RETIREMENT BENEFIT IMPROVEMENTS
AND CONTRIBUTION REDUCTIONS
At the May 22nd Pre-Council session, the City Council was
presented information concerning the Employees Retirement Fund as
follows:
1) an overview of the January 1 , 1990, Actuarial Valuation
2) a comparison of contribution levels and benefits among
similar retirement funds of major Texas cities, and
3) a request from the Retirement Fund Board of Trustees to
amend the Retirement Ordinance to provide for certain
benefit improvements.
Subsequently, the City staff has evaluated the present actuarial
condition of the Retirement Fund and the Board of Trustees'
request for improvements in the context of present budget
conditions and total employee and retiree benefits . To
facilitate this evaluation, additional actuarial analyses were
provided by the Wyatt Company.
It is my recommendation that the City Council amend the
retirement ordinance to provide for (1) some improvements to
bring our benefits more in line with other major Texas cities and
(2) a reduction in the rate of contribution for both employees
and the City.
The recommended benefit improvements are as follows :
A) increase benefit formula multiplier from 2 .00 % to 2 . 50%
B) establish a minimum benefit for current retirees of $150 for
each 5 years of service after the first 5 years
C) provide for an "early" retirement at age 50 with a penalty
of 5/12's per month for each month commencement of pension
antedates date on which employee would have accumulated 80
"points"
The total actuarial cost of the Fund if these improvements are
made would be 12 , 69% which is 6. 48% over the current combined
employee/City contribution of 19.17%. A total contribution
reduction of 5 .00% ( 3 .00% to City and 2 .00% to employee) can be
made, and there will still remain a contribution safety margin of
1. 48% which covers the minimum 1 .00% safety margin recommended by
the actuary.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7471
s0 Pr To the Mayor and Members of the City Council June 5, 1990
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If the City's contribution is reduced from 11. 50% to 8 . 50%, 1
propose that in future years an amount equivalent to 3.00% of
employees' salaries be transferred to a dedicated account from
which the cost of retirees' health care insurance would be made.
The proposed 2.00% reduction in the employees' contribution would
increase employees' take-home pay.
The attached chart provides you with a comparison between this
recommendation and that previously submitted by the Retirement
Fund Board of Trustees.
Ivor
David 4 y
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
OF-
COMPARISON OF RETIREMENT ORDINANCE AMENDMENTS
RECOMMENDED BY CITY MANAGER AND RETIREMENT FUND
BOARD OF TRUSTEES
RECOMMENDED BY
RECOMMENDATION MANAGER BOARD
increase benefit multiplier to 2.50% yes yes
full retirement after 25 service yrs. no yes
retirement at age 50 with penalty yes no
minimum benefit of $200 for each
5 yrs. of service no yes
minimum benefit of $150 for each
5 yrs. of service starting after
first 5 years yes no
reduce City and employee contribution yes no