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HomeMy WebLinkAboutOrdinance 21459-09-2014 t � I I ORDINANCE NO. 21459-09-2014 i I i AN ORDINANCE AMENDING CHAPTER 2.5, "RETIREMENT," ARTICLE I, "EMPLOYEES' RETIREMENT FUND," DIVISION 1, I "GENERAL PROVISIONS" TO DELETE UNUSED DEFINITIONS AND ADD DEFINITIONS; AND ADDING DIVISION 7 TO INCORPORATE BENEFIT CHANGES AND REDUCTIONS TO THE EMPLOYEES' 1 RETIREMENT FUND; PROVIDING THAT THIS ORDINANCE IS CUMULATIVE; PROVIDING A SEVERABILITY CLAUSE; PROVIDING THAT ALL CONDITIONS PRECEDENT FOR THE ADOPTION OF THIS ORDINANCE HAVE BEEN MET; AND PROVIDING AN EFFECTIVE f DATE. WHEREAS, the City of Fort Worth City Council ("City Council") adopted by I Ordinance Chapter 2.5 of the Code of the City of Fort Worth, collectively called "Retirement," I providing for accrual and payment of retirement benefits for eligible participants; and WHEREAS, the City's retirement benefits are administered by the Employees' Retirement Fund of the City of Fort Worth ("the Fund"), which has legal authority over the I investment and management strategies of contributions after they have been remitted to the i Fund; and t I WHEREAS, although the City does not manage the Fund, the City and its taxpayers are ultimately obligated under the Texas Constitution to honor earned retirement benefits should the I Fund become insolvent; and WHEREAS, because of their ultimate liability, the City and its taxpayers have a critical interest in the affordability of benefits that are offered to employees and the ongoing ability of the Fund to meet its obligations; and i WHEREAS, taking into account more conservative and realistic investment returns, the I City's analysis indicates that it would take an infinite amount of time for the Fund to meet its I Ordinance No.21459-09-2014 Page 1 of 28 I I I ' I projected liability for previously earned benefits, which is also known as its actuarial accrued I liability; and i WHEREAS, any future ad hoc cost-of-living adjustments (COLAs) would further I I I increase the Fund's actuarial accrued liability and extend the infinite funding period even further; and I I WHEREAS, the City controls, within Constitutional constraints and the limitations contained in the collective bargaining and meet and confer agreements, future retirement benefits i that are offered to employees; and WHEREAS, over the course of the last several years, the City has analyzed and considered a wide variety of funding increases and benefit changes in an effort to reduce the i unfunded actuarial accrued liability (UAAL), and ensure the Fund remains a viable long-term vehicle to provide benefits to present and future participants without creating an unnecessary and unfair burden on the taxpayers; and WHEREAS, the City Council has endorsed the goal of preservation of a defined benefit plan for employees; and WHEREAS, the Employee Retirement Fund Board has the legal authority over the I I investment strategy and management oversight of the contributions once remitted to them; and WHEREAS, the City Council has demonstrated commitment to this goal by increasing I the City's contributions to the Fund by 5% of payroll in 2007, by 4% of payroll in 2010 and by I making a one-time contribution of$7 million in 2010; and WHEREAS, over the course of four years, the City nearly doubled its annual financial i r commitment, increasing its annual expense by $39 million between FY2007 and FY2012; and i I i Ordinance No.21459-09-2014 j Page 2 of 28 f i I' I. � I p i i I WHEREAS, the City reduced retirement benefits for General Employees hired on or after July 1, 2011, and Police Officers hired on or after January 1, 2013, and retirement benefits I for future service for General Employees hired prior to July 1, 2011, and Police Officers hired f prior to January 1, 2013, with a pledge to consider the same for Firefighters during their i subsequent contract negotiations; and WHEREAS, the City is unwilling to make additional financial contributions to the Fund i due to risks to the City's long-term sustainability in terms of operations, staffing, infrastructure and tax rate competitiveness; and WHEREAS, Article 16, Section 1 of the April 13, 2010, Collective Bargaining Agreement between the City and the Professional Firefighters Association IAFF Local 440 (2010 i CBA) prohibits changes to the City's contribution rate for Firefighters, and also does not all Firefighters benefits to be diminished or impaired; and I WHEREAS, Article 16, Section 2 of the 2010 CBA, states that Firefighters hired after I September 30, 2013 are not entitled to the benefit of the protections of Section 1, Article 16, I thereby allowing the City to make changes that diminish or impair the pension benefits for Firefighters hired after September 30, 2013; and f WHEREAS, Article 5 of the 2010 CBA requires that all economic benefits, privileges, and working conditions for fire fighters that were in effect on April 13, 2010, the effective date I of the CBA, shall remain unchanged while the 2010 CBA is in effect; and I WHEREAS, the specific provision in Article 16, Section 2 of the 2010 CBA affecting 4 Firefighters hired after September 30, 2013 controls over the general prohibition in Article 5 of the 2010 CBA; and I I Ordinance No.21459-09-2014 Page 3 of 28 I i I I � i WHEREAS, in accordance with Article 6243i of the Texas Revised Civil Statutes, the I City Council has provided ninety-day notice to the Fund's Board of Trustees of its intention to make benefit changes and reductions in retirement benefits for future Firefighters and future service accrual for existing Firefighters; r NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE f CITY OF FORT WORTH, TEXAS THAT: SECTION 1. Chapter 2.5, "Retirement," Article I, "Employees' Retirement Fund," Division 1, 4 "General Provisions," Sections 2.5-1 through 2.5-4, Section 2.5-7, and Section 2.5-8 are F amended as follows: I Sec. 2.5-1. Definitions. The following words, terms and phrases, when used in this Chapter, as amended, shall have the meanings ascribed to them in this Section, except where the context clearly indicates a different f meaning. The masculine pronouns, wherever used herein, shall include both male and female persons. 6 Actuarial Equivalent and Actuarially Equivalent shall mean equality in value of the aggregate amounts expected to be received under different forms of payment based upon the actuarial factors and assumptions used by the Actuary with the approval of the Board. Actuarial Tables shall mean such tables of mortality, interest rates, turnover discounts, salary scales, etc., as shall be used by the Actuary with approval of the Board. Actuary shall mean the technical advisor regarding the operations, which are based on mortality, service, and compensation experience, who makes periodic valuations of the assets and liabilities of the Fund and other evaluations as requested by the Board and the Governing Body. I F Alternative Pension Benefit shall have the meaning as set forth in the following Sections: • Section 2.5-25 for Group III Members • Section 2.5-35 for Group IV Members • Section 2.5-45 for Group I Members • Section 2.5-55 for Group II Members • Section 2.5-65 for Firefighters; P • Section 2.5-75 for Group VI Firefighters. i I Ordinance No.21459-09-2014 r Page 4 of 28 i Base Pension shall mean the annual life pension a Member receives as set forth in the following Sections: i • Section 2.5-25 for Group III Members • Section 2.5-35 for Group IV Members 6 • Section 2.5-45 for Group I Members • Section 2.5-55 for Group II Members • Section 2.5-65 for Firefighters • Section 2.5-75 for Group VI Firefighters. Beneficiary shall mean any person in receipt of a Retirement Benefit or any other benefit I provided under this Chapter. Board shall mean the Board of Trustees of the Employees' Retirement Fund of the City of Fort Worth. Built-in Overtime shall mean the overtime earned as a result of suppression Firefighters working j their regular schedules, that is, the hours worked in excess of 212 hours in the City's regular 28- day pay cycle for Firefighters. This definition does not include Constant Staffing Overtime (CSOT) or Emergency Callback Overtime (ECOT). In each 28-day pay cycle, a suppression Firefighter is scheduled to work either 216, 224 or 232 hours. The number of hours in each 28- day pay cycle that are in excess of 212 is the "Built-in Overtime"that the suppression Firefighter will earn for that particular 28-day pay cycle. Thus, the maximum amount of `Built-in Overtime" that a suppression Firefighter can earn per 28-day pay cycle is 4 hours (when the suppression Firefighter is scheduled to work 216 hours), or 12 hours (when the suppression Firefighter is scheduled to work 224 hours), or 20 hours (when the suppression Firefighter is scheduled to work 232 hours). I Cash Balance Account shall mean the individual nominal account established for General Employees hired on or after July 1, 2011, to account for overtime contributions made to the Fund. i City shall mean the City of Fort Worth, Texas. i Code shall mean the United States Internal Revenue Code, as amended, and any successor thereof. Group I Member shall mean a General Employee hired prior to July 1, 2011. i Group II Member shall mean a General Employee hired on or after July 1, 2011. t Group III Member shall mean a Police Officer hired prior to January 1, 2013. Officer hired on or after January 1 2013. Group IV Member shall mean a Police Of ary Firefighter shall mean a Firefighter hired prior to January 10, 2015. Ordinance No.21459-09-2014 ! Page 5 of 28 I i I P Group VI Firefighter shall mean a Firefighter hired on or after January 10, 2015. I Compensation Base shall have the meanings set forth in the following Sections: • Section 2.5-23 for Group III Members; F • Section 2.5-33 for Group IV Members; • Section 2.5-43 for Group I Members; • Section 2.5-53 for Group II Members; • Section 2.5-63 for Firefighters; • Section 2.5-73 for Group VI Firefighters. i Credited Service shall mean the number of years (treating each complete month of service as one-twelfth (1/12) of a year) in which an employee has participated in the Employees' Retirement Fund of the City of Fort Worth, Texas, including unused accumulated sick leave and major medical leave pursuant to Section 2.5-4. Service for fifteen (15) or more calendar days in any month shall constitute a complete month of service; service for less than fifteen (15) j calendar days in any month shall constitute a complete month of absence. Notwithstanding the I preceding provisions of this definition of Credited Service, the period of time following a Member's effective DROP election shall not be included when determining a Member's Credited P Service. A Member may have his or her proof of Credited Service increased through the purchase of Permissive Service Credits as provided in Section 2.5-4(c). DROP shall mean the Deferred Retirement Option Program as set forth in Section 2.5-9. i DROP Account shall mean the account created pursuant to Section 2.5-9(d) for a Member who has made a DROP Election. DROP Election shall mean the election made by a Member pursuant to Section 2.5-9 to participate in the DROP. 4 Earned Income shall mean, for purposes of Section 2.5-7, those wages, salaries, tips, commissions, monetary bonuses or professional fees, and other amounts received as compensation for personal services actually rendered, including any compensation deferred under a deferred compensation program. Earnings shall have the meaning set forth in the following Sections: I • Section 2.5-21 for Group III Members; • Section 2.5-31 for Group IV Members; • Section 2.5-41 for Group I Members; • Section 2.5-51 for Group II Members; • Section 2.5-61 Firefighters; • Section 2.5-71 for Group VI Firefighters. Executive Director shall mean the individual appointed by the Board to supervise the administrative affairs of the Fund and carry out the business of the Fund. i �I Ordinance No.21459-09-2014 Page 6 of 28 i I I i I 1 I � I Firefighter shall mean any Member of the Fort Worth Fire Department, hired prior to January j 10, 2015 who was hired in substantial compliance with Chapter 143 of the Texas Local Government Code, or as modified by the provisions of the City's collective bargaining agreement with the Fort Worth Professional Firefighters Association IAFF Local 440, and any Firefighter trainee who is employed by the City for the sole purpose of attending the City of Fort Worth Fire Department's Training Academy. P Fiscal Year shall mean the period from October 1 of one (1) year through September 30 of the following year. I Fund shall mean The Employees' Retirement Fund of the City of Fort Worth, Texas. P General Employee shall mean a member of the Fund who is not a Police Officer or Firefighter. Governing Body shall mean the City Council for the City of Fort Worth. Group VI Firefighter shall mean any Member of the Fort Worth Fire Department, hired on or after January 10, 2015, who was hired in substantial compliance with Chapter 143 of the Texas Local Government Code, or as modified by the provisions of the City's collective bargaining agreement with the Fort Worth Professional Firefighters Association IAFF Local 440, and any Firefighter trainee who is employed by the City for the sole purpose of attending the City of Fort Worth Fire Department's Training Academy. P Legitimate Children shall mean those children legitimate to their respective parent(s), as legitimacy is defined by the Texas Family Code and the Texas Probate Code, as amended. Line of Duty shall mean in the course of the operation usual to a Member's employment, including all operations necessary, incident or appurtenant thereto or connected therewith, whether such operations are conducted at the usual place of employment or elsewhere. i Member shall mean a "participating Member" as defined by Section 1.02(4) of Article 62431 of the Texas Revised Civil Statutes. i Net Earnings from Self-Employment shall constitute, for purposes of Section 2.5-7, the Net j Earnings from Self-Employment as reflected upon the Internal Revenue Form Schedule SE and its successors, which schedule is attached to Internal Revenue Form 1040 and its successors. i Normal Retirement Date shall have the meaning set forth in the following Sections: • Section 2.5-22 for Group III Members; • Section 2.5-32 for Group IV Members; • Section 2.5-42 for Group I Members; • Section 2.5-52 for Group II Members; • Section 2.5-62 for Firefighters; • Section 2.5-72 for Group VI Firefighters. i Ordinance No.21.459-09-2014 Page 7 of 28 i I I I I � I � � Permissive Service Credits shall mean a Member's voluntary purchase of additional periods of Credited Service pursuant to Section 2.54(c). Police Officer shall mean a Member of the City of Fort Worth Police Department, who has acquired civil service status pursuant to Chapter 143 of the Texas Local Government Code, as amended, as well as a beginning employee of the City of Fort Worth Police Department currently serving a one-year probationary period pursuant to Chapter 143 of the Texas Local Government Code, as amended. i Regular Interest shall mean interest compounded biweekly which should equal but not exceed the effective annual rate of five and one-quarter(51/4)percent computed on a calendar year basis. Retirement Benefit shall mean a pension for life, as provided in this Chapter, payable each year in twelve (12) equal monthly installments, beginning as of the date fixed by the Board in accordance with the provisions of this Chapter. j Standard Pension Benefit shall have the meaning set forth in the following Sections: • Section 2.5-25 for Group III Members; • Section 2.5-35 for Group IV Members; • Section 2.5-45 for Group I Members; • Section 2.5-55 for Group II Members; • Section 2.5-65 for Firefighters; • Section 2.5-75 for Group VI Firefighters. P Termination of Employment shall mean complete severance of employment of any Member as an employee of the City by any act or means except death, disability or retirement. I Trustee shall mean a person appointed or elected to administer the Fund. Vested shall mean the rights accrued under this Article by a Member of the Fund who has been a f Member for five (5) years or more, or who has attained his or her retirement date, as described in this Chapter. Such rights shall also accrue to all Members of the Fund at the time of termination of the Fund, at the time of any complete discontinuance of the City's contributions to the Fund, f and to Members affected at the time of any partial termination of the Fund, but only to the extent that the benefits of such Members have been funded. i Vested Retirement Date shall have the meaning as set forth in the following Sections: • Section 2.5-22(b) for Group III Members; • Section 2.5-32(b) for Group IV Members; • Section 2.5-42(b) for Group I Members; • Section 2.5-52(b) for Group II Members; • Section 2.5-62(b) for Firefighters; • Section 2.5-72(b) for Group VI Firefighters. i Vested Termination Pension shall have the meaning as set forth in the following Sections: i Ordinance No.21459-09-2014 Page 8 of 28 I I f I I i • Section 2.5-24(b) for Group III Members; j • Section 2.5-34(b) for Group IV Members; • Section 2.5-44(b) for Group I Members; • Section 2.5-54(b) for Group II Members; j • Section 2.5-64(b) for Firefighters; • Section 2.5-74(b) for Group VI Firefighters. Sec.2.5-4. Credited Service. j I (a) Service Breaks. Pension credits shall be granted for all Credited Service for which a Member of the Fund receives employment compensation from the City, subject to the following I regulations pertaining to service breaks: (1) Authorized service breaks of ninety (90) or less consecutive calendar days 6 without pay shall not be deducted from Credited Service. (2) Except as provided below, periods of absence in excess of ninety (90) consecutive calendar days without pay shall be deducted from Credited Service, and no contributions shall be made by Members or by the City during such periods. G (3) An absence of any period shall be permitted without loss of prior Credited Service, unless the Member receives a distribution of his or her total contributions, plus Regular Interest, and any period of absence shall cancel all prior Credited Service if the Member receives a distribution of the Member's total contributions, plus Regular Interest; however, if a Member is absent, the Member may regain prior Credited Service by repaying the total amount of all contributions withdrawn, plus Regular Interest thereon (at the Regular Interest rate in effect on the date of repayment), less the amount received in from the Member's Cash Balance Account, from the date of withdrawal to the date of repayment, pursuant to policies adopted by the Board under one (1) of the two (2) following options: a. Repay in a single lump sum payment within ninety (90) days of reemployment, or i b. Repay through a payroll deduction pay-back plan which commences within ninety (90) days of reemployment, and provides that Regular Interest will be charged throughout the pay-back period and that the repayment period will not exceed seven(7) years. j i A rehired Member who does not timely elect one (1) of these two (2) options and timely repay the prior contributions (plus Regular Interest) will waive his or her right to prior Credited Service. Members who received a refund of the proceeds in their Cash Balance Account are not required to repay that amount to regain Credited Service under this provision. A refund of the proceeds in the Cash Balance Account is irrevocable and the Ordinance No.21459-09-2014 Page 9 of 28 1 I t Member cannot pay back the amount received to restore their original Cash Balance Account. (4) Effective on or after December 12, 1994, any Member who is reemployed by the City upon completion of service in the uniformed services (within the time frame provided k under the Uniformed Services Employment and Reemployment Rights Act of 1994, as I amended), shall be granted Credited Service for such uniformed service, provided the Member makes the contributions (with no interest) to the Fund that the Member would have been required to contribute if the Member had remained continuously employed by the City throughout the period of uniformed service. Such payment must be made during the period which commences with the date of reemployment by the City and which j duration is three (3) times the period of the Member's service in the uniformed services, not to exceed five (5) years. If a reemployed Member makes such contributions, the City shall also make its corresponding contributions to the Fund. This provision shall be construed consistently with the requirements of the Uniformed Services Employment and Reemployment Act of 1994, as amended. (5) Any Member whose employment was terminated involuntarily and was thereafter reinstated as the direct result of an appeal or suit arising from the involuntary termination j shall be granted all Credited Service for the period of absence. (b) Accumulated Sick Leave and Major Medical Leave. At retirement and in calculating a Vested Termination Pension, a Member shall have added to his or her Credited Service, subject to the provisions of this Section, any hours of accumulated sick leave and/or unused major medical leave, as recorded in the official personnel records of the City, for which that employee has not received compensation. Notwithstanding the preceding sentence, accumulated sick leave and/or unused major medical leave shall not be taken into account to increase the pension of a Member receiving a Line of Duty disability pension. For Credited Service purposes, such accumulated sick leave and/or unused major medical leave for which a Member shall not receive compensation shall be converted into months using the following formula: total number of hours accumulated uncompensated sick leave and/or unused major medical leave divided by the Member's total scheduled hours of work for the year and multiplied by twelve (12). The resulting product represents the number of months in whole numbers and/or a decimal fraction of a month, and any whole number shall constitute that number of months to be added to Credited Service. If the resulting product contains a decimal value that is less than five-tenths (0.50),then no addition to Credited Service shall be made with respect to such decimal value, however, if the resulting product contains a decimal value that is five-tenths (0.50) or greater, then an additional month of Credited Service shall be provided for such decimal value. The addition of such accumulated sick leave and/or unused major medical leave to Credited Service shall not be applied toward determination of retirement eligibility, but only toward calculation of Retirement Benefits. Group I Members and Group III Members who have unused accumulated sick leave and/or major medical leave that was earned prior to October 1, 2013, will have the leave added to Credited Service earned or purchased prior to October 1, 2013. Unused accumulated sick leave and/or major medical leave earned on or after October 1, 2013, will be added to Credited Service earned or purchased after October 1, 2013. Group I Members and Group III Members who use j their accumulated sick leave and/or major medical leave prior to retirement will have the leave i Ordinance No.21459-09-2014 Page 10 of 28 f I i a i t deducted from accumulated sick leave and major medical hours earned prior to October 1, 2013, first. (c) Permissive Service Credits. I (1) General. Effective on or after October 1, 2002, a Member who has Earnings from I the City for the then current year may elect to purchase Permissive Service Credits and have his or her period of Credited Service increased for purposes of calculating the Member's Retirement Benefit, pursuant to the provisions of this Division. The Actuary shall prepare factors which shall- be used to determine the voluntary additional contributions that a Member must make to purchase Permissive Service Credits, provided, however, that in no event shall a Member be required to contribute an amount that exceeds the amount necessary to fund the benefit attributable to the additional Credited Service that is purchased. (2) Limitations. A Member may purchase up to five (5) years of Permissive Service I Credits that are attributable to non-qualified service, and a Member cannot purchase any Permissive Service Credits for non-qualified service prior to completion of five (5) years j of participation as a Member. i (3) Non-Qualified service. For purposes of Section 2.54(c), the term "non-qualified service" means service other than (i) service (including parental, medical, sabbatical, and similar leave) as an employee of the government of the United States, any state or political subdivision thereof, or any agency instrumentality of any of the foregoing (other than military service or service for credit which was obtained as a result of the repayment 1 described in Section 415(k)(3) of the Code), (ii) service (including parental, medical, sabbatical, and similar leave) as an employee (other than as an employee described in clause (i) above) of an education organization described in Section 170(b)(1)(A)(ii) of the Code which is a public, private, or sectarian school which provides elementary or secondary education (through grade 12), as determined under state law, (iii) service as an employee of an association of employees who are described in clause (i) above, or (iv) military service (other than qualified military service under Section 414(u) of the Code) recognized by such governmental plan. In the case of service described in clauses (i), (ii), or (iii) above, such service will be non-qualified service if recognition of such service would cause a member to receive retirement benefits for the same service under more than one (1) plan. (4) Purchase of Permissive Service Credits. A Member may purchase Permissive Service Credits pursuant to the rules, procedures and forms as may be adopted and amended by the Board in its complete discretion, which shall be uniform and nondiscriminatory and which shall be interpreted in a manner that is consistent with the provision of the retirement ordinance and applicable law. Permissive Service Credits may be purchased by a Member's direct payment to the trustee of the amount determined by the factors provided by the Actuary, or through a trustee to trustee transfer of such amount from the Member's account under an eligible deferred compensation plan (as defined in Code Section 457) or a qualified plan within the meaning of Code Section I, Ordinance No.21459-09-2014 Page 11 of 28 i I I E I I I ' I 401(a), including a 401(k) plan, or the Member's annuity contract meeting the requirements of Code Section 403(b). h Sec. 2.5-7. Disability Pension j I (a) Definition of Disabled Member. A Member is disabled (or continues to be disabled) if, because of bodily injury, disease or mental illness, the Member is incapacitated for life, in spite I of reasonable accommodations by the City, from performing the essential functions of (i) the trade, profession or occupation in which the Member was employed by the City when the Member suffered the bodily injury, disease, or mental illness and (ii) any other position which the Board,determines to be reasonably comparable to the position held by the Member, taking into account the Member's education, qualifications, experience, salary and other factors which the Board deems appropriate; provided, however, that no physical condition existing at the time of entry into the Fund shall be a basis for a disability pension prior to vesting. (b) General Provisions. 0 (1) Such disability must exist for at least ninety (90) consecutive days prior to a pp lication for a disability pension. (2) Such disability must not have been contracted, suffered or incurred while the Member was engaged in, or did not result from the Member having engaged in, a criminal j enterprise, or from habitual drunkenness, addiction to narcotics, self-inflicted injury, or from voluntary or involuntary service in the Armed Forces of the United States (including the United States Merchant Marine), any of its allies or any other foreign country. (3) Notwithstanding the provisions of Sections 2.5-26, 2.5-36, 2.5-46, 2.5-56, 2.5-66 and 2.5-76, no disability pension shall, at the time of commencement, exceed the Member's rate of Earnings. (4) To assist the Board in making disability determinations, the City shall provide the Executive Director with City job descriptions and qualifications, related salary ranges, I and other appropriate information as requested. (5) Continuation of a disability pension, whether granted before or after the enactment of this Article, shall be subject to all the provisions of this Section, including review and determination of the Member's eligibility for a disability pension. i (c) Qualification for Disability Pension. (1) A Member shall not qualify for a disability pension as hereinafter provided unless one I (1) or more duly licensed and practicing physician(s) appointed by the Executive Director has determined that the Member is not capable of performing the essential functions of I the positions identified under this Section. Determination of the existence of disability j shall not be made until ninety (90) days after the date such disability is alleged to have i I Ordinance No.21459-09-2014 Page 12 of 28 I I i i commenced, and benefits shall not commence before the first day of the month following the month in which such ninety-day period ends. (2) The Executive Director shall have the appointed physician(s) conduct an annual medical examination after a disability pension has been granted (unless deemed not necessary by the Executive Director due to the Member's medical condition) and at any I other time deemed necessary by the Board in order to determine whether the disability is continuing. The Fund will pay the expenses for medical examinations directed by the Executive Director or Board. To continue to receive a disability pension, the Member shall submit to any medical examination required by the Executive Director or Board. I (3) If at any time the Board is in reasonable doubt as to whether the Member is disabled as above defined, it may suspend the disability pension until the doubt is resolved, which 4 shall occur within a reasonable time. Any disability pension shall be terminated upon the Board's determination that the Member is not disabled as defined in this Section. r (4) No disability pension coverage shall be provided during a service break in excess of ninety (90) consecutive days unless the service break was caused by sickness or accident leading to total disability. (5) The disability pension specified herein shall not be payable during any period for which wages are received from the City, the State of Texas or any other branch of government while performing the duties of a Firefighter or Peace Officer. I (6) Falsification or omission on any part of the employment application of prior conditions or injuries for which a disability pension is or has been sought, falsification or i omission on any part of the disability pension application, or falsification or omission in connection with the continuation of a disability pension shall constitute grounds for j denial of a disability pension or for revocation of any disability pension previously granted. (7) The Board's determination on all matters concerning the granting, refusing or revoking of a disability pension shall be final and conclusive on all parties, and no appeal can be made therefrom. A Member is entitled to a reasonable hearing (at which the Member may appear in person, with or by a representative, or in writing) before the Board makes its determination. (8) No disability pension shall be granted (or continued) while the Member is working for the City; provided however, a Member may be granted a disability pension if the Executive Director or the Board has been informed by the City that the Member's employment is about to be terminated by the City because of the Member's inability to perform the essential functions of the Member's position. Any such disability pension granted under Section 2.5-7(c)(8) shall not become effective until the month after the Member has stopped working for the City. (9) Except as otherwise provided by law, to be eligible to continue receiving a disability i i Ordinance No.21459-09-2014 Page 13 of 28 1{ i I i I i f pension, a Member must have complied with the medical recommendations (including i rehabilitation therapy and treatment) as prescribed by the Member's treating physician(s), the physician(s) appointed by the Executive Director and/or the Texas Rehabilitation Commission. j I (d) Calculation of Disability Pension. The calculation for disability pension can be found in the following Sections: r i (1) Section 2.5-26 for a Group III Member; (2) Section 2.5-36 for a Group IV Member; (3) Section 2.5-46 for a Group I Member; (4) Section 2.5-56 for a Group II Member; i (5) Section 2.5-66 for a Firefighter; (6) Section 2.5-76 for a Group VI Firefighter. i ji (e) Recovery from Disability. If the Board determines that a disabled Member receiving a disability pension hereunder is no longer disabled as above defined, the Member's disability i pension shall immediately cease. If such Member is re-employed by the City immediately ' i following such determination by the Board, the Member's Fund membership shall be reinstated as of the date of such re-employment, with full Credited Service to the date of disability. The Member shall receive no additional Credited Service for the period of disability, provided however, that such period of disability shall be used to determine attainment of Normal Retirement Date and special retirement date. If such Member is not re-employed by the City immediately following certification of recovery, the Member shall be considered as a terminated i Fund Member and shall have no further interest in the Fund other than a refund of any excess of the Member's total contributions, plus Regular Interest (at the Regular Interest rate in effect on the date of any refund), less the amount already received from the Member's Cash Balance Account, if applicable, over the total of disability payments made to the Member; provided, however, that if such Member had a Vested interest in pension credits as of the date of which the Member was certified disabled, the Member shall receive a Vested Termination Pension from the later of the date of certification of recovery or attainment of the Vested Retirement Date under Section 2.5-24, 2.5-34, 2.5-44, 2.5-54, 2.5-64, or 2.5-74, whichever is applicable, equal to the amount which would have been payable under the provisions of this Section had the Member terminated employment on the date the disability pension began. Any death benefits thereafter shall be determined in accordance with the applicable provisions of this Article. (f) 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 t Ordinance No.21459-09-2014 Page 14 of 28 I r � 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 I Executive Director an affidavit on the Executive Director's approved form swearing that the I 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 file 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 (2) weeks after the tax return has been filed. i If the disabled Member's total receipt of Earned Income, net earnings from self-employment, and City disability pension exceed the annualized base hourly rate of pay the Member would 4 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 j 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 2.5-7(f), 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 disabled Member's disability pension upon the Member's failure to j submit on a timely basis the required income tax returns with all attachments thereto and related documents. If the disabled Member subsequently provides the required documentation by the j 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 Section, and including the payment of any previously withheld amounts, without interest. If the disabled Member fails to provide the required documentation by the end of the calendar year in which the return was j due, the disabled 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 this Section, any amounts paid to a disabled Member's affiliated entity in connection with the performance of services by the disabled Member shall constitute "Earned Income," and any attempt to circumvent the limitations under this Article on Earned Income and Net Earnings from Self-Employment through the use of affiliated entities shall be grounds for the Board to terminate the disabled Member's disability pension. Ordinance No.21459-09-2014 Page 15 of 28 i Sec. 2.5-8. Cost-of-Livin g Adjustment (a) History. In 1999, City Council adopted Ordinance 13842, which established a guaranteed simple 2% cost-of-living adjustment for all Members. In 2007, City Council adopted Ordinance 17839-10-2007, which established an ad hoc cost-of-living adjustment for all City employees hired on or after December 31, 2007, and all Members who were not vested as of December 31, 2007. All Members who were vested as of December 31, 2007, all retired Members, and all beneficiaries were allowed to make a selection to either stay with the two percent (2%) simple cost-of-living adjustment or to receive the ad hoc cost-of-living adjustment. The Members who did not make a selection were automatically defaulted into the two percent (2%) cost-of-living adjustment. In 2011, City Council adopted Ordinance 19599-03-2011, which , eliminated the cost-of-living adjustment for General Employees hired after July 1, 2011. In 2012, City Council adopted Ordinance 20471-10-2012, which eliminated the cost-of-living adjustment for Group IV Members, implemented the two percent (2%) cost-of-living adjustment for all service earned or purchased after October 1, 2013, for Group I and Group III Members, j allowed Group I Members and Group III Members who were subject to the ad hoc cost-of-living adjustment to select the two percent (2%) guaranteed cost-of-living adjustment for past years of service, and allowed Beneficiaries who were subject to the ad hoc cost-of-living adjustment to select the two percent (2%) guaranteed cost-of-living adjustment for future benefits. Active Firefighters, and those Firefighters who retired or separated from employment during the term of the April 13, 2010, Collective Bargaining Agreement between the City and the Fort Worth Professional Firefighters Association IAFF Local 440, were not eligible to participate in the 2012 selection. According to the terms of this ordinance amendment, the cost-of-living adjustment is eliminated for Group VI Firefighters. i I (b) Two Percent Simple Cost-of-Living Adjustment. (1) The two percent (2%) simple cost-of-living adjustment is applicable to the following: I a. Members who were vested as of December 31, 2007, who selected the guaranteed two percent (2%) cost-of-living adjustment during the 2007 selection process; b. Members and Beneficiaries (including those receiving disability retirement and survivors [including children]) receiving benefits on December 31, 2007, who elected the guaranteed two percent (2%) cost-of-living adjustment in the election conducted pursuant to the 2007 selection process; c. Members were vested as of December 31, 2007, and Beneficiaries who failed to make a selection during the 2007 selection process; i d. Credited Service earned or purchased on or after October 1, 2013, for Group III Members, who were subject to the ad hoc cost-of-living adjustment; i I e. Credited Service earned or purchased on or after October 1, 2013, for Group I I Ordinance No.21459-09-2014 Page 16 of 28 I i I I r i Members, who were subject to the ad hoc cost-of-living adjustment; i f (2) Calculation of the Two Percent Simple Cost-of-Living Adjustment: Upon I retirement, on the first day of each January a cost-of-living adjustment shall be made on the Base Pension of a Member subject to the two percent (2%) cost-of-living adjustment by increasing the amount of the actual pension by two percent (2%) of the Base Pension, unless otherwise provided herein. To be eligible for a cost-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. (c) Ad Hoc Cost-of-Living Adjustment I (1) The ad hoc cost-of-living adjustment is applicable to the following: F a. Credited Service until September 30, 2013, for Group I Members who were j not vested as of December 31, 2007, and are not currently receiving a benefit pursuant to this Article, and who did not select to receive the two percent (2%) i simple cost-of-living adjustment during the 2012 selection process; F b. Credited Service until September 30, 2013, for Group I Members who were vested as of December 31, 2007, who selected the ad hoc cost-of-living adjustment in the 2007 selection process, and are not currently receiving a benefit pursuant to this Article, and who did not select to receive the two percent (2%) simple cost-of-living adjustment during the 2012 selection process; c. Credited Service until September 30, 2013, for Group III Members who were not vested as of December 31, 2007, and are not currently receiving a benefit C pursuant to this Article, and who did not select to receive the two percent (2%) simple cost-of-living adjustment during the 2012 selection process; d. Credited Service until September 30, 2013, for Group III Members who were vested as of December 31, 2007, who selected the ad hoc cost-of-living adjustment in the 2007 selection process, and are not currently receiving a benefit pursuant to this Article, and who did not select to receive the two percent (2%) simple cost-of-living adjustment during the 2012 selection process; e. Firefighters hired prior to December 31, 2007, who were not vested as of December 31, 2007; j k f. Firefighters who were vested as of December 31, 2007 who selected the ad hoc cost of living adjustment; I g. Members and Beneficiaries [including those receiving disability retirement and i survivors (including children)] receiving benefits under this Article who are under the ad hoc cost-of-living adjustment, and who did not elect to return to the I Ordinance No.21459-09-2014 Page 17 of 28 l i i I P I guaranteed two percent (2%) simple cost-of-living adjustment during the 2012 j selection. i (2) Calculation of the Ad Hoc 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 i the pension of Members who are subject to the ad hoc cost-of-living adjustment pursuant to Section 2.5-8(c) as follows: I a. Prior to December 31 of each year, the Fund's Actuary shall make a written i 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: 1. Grant a compounded ad hoc cost-of-living adjustment of four percent (4%), if the Actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the Fund, after granting the four percent (4%) cost-of-living adjustment, is eighteen(18.0) years or less; 2. Grant a compounded ad hoc cost-of-living adjustment of three percent (3%), if the Actuary certifies that the amortization period required to pay off the unfunded actuarial accrued liability of the Fund, after granting the three percent (3%) cost-of-living adjustment, is between eighteen and one-tenth (18.1) and twenty-four(24.0) years; i 3. Grant a compounded ad hoc cost-of-living adjustment of two percent (2%), if the Actuary certifies that the amortization period required to pay off the I unfunded actuarial accrued liability of the Fund, after granting a two percent (2%) cost-of-living adjustment, is between twenty-four and one-tenth (24.1) and twenty-eight (28.0) years; i 4. Grant no ad hoc 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 twenty-eight and one-tenth (28.1) years or more. (d) DROP and Cost-of-Living Adjustment. (1) 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 two percent (2%) cost-of-living adjustment for the DROP period before the Member made the ad hoc cost-of-living election. The ad hoc cost-of-living adjustment will apply for the Member's remaining DROP period. (2) If a Member elects the two percent (2%) cost-of-living adjustment, and by December 31, 2007, the Member has completed at least two (2) years of service after i making the DROP Election, the Member's initial pension benefit upon retirement will i Ordinance No. 21459-09-2014 Page 18 of 28 I I � I i f I also receive cost-of-living adjustment for the entire DROP period. (3) 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 whether the Member is entitled to a cost-of-living adjustment. (e) Eligibility for the Cost-of-Living Adjustment. Group II Members, Group IV Members, and Group VI Members, and their Beneficiaries are not eligible to receive a cost-of-living adjustment on their retirement benefits. f SECTION 2. Chapter 2.5, Article I- Employees' Retirement Fund, is amended by adding Division 7 as i follows: DIVISION 7. PROVISIONS FOR GROUP VI FIREFIGHTERS (FIREFIGHTERS HIRED ON OR AFTER JANUARY 10,2015) Sec. 2.5-70. Applicability This Division applies to Group VI Firefighters as defined by Section 2.5-1. Sec. 2.5-71. Earnings 1 Earnings shall mean the amount actually paid to a Group VI Firefighter by the City for services rendered to the City during the calendar year, plus acting, assignment, holiday, longevity, educational incentive, safety award, incentive and shift differential pay, as reported on the Group VI Firefighter's W-2 form. "Earnings" shall also include weekly workers' compensation benefits (currently referred to as temporary income benefits). Earnings will include Built-in Overtime as defined by Section 2.5-1. All other overtime is excluded. Regardless of the fact that the following payments may be shown on a Group VI Firefighter's W-2 form, Earnings shall not include: (1) any non-salary allowance (such as uniform reimbursement, automobile allowance or mileage, etc.), i I (2) lump sum payments received at time of termination for unused vacation, sick and/or major medical, and personal leave, (3) any award by a court, administrative body, or settlement agreement in excess of Earnings, (4) any payment received from the City's Wellness Program, I (5) any amount received from the City's vacation sell-back program, I i I Ordinance No.21459-09-2014 Page 19 of 28 s I i (6) any amount paid to a Group VI Firefighter for which the City does not contribute to the Fund under Section 2.5-3(b), and I (7) overtime that is not Built-In Overtime. i A Group VI Firefighter participating in a City-sponsored deferred compensation plan shall have the amount of any deferred compensation credited to that Group VI Firefighter during the calendar year added to Earnings reported on the Group VI Firefighter's W-2 form to arrive at total Earnings for Fund matters. Mandatory Group VI Firefighter contributions that are picked- up by the City and excluded from a Group VI Firefighter's W-2 form shall also be included as part of Earnings. Notwithstanding the foregoing, Earnings in excess of two hundred thousand dollars ($200,000.00), if any (or such other amounts as may be determined by taking into account the cost-of-living adjustment provided under Section 401(a)(17) of the Code) shall be disregarded for all purposes of this definition. Notwithstanding the preceding provisions, Earnings shall not include any amounts paid following a Group VI Firefighter's effective DROP Election. See. 2.5-72. Retirement Dates I 4 (a) Normal Retirement Date. A Group VI Firefighter shall be eligible for a Standard Pension Benefit or an Alternative Pension Benefit on or after the Group VI Firefighter's Normal Retirement Date which shall be the last day of the month in which the earliest of the following V occurs: I 0 (1) The Group VI Firefighter's years of age and years of Credited Service total eighty (80); or i (2) The later of(i) the date on which the Group VI Firefighter reaches age sixty-five (65) or(ii)the fifth anniversary of the date the Group VI Firefighter joined the Fund. i (b) Vested Terminated Retirement Date. A Vested Group VI Firefighter who is voluntarily or i involuntarily separated from the service of the City shall be eligible for pension benefits on or ' after such Group VI Firefighter's Vested termination date which shall be the last day of the month in which the Group VI Firefighter reaches age fifty (50), or, if earlier, the last day of the month in which the Group VI Firefighter's age when added to his or her Credited Service total eighty (80). i See. 2.5-73. Compensation Base for Determining Benefits for Group VI Firefighters (a) Pension, death, disability and Vested termination benefits shall be based upon the Group VI Firefighter's Compensation Base which shall mean the average annual Earnings which were paid to the Group VI Firefighter by the City for employment with the City during any five years in which the Group VI Firefighter had the highest annual Earnings. If a Group VI Firefighter has less than five (5) calendar years of employment, the Group VI Firefighter's Compensation Base shall be determined by the Executive Director under uniform, non-discriminatory procedures that Ordinance No.21459-09-2014 Page 20 of 28 I I ! i are consistently applied. (b) For Compensation Base purposes, any lump sum payments of Earnings for any prior time ! period, whether awarded to the Group VI Firefighter by a court, administrative body or settlement agreement, shall be retroactively attributed to the calendar year in which it would otherwise have been received by the Group VI Firefighter from the City for services rendered. i (c) For purposes of computing the Compensation Base for a Group VI Firefighter who has made an effective DROP Election, the Group VI Firefighter's Compensation Base shall be calculated using the Group VI Firefighter's Earnings prior to the effective date of the DROP Election. I Sec. 2.5-74. Termination Benefits and Vesting ; (a) Contribution Refund Prior to Vesting. A Group VI Firefighter who is voluntarily or involuntarily separated from the service of the City before the Group VI Firefighter is Vested shall be entitled to receive the amount of the Group VI Firefighter's contributions plus Regular Interest (at the Regular Interest rate in effect on the date of such payment) less any amount previously paid to the Group VI Firefighter from the Fund. (b) Vested Termination Pension. I (1) A Vested Group VI Firefighter who is voluntarily or involuntarily separated from the service of the City shall be entitled to receive a Vested Termination Pension payable: (i) in full, pursuant to Section 2.5-72(b) or (ii) in a reduced amount commencing on or after age fifty (50). A Group VI Firefighter must file a request for the commencement of the Vested Termination Pension by completing such forms and following such procedures as are established by the Board. A Vested Termination Pension shall be ' payable monthly on the first day of each month commencing with the month following approval of the Vested Termination Pension by the Board. I (2) A Vested Termination Pension shall be an annual life pension, the amount of which shall be the specified percentage of the Group VI Firefighter's Compensation Base ; multiplied by his or her total years of Credited Service to date of such voluntary or involuntary separation from the service of the City. For purposes of the preceding sentence, the specified percentage of the Group VI Firefighter's Compensation Base shall be two and one quarter percent (2.25%), unless the Group VI Firefighter has attained his or her Normal Retirement Date prior to the date that pension payments begin, in which case the specified percentage shall be two and one half percent (2.5%). A Vested Termination Pension shall be calculated using the specified percentage and Compensation Base in effect at the time the Group VI Firefighter's earned the Credited Service. (3) If a Group VI Firefighter has not attained his or her Normal Retirement Date prior to the date the Vested Termination Pension payments begins, the amount of reduction for j commencement of a pension prior to the Group VI Firefighter's Normal Retirement Date ! Ordinance No.21459-09-2014 Page 21 of 28 r I I i [in addition to the specified percentage of two and one quarter percent (2.25%)], shall be five-twelfths percent (5/12%) for each month by which commencement of the pension antedates the Group VI Firefighter's Normal Retirement Date had he or she remained employed by the City. I (c) Contribution Refund After Vesting in Lieu of Vested Termination Pension. Any Vested Group VI Firefighter who is voluntarily or involuntarily separated from the service of the City may elect to receive a refund of the Group VI Firefighter's contributions, plus Regular Interest (at the Regular Interest rate in effect on the date of such payment) less any amount previously paid to the Group VI Firefighter from the Fund, either at the date of such separation or at any time thereafter prior to commencement of Retirement Benefit, but by so doing, the Group VI f Firefighter shall forfeit all rights under the Fund and thereafter be entitled to no further benefits hereunder. i Sec. 2.5-75. Retirement Pension (Benefit) i (a) Pensions Commencing upon Normal Retirement Date. A Vested Group VI Firefighter under this Division who retires on or after the Group VI Firefighter's Normal Retirement Date and requests commencement of the Group VI Firefighter's pension, or a Group VI Firefighter who terminates employment prior to the Group VI Firefighter's Normal Retirement Date and who waits until such Normal Retirement Date to apply for a pension, shall receive an annual life pension, the amount of which shall be two and one half percent (2.5%) of the Group VI Firefighter's Compensation Base multiplied by the Group VI Firefighter's total years of Credited Service, payable monthly on the first day of each month commencing with the month following the Board's approval of the Group VI Firefighter's pension. This pension benefit shall be called i the "Group VI Firefighter's Standard Pension Benefit." (b) Alternative Pension Benefit. In lieu of the Standard Pension Benefit, a Group VI Firefighter may irrevocably elect with his or her spouse's consent (where applicable), in advance of his or her retirement and pursuant to regulations and requirements the Board in its discretion may adopt, to receive an "Alternative Pension Benefit" which shall be Actuarially Equivalent to the Group VI Firefighter's Standard Pension Benefit and which shall be payable in two (2) parts: (i) one (1)part in a lump sum amount not less than five percent (5%) nor greater than twenty-five percent (25%) of the Actuarial Equivalent of the Group VI Firefighter's Standard Pension Benefit, which lump sum shall be payable on the date benefits commence under (ii); and a the remainder in an annual life pension,payable monthly on the first day of each month commencing with the month following the Board's approval of the Group VI Firefighter's pension. I I (c) Limitation on Alternative Pension Benefit. Notwithstanding any other provision in this Division to the contrary, the option to elect an Alternative Pension Benefit shall not be available for any disability pension under Section 2.5-76, death benefit under Section 2.5-77, or Vested Termination Pension under Section 2.5-74, nor shall it be available to any retired Group VI Firefighter who is receiving pension benefits hereunder as of the effective date of the Alternative Pension Benefit provisions of this Section, nor shall it be available upon re-retirement to any retired Group VI Firefighter who becomes re-employed by the City. Ordinance No.21459-09-2014 Page 22 of 28 I I f I i i � I Sec. 2.5-76. Disability Pension i (a) See Section 2.5-7 for General Provisions related to Disability Pension (b) Disability in Line of Duty. If a Group VI Firefighter, whether or not Vested, becomes disabled as defined in Section 2.5-7 while in Line of Duty, the Group VI Firefighter shall receive an annual life pension, the amount of which shall be the specified percentage of the Group VI Firefighter's Compensation Base multiplied by the total years of Credited Service which would have accrued if the Group VI Firefighter had worked to Normal Retirement Date, but not less than two hundred fifty dollars ($250.00) per month. For purposes of the preceding sentence, the specified percentage of the Group VI Firefighter's Compensation Base shall be two and one quarter percent (2.25%), unless the Group VI Firefighter is already eligible to retire on or after his or her Normal Retirement Date, in which case the specified percentage shall be two and one half percent(2.5%). (c) Disability Not in Line of Duty for Vested Group VI Firefighters. If a Vested Group VI Firefighter becomes disabled, as defined in Section 2.5-7, while not in Line of Duty, the Group VI Firefighter shall receive an annual life pension, the amount of which shall be the specified percentage of the Group VI Firefighter's Compensation Base multiplied by the Group VI Firefighter's total years of Credited Service to date of actual retirement. For purposes of the preceding sentence, the specified percentage of the Group VI Firefighter's Compensation Base shall be two and one quarter percent (2.25%), unless the Group VI Firefighter is already eligible to retire on or after the Group VI Firefighter's Normal Retirement Date, in which case the specified percentage shall be two and one half percent(2.5%). (d) Disability Not in Line of Duty f or Non-Vested Group VI Fire fi g hters. If a Group VI Firefighter becomes disabled while not in Line of Duty before the Group VI Firefighter is 4 Vested, then such Group VI Firefighter shall be entitled to receive a contribution refund in accordance with Section 2.5-74(a). Sec. 2.5-77. Death Benefit i I (a) While in Line of Duty (1) If a Group VI Firefighter dies before retirement while in Line of Duty and as a result of the performance of that Group VI Firefighter's duties, the surviving widow or widower shall be entitled to receive a monthly pension, the amount of which shall be seventy-five percent (75%) of the Group VI Firefighter's pension, based on the number of years of Credited Service that would have accrued had the Group VI Firefighter lived to ' the Group VI Firefighter's Normal Retirement Date, but not less than two hundred fifty dollars ($250.00). (2) Each dependent child of such Group VI Firefighter under eighteen (18) years of 4 age shall be entitled to receive a monthly pension, the amount of which shall be one hundred dollars ($100.00), provided however, that if no surviving widow or widower shall be entitled to receive a monthly pension pursuant to the terms of this Section, all G Ordinance No.21459-09-2014 Page 23 of 28 i i such dependent children shall share equally a monthly pension, the amount of which shall be seventy-five percent (75%) of the Group VI Firefighter's pension, based on the number of years of Credited Service that would have accrued had the Group VI i Firefighter lived to the Group VI Firefighter's Normal Retirement Date, but not less than two hundred fifty dollars ($250.00). i (3) If a Group VI Firefighter dies while in Line of Duty and leaves no widow or widower or children eligible to receive a benefit hereunder, but is survived by a dependent parent or parents, such dependent parent(s), or the surviving dependent parent, shall be entitled to receive a monthly pension, the amount of which shall be seventy-five i percent (75%) of the Group VI Firefighter's accrued pension projected to his or her Normal Retirement Date, but not less than two hundred fifty dollars ($250.00). i (4) The survivor's monthly pension benefit for a Group VI Firefighter who dies in Line of Duty shall be calculated using a multiplier of two and one half percent (2.5%). (b) While Not in Line of Duty. (1) Vested Group VI Firefighter. a. If a Vested Group VI Firefighter dies before retirement, while not in Line of Duty, the surviving widow or widower shall be entitled to receive a monthly pension,the amount of which shall be seventy-five percent (75%) of the Group VI Firefighter's accrued pension but not less than one hundred fifty dollars ($150.00). I b. Each dependent child under eighteen (18) years of age of such Vested Group VI Firefighter shall be entitled to receive a monthly pension, the amount of which shall be one hundred dollars ($100.00); provided, however, that if no surviving widow or widower shall be entitled to receive a monthly pension pursuant to the terms of this Section, all such dependent children shall share equally a monthly i pension, the amount of which shall be seventy-five percent (75%) of the Group VI Firefighter's accrued pension, but not less than one hundred fifty dollars r ($150.00). j c. If a Group VI Firefighter dies while not in Line of Duty and leaves no widow or widower or children eligible to receive a benefit hereunder, but is survived by a dependent parent or parents, such dependent parent(s), or the surviving dependent parent, shall be entitled to receive a monthly pension, the amount of which shall be seventy-five percent (75%) of the Group VI Firefighter's accrued pension, but not less than one hundred fifty dollars ($150.00). i i d. The survivor's monthly pension benefit for a Vested Group VI Firefighter who dies not in Line of Duty shall be calculated using a multiplier of two and one quarter percent (2.25%). R i Ordinance No.21459-09-2014 f Page 24 of 28 I i ! (2) Group VI Firefighter Not Vested at Time of Death. If a Group VI Firefighter was ! not Vested on the date of death, the surviving widow or widower shall be entitled to the return of all contributions which the Group VI Firefighter paid into the Fund during the Group VI Firefighter's life plus Regular Interest thereon (at the Regular Interest rate in j effect on the date of any payment to the widow or widower). If there is not a surviving widow or widower, the contributions shall be paid to the estate of the Group VI i Firefighter. (c) After Retirement. � ! (1) Group VI Firefighters Who are Married at Retirement. The surviving spouse of a Group VI Firefighter who dies after retirement would be eligible to receive a monthly pension if the Group VI Firefighter elected to receive a reduced monthly pension prior to retirement, on a form and subject to procedures developed by the Executive Director of the Fund. The Group VI Firefighter's reduced monthly pension shall be determined in a manner that is actuarially neutral to the Fund, based on Actuarial Tables in effect on the date of the Group VI Firefighter's election to receive a reduced monthly pension. Notwithstanding the preceding, a surviving spouse who was not married to the deceased Group VI Firefighter at the time of his or her retirement shall be eligible to receive a monthly pension if the Group VI Firefighter 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 Group VI Firefighter's completion of two (2) years of marriage to his or her spouse. The 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 I date of the Group VI Firefighter's election to receive a reduced monthly pension. The Group VI Firefighter can elect for his or her surviving spouse to receive either one hundred percent (100%), seventy-five percent (75%), fifty percent (50%), or twenty-five percent (25%) of the Group VI Firefighter's reduced monthly pension. (2) Group VI Firefighters Who Are Not Married on Date of Retirement. Upon the death of a retired Group VI Firefighter, who was not married at retirement, a Beneficiary designated by the Group VI Firefighter at retirement may be eligible to receive a monthly pension if the Group VI Firefighter has elected to receive a reduced monthly pension, on a form and subject to procedures developed by the Executive Director. The Group VI Firefighter'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 Group VI Firefighter's election to receive a reduced monthly pension. The Group VI Firefighter can elect for his or her designated Beneficiary to receive either one hundred r percent (100%), seventy-five percent (75%), fifty percent (50%), or twenty-five percent (25%) of the Group VI Firefighter's reduced monthly pension. If a Group VI Firefighter who was not married at retirement and who selected a designated Beneficiary pursuant to this subsection later marries, only the designated Beneficiary would be entitled to receive a lifetime monthly pension. (3) Each dependent child under eighteen (18) years of age of such retired deceased Group VI Firefighter shall be entitled to receive a monthly pension, the amount of which I Ordinance No.21459-09-2014 Page 25 of 28 i i i i f shall be one hundred dollars ($100.00), but shall cease upon the earliest of such child's death, marriage or attainment of age eighteen(18) pursuant to the terms of this Section. j I (d) Death of Vested Terminated Group VI Firefighter Prior to Pension Commencing. If a terminated Group VI Firefighter entitled to a pension dies before his or her pension commences, the Group VI Firefighter's designated Beneficiary, or if none, the Group VI Firefighter's estate shall receive an amount equal to the Group VI Firefighter's total contributions to the Fund, plus Regular Interest (at the Regular Interest rate in effect on the date of any payment to the estate). If the Vested Group VI Firefighter's years of age and years and Credited Service total at least sixty-five (65) as of the date of the Group VI Firefighter's termination, the Group VI Firefighter's eligible dependents shall receive the benefit specified under Section 2.5-77(b), based on the pension to which the Group VI Firefighter would have been entitled as of the date of the Group VI Firefighter's death, in lieu of the payment of contributions plus Regular Interest (at the Regular Interest rate in effect on the date of any such payment). If the Group VI Firefighter's years of age and service did not total at least sixty-five (65) as of the date of the Group VI Firefighter's termination, the Group VI Firefighter's eligible dependents may choose between the refund of contributions, the payment of the survivor benefit at the date the Group VI Firefighter would have been eligible to draw the benefit, or an immediate benefit at an actuarially reduced rate. I (e) General Provisions (1) If a deceased Group VI Firefighter leaves no widow, widower, designated beneficiary, children or dependent parents eligible to receive a benefit hereunder, the Group VI Firefighter'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 Group VI Firefighter's estate. (2) Payments to a child shall be made whether or not a widow, widower, or designated Beneficiary survives and shall continue after the death of a widow, widower, or designated Beneficiary 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 Section, a parent will be deemed to be dependent if the Group VI Firefighter provides over one half of the parent's support. Payments to a widow, widower, or designated Beneficiary shall continue after remarriage, but shall cease upon the death of the widow, widower, or designated Beneficiary. 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 payment can be made. After payments cease, any excess of the Group VI Firefighter's total contributions over and above disability and/or death benefits paid, plus Regular Interest at date of death shall be paid to the Firefighter's estate. i (3) Except as provided in Section 2.5-77(d), death benefit coverage during service breaks in excess of ninety (90) consecutive calendar days shall be limited to Group VI Firefighters who are absent due to service-connected injury incurred while in Line of r Duty. Ordinance No.21459-09-2014 Page 26 of 28 i i I I (4) Benefits hereunder shall be payable on the first day of each month commencing with the month following the month in which the Group VI Firefighter's death occurs. The Board shall determine all questions of dependency, and its determination shall be final and 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 i be considered dependent. Sec. 2.5-78-2.5-225: Reserved i i i SECTION 4. This ordinance shall be cumulative of all provisions of ordinances of the Code of the City of i Fort Worth, Texas (1986), as amended, except where the provisions of this ordinance are in direct i conflict with the provisions of such ordinances and such Code, in which event conflicting provisions I of such ordinances and such Code are hereby repealed. SECTION 5. i It is hereby declared to be the intention of the City Council that the phrases, clauses, sentences, paragraphs and sections 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 i any of the remaining phrases, clauses, sentences, paragraphs and sections of this ordinance, since i the same would have been enacted by the City Council without the incorporation in this ordinance I of any such unconstitutional phrase, clause, sentence,paragraph or section. 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 i i the adoption of this Ordinance have been done, have happened and have been performed in i f proper and lawful time. i Ordinance No.21459-09-2014 I Page 27 of 28 I I I i I SECTION 7. This ordinance shall be in full force and effect from and after its adoption. APPROVED AS TO FORM AND LEGALITY: ATTEST: I / l Assistant City Attorney Mary J. Ka City Secretary i Adopted: September 16, 2014 i Effective: September 16, 2014 ' I I i i i f i i F I i i i Ordinance No.21459-09-2014 Page 28 of 28 I i City of Fort Worth, Texas r Mayor and Council Communication NCIL=,ACTION .Approved on 9/16/2014 =Ordina'nce No21459=,09-20`1<<I DATE: Tuesday, September 16, 2014 REFERENCE NO.: G-18308 i LOG NAME: 12NEW FIREFIGHTER PENSION CHANGES 2014 SUBJECT: Adopt Ordinance Amending Chapter 2.5, Retirement, Article I, Employees' Retirement Fund, of the City Code to Modify Pension Benefits for Firefighters Hired on or After January 10, 2015 (ALL COUNCIL I DISTRICTS) RECOMMENDATION: It is recommended that the City Council adopt the attached ordinance amending Chapter 2.5, Retirement, Article I, Employees' Retirement Fund, of the City Code to modify pension benefits for Firefighters hired on or after January 10, 2015. DISCUSSION: In 1945 the City of Fort Worth established the Employees' Retirement Fund of the City of Fort Worth (Fund) which is a tax-qualified government pension plan (Plan). The City picks-up and pays member contributions on a pre-tax basis for the employee. Since 2007, the Fund has been governed by 6243i of the Texas Revised Civil Statutes. The statute permits both the Retirement Fund Board and the City Council to make rules governing the Fund. The Fund is also subject to Article 16, Section 66 of the Texas Constitution, which prohibits accrued pension benefits from being decreased. Previous Benefit Reductions In 2011, the City Council adopted an ordinance implementing benefit reductions for general employees hired on or after July 1, 2011 (Ordinance No.19599-03-2011). Those reductions included a reduction in the normal retirement multiplier (2.5 percent), a reduction in the benefit calculation from the highest three i years of earnings to highest five years of earnings and the elimination of the Cost of Living Adjustment (COLA) at retirement, among others. In 2012, the City Council adopted Ordinance No. 20471-10-2012, which implemented similar benefit reductions for police officers hired on or after January 1, 2013. Pension benefits for firefighters were not modified pursuant to the terms of the 2010 Collective Bargaining Agreement (2010 CBA) between the City and the International Association of Fire Fighters, Local 440 (the Association). However, Article 16, Section 2 of the 2010 CBA states that Firefighters hired after September 30, 2013 are "eligible for the same benefits offered to all other employees at that time," therefore allowing the City to modify pension benefits for those Firefighters. I i Collective Bargaining Negotiations f In September 2012, representatives from the City and the Association began face-to-face collective bargaining negotiations to discuss the terms and conditions of employment, including wages and pension benefits, for the firefighters represented by the Association. Over the course of the next 15 months, the City carefully considered all proposals from the Association in good faith, and offered numerous counter- proposals in an effort to reach an Agreement on a comprehensive new Collective Bargaining I Logname: 12NEW FIREFIGHTER PENSION CHANGES 2014 Page 1 of 3 I I Agreement. After 11 face-to face meetings, the City and the Association were unable to reach an Agreement regarding at least two significant subjects—wages and changes to the pension benefits for current and future firefighters. As a result, the parties reached impasse in their collective bargaining i negotiations on December 31, 2013. The evergreen period in the Collective Bargaining Agreement i between the City and the Association expires on September 30, 2014. The City and the Association resumed negotiations on August 12, 2014, and have not reached an Agreement on the pension issue. Consistent with the Rule 11 Agreement reached in state court on August 28, 2014, the terms of the current contract that allow the City to modify benefits for Firefighters hired on or after September 30, 2013 to mirror those of all other employees, and as indicated to the Association in bargaining on September 10, 2014, the City is proceeding with adoption of pension changes for new Firefighters. The effective date of these changes will be delayed to include Firefighters hired on or after January 10, 2015, again consistent with the Rule 11 Agreement. Since this is a topic that is subject to ` collective bargaining and talks may continue, the final benefit structure may change if negotiations are fruitful between now and January 10, 2015 and such changes are adopted by the City Council. Recommended Ordinance Amendments i On January 14, 2014, the City Council adopted Resolution No. 4276-01-2014, notifying the Board of Trustees of the Fund that the City Council intended to consider and vote on amendments to the Retirement Ordinance for firefighters to reduce non-accrued benefits provided by the Plan. The proposed amendments to the ordinance for Firefighters hired on or after January 10, 2015 (referred to as Group VI Firefighters), will: ! i 1. Add definitions for Group VI Firefighters and Built-In Overtime; I 2. Amend current definitions to include Group VI Firefighters; i 3. Modify Benefits For Firefighters Hired on or after January 10, 2015, as follows: i a. No Cost of Living Adjustment; I b. Compensation base is High 5 and does not include vacation sell-back, payments from the City's Wellness Program, or overtime, except for Built-In Overtime, ; ' c. Multiplier for normal retirement, death in the line of duty, and vested termination retirement is 2.5 I percent; d. Multiplier is 2.25 percent for vested termination benefits drawn before normal retirement date (early retirement), benefits for death not in the line of duty for vested employees, disability in the line of duty, and disability not in the line of duty for vested employees; I e. Multiplier and compensation base for vested termination benefits will be the multiplier and compensation base in effect on the date the credited service was earned or purchased; and F f. Actuarially neutral survivor benefit. C i FISCAL INFORMATION /CERTIFICATION: The Financial Management Services Director certifies that the proposed changes are designed to improve the long term funded status of the Retirement Fund, which may have a positive impact on City funds in the future. I i - i Logname: 12NEW FIREFIGHTER PENSION CHANGES 2014 Page 2 of 3 I TO Fund/Account/Centers FROM Fund/Account/Centers j i CERTIFICATIONS: Submitted for City Manager's Office by: Susan Alanis (8180) Originating Department Head: Sarah Fullenwider (7606) f Additional Information Contact: Laetitia Brown (6639) II i I. 1 I i . i i i i i I i I I; I Logname: 12NEW FIREFIGHTER PENSION CHANGES 2014 Page 3 of 3 I