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HomeMy WebLinkAboutOrdinance 21510-10-2014 I I I ORDINANCE NO. 21510-10-2014 AN ORDINANCE AMENDING CHAPTER 2.5, "RETIREMENT," I ARTICLE I, "EMPLOYEES' RETIREMENT FUND," DIVISION 1, "GENERAL PROVISIONS" TO DELETE UNUSED DEFINITIONS AND ADD DEFINITIONS; REVISING SCOPE OF DIVISION 6 TO INCORPORATE BENEFIT CHANGES AND REDUCTIONS TO THE EMPLOYEES' 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 j PROVIDING AN EFFECTIVE DATE. I WHEREAS, the City of Fort Worth City Council ("City Council") adopted by Ordinance Chapter 2.5 of the Code of the City of Fort Worth, collectively called "Retirement," providing for accrual and payment of retirement benefits for eligible participants; and i 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 j I investment and management strategies of contributions after they have been remitted to the j f i Fund; and WHEREAS, although the City does not manage the Fund, the City and its taxpayers are i ultimately obligated under the Texas Constitution to honor earned retirement benefits,should the Fund become insolvent; and A t WHEREAS, because of their ultimate liability, the City and its taxpayers have a critical d interest in the affordability of benefits that are offered to employees and the ongoing ability of I the Fund to meet its obligations; and WHEREAS, taking into account more conservative and realistic investment returns, the City's analysis indicates that it would take an infinite amount of time for the Fund to meet its ` Resolution No.21510-10-2014 Page 1 of 37 I I i i projected liability for previously earned benefits, which is also known as its actuarial accrued liability; and WHEREAS, any future ad hoc cost-of-living adjustments (COLAs) would further w increase the Fund's actuarial accrued liability and extend the infinite funding period even further; I and i I WHEREAS, the City controls, within Constitutional constraints and the limitations I� contained in the collective bargaining and meet and confer agreements, future retirement benefits that are offered to employees; and WHEREAS, the Employee Retirement Fund Board has the legal authority over the i investment strategy and management oversight of the contributions once remitted to them; and i WHEREAS, over the course of the last several years, the City has analyzed and 1 considered a wide variety of funding increases and benefit changes in an effort to reduce the unfunded actuarial accrued liability (UAAL), and ensure the Fund remains a viable long-term f C vehicle to provide benefits to present and future participants without creating an unnecessary and I unfair burden on the taxpayers; and l WHEREAS, the City Council has endorsed the goal of preservation of a defined benefit plan for employees; and i WHEREAS, the City Council has demonstrated commitment to this goal by increasing the City's contributions to the Fund by 5% of payroll in 2007, by 4% of payroll in 2010 and by making a one-time'contribution of$7 million in 2010; and I i WHEREAS, over the course of four years, the City nearly doubled its annual financial i commitment, increasing its annual expense by $39 million between FY2007 and FY2012; and i i I II Resolution No.21510-10-2014 Page 2 of 37 I I 1 I WHEREAS, the City reduced retirement benefits for General Employees hired on or j after July 1, 2011, Police Officers hired on or after January 1, 2013, and Firefighters hired on or i after January 10, 2105, and retirement benefits for future service for General Employees hired I prior to July 1, 2011, and Police Officers hired prior to January 1, 2013, with a pledge to I k consider the same for all other Firefighters during their subsequent contract negotiations; and WHEREAS, Article 5 of the April 14, 2010 Collective Bargaining Agreement (2010 i CBA) between the City and the Professional Firefighters Association IAFF Local 440 (the i Association) required that all economic benefits, privileges, and working conditions for Firefighters subject to the 2010 CBA that were in effect on April 13, 2010, the effective date of the CBA, shall remain unchanged while the 2010 CBA is in effect; and WHEREAS, the 2010 CBA expired on September 30, 2014, but the City and the Association agreed that certain benefits of the 2010 CBA would remain intact until January 10, 2015; and i WHEREAS, since the 2010 CBA is no longer in effect, the City can make pension modifications to Firefighters subject to the 2010 CBA, in accordance with state and federal law; and WHEREAS, the City intends to resolve the current structural dilemma of the ad hoc i i COLA for the benefit of all members' future security by assigning a 2% simple guaranteed annual COLA for future accrued years of service to Firefighters hired prior to January 10, 2015; I and i i WHEREAS, the City intends to allow all active Firefighters hired before January 10, 2015, who are subject to the ad hoc COLA the opportunity to select a 2% simple guaranteed i annual adjustment for past service accrual; and Resolution No.21510-10-2014 i Page 3 of 37 i I WHEREAS, the City intends to allow all Firefighters who have retired, and where subject to the 2010 CBA, and who are subject to the ad hoc COLA the opportunity to select the I i 2% simple guaranteed annual adjustment for future retirement benefits based on their starting i pension amount with the first payment occurring in January 2016; and y WHEREAS,the City is unwilling to make additional financial contributions to the Fund due to risks to the City's long-term sustainability in terms of operations, staffing, infrastructure and tax rate competitiveness; and ! I WHEREAS, in order to pay for the 2% guaranteed annual COLA and to improve the health i of the Fund for the wellbeing of its participants and the taxpayers of Fort Worth, additional i benefit reductions are necessary for the future service accrual of Firefighters hired prior to I January 10, 2015; and I WHEREAS, in accordance with Article 62431 of the Texas Revised Civil Statutes, the 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 I service accrual for existing Firefighters; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS THAT: i SECTION 1. I Chapter 2.5, "Retirement," Article I, "Employees' Retirement Fund," Division 1, "General Provisions," Sections 2.5-1 through 2.5-4, Section 2.5-7, and Section 2.5-8 are amended by deleting each section in its entirety and replacing it as follows: Sec. 2.5-1. Definitions. Resolution No.21510-10-2014 Page 4 of 37 i i 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 meaning. The masculine pronouns, wherever used herein, shall include both male and female persons. I 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. i Actuarial Tables shall mean such tables of mortality, interest rates, turnover discounts, salary 1 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 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 Group V Firefighters • Section 2.5-75 for Group VI Firefighters. Base Pension shall mean the annual life pension a Member receives 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 Group V Firefighters ! • Section 2.5-75 for Group VI Firefighters. Beneficiary shall mean any person in receipt of a Retirement Benefit or any other benefit 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 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 Resolution No.21510-10-2014 Page 5 of 37 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 j Firefighter is scheduled to work 224 hours), or 20 hours (when the suppression Firefighter is scheduled to work 232 hours). 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. p City shall mean the City of Fort Worth, Texas. l 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. Group III Member shall mean a Police Officer hired prior to January 1, 2013. i Group IV Member shall mean a Police Officer hired on or after January 1, 2013. i Group V Firefighter shall mean a Firefighter Member hired prior to January 10, 2015. � i Group VI Firefighter shall mean a Firefighter Member hired on or after January 10, 2015. i Compensation Base shall have the meanings set forth in the following Sections: f • Section 2.5-23 for Group III Members; , • 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 Group V Firefighters; • Section 2.5-73 for Group VI Firefighters. Credited Service shall mean the number of years (treating each complete month of service as j 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) calendar days in any month shall constitute a complete month of absence. Notwithstanding the preceding provisions of this definition of Credited Service, the period of time following a i Member's effective DROP election shall not be included when determining a Member's Credited 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). i DROP shall mean the Deferred Retirement Option Program as set forth in Section 2.5-9. 1 l Resolution No.21510-10-2014 Page 6 of 37 i 4 . I I DROP Account shall mean the account created pursuant to Section 2.5-9(d) for a Member who has made a DROP Election. I DROP Election shall mean the election made by a Member pursuant to Section 2.5-9 to participate in the DROP. f i 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. a 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; i • Section 2.5-41 for Group I Members; • Section 2.5-51 for Group II Members; j • Section 2.5-61 for Group V Firefi hg tiers; • 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 Fiscal Year shall mean the period from October 1 of one (1) year through September 30 of the 1 following year. Fund shall mean The Employees' Retirement Fund of the City of Fort Worth, Texas. 4 General Employee shall mean a member of the Fund who is not a Police Officer or Firefighter. I Governing Body shall mean the City Council for the City of Fort Worth. Group V Firefighter shall mean any Member of the Fort Worth Fire Department, hired prior to January 10, 2015 who was hired in substantial compliance with Chapter 143 of the Texas Local I 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. i i 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 f Firefighter trainee who is employed by the City for the sole purpose of attending the City of Fort Worth Fire Department's Training Academy. i , v Resolution No.21510-10-2014 Page 7 of 37 { i 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. I 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. f i Member shall mean a "participating Member" as defined by Section 1.02(4) of Article 62431 of the Texas Revised Civil Statutes. 1 Net Earnings from Self-Employment shall constitute, for purposes of Section 2.5-7, the Net 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. 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 Group V Firefighters; • Section 2.5-72 for Group VI Firefighters. 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. 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. I 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; 1 • Section 2.5-55 for Group II Members; • Section 2.5-65 for Group V Firefighters; • Section 2.5-75 for Group VI Firefighters. Resolution No.21510-10-2014 Page 8 of 37 t i i l i 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. 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 ' 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 I of the Fund, at the time of any complete discontinuance of the City's contributions to the Fund, 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 asset forth in the following Sections: i • 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 Group V Firefighters; • Section 2.5-72(b) for Group VI Firefighters. Vested Termination Pension shall have the meaning as set forth in the following Sections: • Section 2.5-24(b) for Group III Members; • 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; • Section 2.5-64(b) for Group V Firefighters; • Section 2.5-74(b) for Group VI Firefighters. Sec. 2.5-2. Membership in the Fund. i (a) Membership in the Fund shall be based on the requirements set forth in Section 2.01 of Article 62431 of the Revised Civil Statutes, provided however, that membership in the Fund shall be a condition of employment for all employees who are eligible to be Members. (b) If a Group I Member terminates employment with the City after vesting, takes a refund of contributions, and then returns to service with the City after July 1, 2011, then the Group I Member will be treated as if he or she was hired after July 1, 2011, even if the Member purchases Permissive Service Credits pursuant to Section 2.5-4. i i (c) If a Group I Member terminates employment with the City after vesting, does not take a refund of contributions, and then returns to service with the City after July 1, 2011, then the Group I Member will be treated as if he or she was hired prior to July 1, 2011. i Resolution No.21510-10-2014 Page 9 of 37 i I i (d) If a Group I Member terminates employment with the City prior to vesting, and then returns to service with the City after July 1, 2011, then the Group I Member will be treated as if he or she was hired after July 1, 2011, even if he or she purchases Permissive Service Credits pursuant to Section 2.5-4, or failed to take a refund of contributions. i (e) For pension purposes, if a Group III Member terminates employment with the City after ; vesting, takes a refund of contributions, and then returns to service with the City after January 1, 2013, then the Group III Member will be treated as if the Group III Member was hired after January 1, 2013, even if the Group III Member purchases Permissive Service Credits pursuant to Section 2.5-4. (f) For pension purposes, if a Group III Member terminates employment with the City after j vesting, does not take a refund of contributions, and then returns to service with the City after January 1, 2013, then the Group III Member will be treated as if the Group III Member was hired prior to January 1, 2013. (g) For pension purposes, if a Group III Member terminates employment with the City prior to vesting, and then returns to service with the City after January 1, 2013, the Group III Member will be treated as if the Group III Member was hired after January 1, 2013, even if the Group III Member purchases Permissive Service Credits pursuant to Section 2.5-4, or failed to take a refund of contributions. i (h) For pension purposes, if a Group V Firefighter terminates employment with the City after vesting, takes a refund of contributions, and then returns to service with the City after January 10, 2015, then the Group V Firefighter will be treated as if the Group V Firefighter was hired after January 10, 2015, even if the Group V Firefighter purchases Permissive Service Credits pursuant to Section 2.5-4. i (i) For pension purposes, if a Group V Firefighter terminates employment with the City after vesting, does not take a refund of contributions, and then returns to service with the City after January 10, 2015, then the Group V Firefighter will be treated as if the Group V Firefighter was hired prior to January 10, 2015. �) For pension purposes, if a Group V Firefighter terminates employment with the City p rior to ; vesting, and then returns to service with the City after January 10, 2015, the Group V Firefighter ' will be treated as if the Group V Firefighter was hired after January 10, 2015, even if the Group V Firefighter purchases Permissive Service Credits pursuant to Section 2.5-4, or failed to take a refund of contributions. Sec. 2.5-3. Contributions. (a) Member Contributions (1) Commencing on the effective date of membership and continuing until the date of actual retirement or earlier Termination of Employment, Police Officer Members shall contribute to the Fund eight and seventy-three one-hundredths percent (8.73%) of their 'i Resolution No.21510-10-2014 Page 10 of 37 I i I Earnings and all other Members shall contribute eight and one quarter percent (8.25%) of their Earnings. i (2) If, following a Member's involuntary Termination of Employment, the City is required, as the direct result of an appeal or suit arising from the involuntary termination, to reinstate the Member's employment, the Member shall make the contribution described in this Section on any payment made by the City to the Member as back pay, less interim Earnings, if any. I (3) Contributions by Members reinstated following a military leave of absence are governed by the Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. §§ 4301-33, as provided for in Section 2.5-4(a)(4) of this Division. These contributions shall be made even if to do so would reduce a Member's net cash compensation below the minimum wage prescribed by law. (4) By accepting employment with the City, each Member shall be deemed to consent and agree to deductions made from the Member's compensation, and payments to all such Members of compensation, less the deduction, shall constitute a full and complete discharge of all claims and demands whatsoever for services rendered by such Member during the period covered by such payment, except as to the benefits provided by the Fund. r (5) The contributions of all Members may be raised at any time from the amount stated in this Section to a higher amount in accordance with the procedures provided by Article 62431 of the Texas Revised Civil Statutes. (6) Both Group V and Group VI Firefighters will make contributions to the Fund on Built-In Overtime. (b) City Contributions j (1) For Group III and Group IV Members only, effective October 1, 2010, the City shall contribute to the Fund twenty and forty-six one hundredths percent (20.46%) of their Earnings. For all other Members, effective October 1, 2010, the City shall contribute to the Fund nineteen and seventy-four one hundredths percent (19.74%) of their Earnings. Notwithstanding the foregoing, City contribution to the Fund shall be reduced for each i Fiscal Year by the amount of benefits paid by the City, if any, under the Supplemental Retirement Ordinance. Section 2.5-3(a) shall not limit the right of the Governing Body, through its budget appropriation, to contribute an additional amount over and above the Member's contribution in accordance with Article 62431 of the Texas Revised Civil Statutes, as amended. (2) If, following a Member's involuntary Termination of Employment, the City is required, as the direct result of an appeal or suit arising from the involuntary termination, to reinstate the Member's employment, the City shall make the contribution described in I I Resolution No.21510-10-2014 Page 11 of 37 i I this Section on any payment by the City to the Member as back pay, without reduction for the Member's interim Earnings, if any. In addition, the City shall, on behalf of the Member, make the Member's contribution described in Section 2.5-3 above on any I interim Earnings deducted from the back-pay award. Contributions made by the City on behalf of Members whose employment is reinstated following a military leave of absence are governed by the Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. §§4301-33, as provided for in Section 2.54(a)(4). (3) Effective for pay periods ending after April 1, 1999, the required Member contributions described in Section 2.5-3(a) shall be picked up by the City and shall be treated as City contributions for federal income tax purposes. Such contributions, although designated as Member contributions, shall be paid by the City on behalf of the Members and in lieu of contributions by the Members. The Members shall not have the option of receiving such contributions directly instead of having such amounts paid by the City to the Fund. (4) Retirement contributions made on behalf of the Members, as well as the City's j contributions to the Fund, shall be paid by the City based on weekly workers compensation benefits (currently referred to as a temporary income benefits) paid to those Members, beginning for such amounts received by Members on or after January 1, I 2006. i i (5) Although effective October 1, 2013, overtime will not be included in the definition of Earnings for Group I and Group III Members, the City will continue to contribute its contribution on overtime for all Group I and Group III Members. I (6) Although effective January 10, 2015, overtime that is not Built-In Overtime will not be included in the definition of Earnings for Group V Firefighters, the City will continue to contribute its contribution on all overtime for all Group V Firefighters, and on Built-In Overtime for all Group VI Firefighters. i Sec. 2.5-4. Credited Service. i (a) Service Breaks. Pension credits shall be granted for all Credited Service for which a a Member of the Fund receives employment compensation from the City, subject to the following regulations pertaining to service breaks: I (1) Authorized service breaks of ninety (90) or less consecutive calendar days 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. (3) An absence of any period shall be permitted without loss of prior Credited i Resolution No.21510-10-2014 i I Page 12 of 37 I i I i 1 I 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 i 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: i a a. Repay in a single lump sum payment within ninety (90) days of j 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. { 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 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 under the Uniformed Services Employment and Reemployment Rights Act of 1994, as 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 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 i construed consistently with the requirements of the Uniformed Services Employment and Reemployment Act of 1994, as amended. j 6 (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 ` shall be granted all Credited Service for the period of absence. 4 (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 { Resolution No.21510-10-2014 Page 13 of 37 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 r 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 their accumulated sick leave and/or major medical leave prior to retirement will have the leave j deducted from accumulated sick leave and major medical hours earned prior to October 1, 2013, first. Group V Firefighters who have unused accumulated sick leave and/or major medical leave that was earned prior to January 10, 2015, will have the leave added to Credited Service earned or purchased prior to January 10, 2015. Unused accumulated sick leave and/or major medical leave earned on or after January 10, 2015, will be added to Credited Service earned or purchased 4 after January 10, 2015. Group V Firefighters who use their accumulated sick leave and/or major medical leave prior to retirement will have the leave deducted from accumulated sick leave and/or major medical leave earned prior to January 10, 2015, first. (c) Permissive Service Credits. (1) General. Effective on or after October 1, 2002, a Member who has Earnings from 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 I 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. I (2) Limitations. A Member may purchase up to five (5) years of Permissive Service Credits that are attributable to non-qualified service, and a Member cannot purchase any i Resolution No.21510-10-2014 Page 14 of 37 i i I I i Permissive Service Credits for non-qualified service prior to completion of five (5) years I of participation as a Member. (3) Non-Qualified service. For purposes of Section 2.5-4(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 j 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 i 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 I 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 401(a), including a 401(k) plan, or the Member's annuity contract meeting the requirements of Code Section 403(b). Sec. 2.5-7. Disability Pension 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 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 i 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. Resolution No.21510-10-2014 i Page 15 of 37 I i i (1) Such disability must exist for at least ninety (90) consecutive days prior to application 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 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, and 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, and other appropriate information as requested. i (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. (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 the positions identified under this Section. Determination of the existence of disability shall not be made until ninety (90) days after the date such disability is alleged to have 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 j other time deemed necessary by the Board in order to determine whether the disability is j 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. (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 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. I (4) No disability pension coverage shall be provided during a service break in excess of i I Resolution No. 21510-10-2014 Page 16 of 37 i i i I I I ninety (90) consecutive days unless the service break was caused by sickness or accident i 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. (6) Falsification or omission on any part of the employment application of prior I conditions or injuries for which a disability pension is or has been sought, falsification or 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 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. i (9) Except as otherwise provided by law, to be eligible to continue receiving a disability pension, a Member must have complied with the medical recommendations (including rehabilitation therapy and treatment) as prescribed by the Member's treating physician(s), I the physician(s) appointed by the Executive Director and/or the Texas Rehabilitation Commission. (d) Calculation of Disability Pension. The calculation for disability pension can be found in the following Sections: 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; I I (4) Section 2.5-56 for a Group II Member; (5) Section 2.5-66 for a Group V Firefighter; Resolution No. 21510-10-2014 Page 17 of 37 i i I (6) Section 2.5-76 for a Group VI Firefighter. (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 pension shall immediately cease. If such Member is re-employed by the City immediately 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 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 f 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 i 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 Member's affiliated entities, including, but not limited to, partnerships, corporations or other entities in which the Member, or any relative, owns any interest, including community or separate property, and for which the Member performs any services, whether compensated or not, as proof of the Member's Earned Income and net earnings from self-employment for that year obtained from any occupation or employment. At the end of the first year of disability retirement and by May 1 of each subsequent year, a disabled Member shall also submit to the Executive Director an affidavit on the Executive Director's approved form swearing that the Member's Earned Income and net earnings from self-employment are fully disclosed on the tax returns provided to the Executive Director and that the disabled Member has not received any other compensation, directly or indirectly, for services rendered by the disabled Member, nor performed any services for which the Member received no compensation except as disclosed in the affidavit, including amounts paid to other affiliated entities for the benefit of the disabled Member or to any relative of the disabled Member. If the Internal Revenue Service has approved an extension to 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 tan return with all attachments and the related affidavit, within two (2) weeks after the tax return has been filed. j i Resolution No.21510-10-2014 ! Page 18 of 37 i i 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 have made during that same tax year had he or she remained employed by the City in the same I position then, as soon as practicable, the Board shall reduce the amount of disability benefits to be paid to the Member. In reducing a Member's disability pension due to such excess Earnings, the Board shall consider the Member's then current Earnings, and attempt to recover the cumulative excess Earnings and preclude excess Earnings in the future. In the event that a V 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. r 4 The Board shall withhold a disabled Member's disability pension upon the Member's failure to submit on a timely basis the required income tax returns with all attachments thereto and related documents. If the disabled Member subsequently provides the required documentation by the end of the calendar year in which the return was due, the Board shall cause the Member's disability pension to be reinstated, subject to the other provisions of this Section, and including I 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 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. G 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. I See. 2.5-8. Cost-of-Living Adjustment I (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- j 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- i 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, allowed Group I Members and i Resolution No.21510-10-2014 I Page 19 of 37 i I i i 1 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 i 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. On September 16, 2014, the City Council adopted Ordinance 21459-09-2014, which eliminated the cost-of-living adjustment for Group VI Firefighters. 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. Vested Members 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 i III Members, who were subject to the ad hoc cost-of-living adjustment; e. Credited Service earned or purchased on or after October 1, 2013, for Group I Members, who were subject to the ad hoc cost-of-living adjustment; f. Credited Service earned or purchased on or after January 10, 2015, for Group V Firefighters, who were subject to the ad hoc cost-of-living adjustment. g. Members and Beneficiaries who selected to receive the guaranteed two percent (2%) cost-of-living adjustment on future benefits in the 2012 and 2014 selection process. j i h. Credited Service earned or purchased prior to October 1, 2013, for Group I, { and III Members that selected the two percent (2%) cost-of-living adjustment for Credited Service prior to October 1, 2013 during the selection process. 1 i. Credited Service earned or purchased prior to January 10, 2015, for Group V Resolution No.21510-10-2014 Page 20 of 37 i ii f I Firefighters that selected the two percent (2%) cost-of-living adjustment for Credited Service prior to January 10, 2015 during the selection process. i (2) Cost-of-Living Adjustment Selection Process a. Group V Firefighters who are under the ad hoc cost-of-living adjustment and are not currently receiving a benefit from the Fund will be allowed to make a one- time selection of the two percent (2%) guaranteed simple cost-of-living adjustment for all Credited Service earned prior to January 10, 2015. The two percent (2%) cost-of-living adjustment will be based on Base Pension on the date of retirement. i i b. Group V Firefighters who retired or separated from employment during the j term of the April 13, 2010, Collective Bargaining Agreement between the City and the Professional Firefighters Association IAFF Local 440, and who are currently receiving benefits, and who are under the ad hoc cost-of-living adjustment will be allowed to make a one-time selection of the guaranteed two percent (2%) cost-of-living adjustment for future years of benefits. The two percent (2%) guaranteed cost-of-living adjustment will be based on base salary on the date of retirement. Members currently receiving benefits who select the two percent (2%) cost-of-living adjustment during the selection process under this sub-section will retain the ad hoc cost-of-living adjustments previously received, but will waive their rights to future ad hoc cost-of-living adjustments. Instead, effective January 1, 2016, and annually thereafter, those Members will receive a two percent (2%) cost-of-living adjustment by adding to the actual pension for that year, an amount equal to two percent(2%) of his or her Base Pension. i (3) Calculation of the Two Percent Simple Cost-of-Living Adjustment: Upon 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. s (c) Ad Hoc Cost-of-Living Adjustment 1 The ad hoc cost-of-living adjustment is applicable to the following: ( ) g j PP g: a. Credited Service until September 30, 2013, for Group I Members who were 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%) simple cost-of-living adjustment during the 2012 selection process; b. Credited Service until September 30, 2013, for Group I Members who were 1 i it Resolution No.21510-10-2014 Page 21 of 37 I, i r 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 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 j pursuant to this Article, and who did not select to receive the two percent (2%) j simple cost-of-living adjustment during the 2012 selection process; ! e. Credited Service until January 9, 2015, for Group V Firefighters who were 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%) simple cost-of-living adjustment during the selection process for Group V Firefighters; I f. Credited Service until January 9, 2015, for Group V Firefighters 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 selection process for Group V Firefighters; g.. Members and Beneficiaries [including those receiving disability retirement and survivors (including children)] receiving benefits under this Article, and who are under the ad hoc cost-of-living adjustment, and who did not elect to return to the guaranteed two percent (2%) simple cost-of-living adjustment during the selection process. (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 the pension of Members who are subject to the ad hoc cost-of-living adjustment pursuant to Section 2.5-8(c) as follows: a. Prior to December 31 of each year, the Fund's Actuary shall make a written report to the Board certifying the amortization period required to pay off the unfunded actuarial accrued liability of the Fund. Based on the information provided by the Actuary, the Board shall: f i 1. Grant a compounded ad hoc cost-of-living adjustment of four percent Resolution No.21510-10-2014 Page 22 of 37 I (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; 3. Grant a compounded ad hoc cost-of-living adjustment of two percent (2%), I if the Actuary certifies that the amortization period required to pay off the 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; 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. i i (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 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 TV Members and Group VI Firefighters, and their Beneficiaries will not be eligible to receive a cost-of-living adjustment on their retirement benefits. I SECTION 2. i I Resolution No.21510-10-2014 Page 23 of 37 j w i i Chapter 2.5, Article I—Employees' Retirement Fund, Division 6, is amended by deleting it in its entirety and replacing it as follows: DIVISION 6. PROVISIONS APPLICABLE TO GROUP V FIREFIGHTERS (FIREFIGHTERS HIRED PRIOR TO JANUARY 10,2015) ONLY Section 2.5-60. Applicability I This Division shall apply to Group V Firefighters as defined by Section 2.5-1. Sec. 2.5-61. Earnings (a) For Credited Service earned prior to January 10, 2015, Earnings shall mean the amount actually paid to a Group V Firefighter by the City for services rendered to the City during the calendar year, plus overtime, acting, assignment, holiday, longevity, educational incentive, safety award, incentive and shift differential pay, as reported on the Group V Firefighter's W-2 form. j "Earnings" shall also include weekly workers' compensation benefits (currently referred to as I temporary income benefits), beginning for such amounts received by Group V Firefighters on or after January 1, 2006, so long as required by law. Regardless of the fact that the following payments may be shown upon a Group V Firefighter's W-2 form, Earnings shall not include: (1) Any non-salary allowance (such as uniform reimbursement, automobile allowance or mileage, etc.), I (2) Lump sum payments received at time of termination for unused vacation, sick and/or major medical, and personal leave, I (3) Any award by a court, administrative body, or settlement agreement in excess of Earnings, i I (4) Any amount paid to a Group V Firefighter for which the City does not contribute i to the Fund under Section 2.5-3(b). A Group V Firefighter participating in a City-sponsored deferred compensation plan shall have the amount of any deferred compensation credited to that Group V Firefighter during the calendar year added to Earnings reported on the Group V Firefighter's W-2 form to arrive at total Earnings for Fund matters. Mandatory Group V Firefighter contributions that are picked-up by the City and excluded from a Group V 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 I for all purposes of this definition. Notwithstanding the preceding provisions, Earnings shall not include any amounts paid following a Group V Firefighter's effective DROP Election. (b) For Credited Service earned on or after January 10, 2015, Earnings shall mean the amount actually paid to a Group V Firefighter by the City for services rendered to the City Resolution No.21510-10-2014 Page 24 of 37 J i i I 9 I i during the calendar year, plus acting, assignment, holiday, longevity, educational incentive, safety award, incentive and shift differential pay, as reported on the Group V Firefighter's W-2 form. "Earnings" shall also include weekly workers' compensation benefits (currently referred to j as temporary income benefits), beginning for such amounts received by Group V Firefighters on or after January 1, 2006, so long as required by law. Earnings will also 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 upon a Group V Firefighter's W-2 form, Earnings shall not include: i (1) Any non-salary allowance (such as uniform reimbursement, automobile j allowance or mileage, etc.), 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, I (4) Any amount paid to a Group V Firefighter for which the City does not contribute to the Fund under Section 2.5-3(b), and i (5) Overtime that is not Built-In Overtime. A Group V Firefighter participating in a City-sponsored deferred compensation plan shall have the amount of any deferred compensation credited to that Group V Firefighter during the calendar year added to Earnings reported on the Group V Firefighter's W-2 form to arrive at total Earnings for Fund matters. Mandatory Group V Firefighter contributions that are picked-up by the City and excluded from a Group V Firefighter's W-2 form shall also be included as part of J 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 I for all purposes of this definition. Notwithstanding the preceding provisions, Earnings shall not include any amounts paid following a Group V Firefighter's effective DROP Election. 1 I I Sec. 2.5-62. Retirement Dates i (a) Normal Retirement Date. A Group V Firefighter shall be eligible for a Standard Pension Benefit or an Alternative Pension Benefit on or after the Group V Firefighter's Normal Retirement Date which shall be the last day of the month in which the earliest of the following occurs: (1) The Group V Firefighters years of age and years of Credited Service total eighty (80); or i (2) The later of(i) the date on which the Group V Firefighter reaches age sixty-five Resolution No.21510-10-2014 Page 25 of 37 4 I i I i (65) or(ii) the fifth anniversary of the date the Group V Firefighter joined the Fund. i (b) Vested Terminated Retirement Date. A Vested Group V 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 V Firefighter's Vested termination date which shall be the last day of the month in which the Group V Firefighter reaches age fifty (50), or, if earlier, the last day of the month in which the Group V Firefighter would have attained his or her Normal Retirement Date had the Group V Firefighter remained employed by the City. Sec. 2.5-63. Compensation Base for Determining Benefits (a) Compensation Base For Determining Group V Firefighter Benefits For Credited Service Earned or Purchased Prior to January 10, 2015: f (1) For Group V Firefighters hired and Vested Prior to October 23, 2007 (not subject I to the 12% cap), pension, death benefits, disability pension and Vested termination benefits shall be based upon the Group V Firefighter's Compensation Base which shall mean the average annual Earnings, as defined by Section 2.5-61(a) which were paid to j the Group V Firefighter by the City for employment with the City during any three (3) calendar years in which he or she had the highest annual Earnings. (2) For Group V Firefighters who were hired prior to January 10, 2015, but not Vested by October 23, 2007 (subject to the 12% cap), pension, death benefits, disability pension and Vested termination benefits shall be based upon the Group V Firefighter's Compensation Base which shall mean the average annual Earnings, as defined by Section 2.5-61(a) which were paid to the Group V Firefighter by the City for employment with the City during any three (3) calendar years in which he or she had the highest annual j Earnings, subject to the following limitations: i I a. The Fund shall determine the four (4) calendar years in which the Group V I Firefighter had the highest annual Earnings. Of such four (4) years, the year in which the Group V Firefighter had the lowest annual Earnings shall serve as the base year. The base year shall not be included as one (1) of the three (3) calendar years for purposes of the Compensation Base calculation. b. The first annual Earnings to be used in the calculation of the Group V f Firefighter's Compensation Base shall be the actual annual Earnings from the calendar year with the third highest annual Earnings of the four (4) calendar years identified in Section 2.5-63(a)(2)a., provided that if such annual Earnings are from a calendar year beginning on or after January 1, 2008, the amount to be used in the calculation of the Compensation Base for the first year shall not exceed one hundred twelve percent (112%) of the annual Earnings for the base year. c. The second annual Earnings to be used in the calculation of the Group V I, Firefighter's Compensation Base shall be the actual annual Earnings from the calendar year with the second highest annual Earnings of the four (4) calendar f Resolution No.21510-10-2014 j Page 26 of 37 I f ! i years identified in Section 2.5-63(a)(2)a., provided that if such annual Earnings f are from a calendar year beginning on or after January 1, 2008, the amount to be used in the calculation of the Compensation Base for the second year shall not exceed one hundred twelve percent (112%) of the annual Earnings that are j attributable to the year described in Section 2.5-63(a)(2)b. d. The third annual Earnings to be used in the calculation of the Group V Firefighter's Compensation Base shall be the actual annual Earnings from the calendar year with the highest annual Earnings of the four (4) calendar years identified in Section 2.5-63(a)(2)a., provided that if such annual Earnings are from a calendar year beginning on or after January 1, 2008,the amount to be used in the calculation of the Compensation Base for the third year shall not exceed one hundred twelve percent (112%) of the annual Earnings that are attributable to the year described in Section 2.5-63(a)(2)c. e. The average of the three (3) amounts determined in accordance with Sections 2.5-63(a)(2)a. through 2.5-63(a)(2)d. will be the average annual Earnings for purposes of the Group V Firefighter's Compensation Base. (b) Compensation Base for Determining Group V Firefighter Benefits For Credited t Service Earned or Purchased On or After January 10, 2015: For Group V Firefighters, Credited Service earned or purchased on or after January 10, 2015 shall be based upon average annual Earnings, as defined by Section 2.5-61(b) which were paid to the Group V Firefighter by the City for employment with the City during any five (5) calendar years in which the Group V j Firefighter had the highest annual Earnings. The Compensation Base for Credited Service earned or purchased on or after January 10,2015, includes Built-In Overtime, but does not include any other overtime. (c) If a Group V Firefighter has less than five (5) [or if applicable, three (3)] calendar years of employment, the Group V Firefighter's Compensation Base shall be determined by the Executive Director under uniform, non-discriminatory procedures that are consistently applied. (d) For Compensation Base purposes, any lump sum payments of Earnings for any prior time period, whether awarded to the Group V 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 V Firefighter from the City for services rendered. ` (e) For purposes of computing the Compensation Base for a Group V Firefighter who has i made an effective DROP Election, the Group V Firefighter's Compensation Base shall be calculated using the Group V Firefighter's Earnings prior to the effective date of the DROP Election. j Sec. 2.5-64 Termination Benefits and Vesting I (a) Contribution Refund Prior to Vesting. Any Group V Firefighter who is voluntarily or involuntarily separated from the service of the City before the Group V Firefighter is Vested i, Resolution No.21510-10-2014 I Page 27 of 37 shall be entitled to receive the amount of the Group V 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 V Firefighter from the Fund. I (b) Vested Termination Pension. (1) A Vested Group V Firefighter who is voluntarily or involuntarily separated from the service of the City shall be entitled to receive a Vested Termination Pension payable: 1 (i) in full, pursuant to Section 2.5-62(b) or (ii) in a reduced amount commencing on or after age fifty (50). A Group V 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 Group V Firefighter's Vested Termination Pension by the Board. (2) A Vested Termination Pension shall be an annual life pension, the amount of which shall be the specified percentage of the Group V Firefighter's Compensation Base multiplied by the Group V Firefighter's total years of Credited Service to date of such voluntary or involuntary separation from the service of the City. For purposes of the I preceding sentence, the specified percentage of the Group V Firefighter's Compensation Base shall be two and three quarters percent (2.75%) for all Credited Service earned or purchased prior to January 10, 2015, and two and one quarter percent (2.25%) for Credited Service earned or purchased on or after January 10, 2015, unless the Group V Firefighter has attained his or her Normal Retirement Date prior to the date the Group V Firefighter's pension payments begin, in which case the specified percentage shall be three percent (3%) for all Credited Service earned or purchased prior to January 10, 2015, and shall be two and one half percent (2.5%) for all Credited Service earned or purchased on or after January 10, 2015. A Vested Termination Pension shall be calculated using the specified percentage and Compensation Base in effect at the time the Group V Firefighter earned or purchased the Credited Service for all Credited Service earned or purchased after January 10, 2015. i (3) In addition to the reduced multiplier described in Section 2.5-64(b)(2), if a Group V Firefighter has not attained his or her Normal Retirement Date prior to the date the Group V Firefighter's Vested Termination Pension payments begins, the amount of reduction for commencement of a pension prior to the Group V Firefighter's Normal Retirement shall be five-twelfths percent (5/12%) for each month by which commencement of the pension antedates the Group V Firefighter's Normal Retirement Date had the Group V Firefighter remained employed by the City. Sec. 2.5-65. - Retirement Pension for Group V Firefighters. (a) Pensions Commencing Prior to January 10, 2015 (1) A Vested Group V Firefighter who retires on or after the Group V Firefighter's Normal Retirement Date and who requests commencement of the Group V Firefighter's i Resolution No.21510-10-2014 Page 28 of 37 I r i pension prior to January 10, 2015, or a Group V Firefighter who terminates employment prior to January 10, 2015, and prior to the Group V Firefighter's Normal Retirement Date P 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 three percent (3%) of the Group V Firefighter's applicable Compensation Base as defined by Section 2.5-63(a)(1) or (a)(2), whichever is applicable, multiplied by the Group V Firefighter's total years of Credited j Service, payable monthly on the first day of each month commencing with the month following the Board's approval of the Group V Firefighter's pension. This retirement pension shall be defined as the "Group V Firefighter's Standard Pension Benefit A." (2) Alternative Pension Benefit. In lieu of the Group V Firefighter's Standard Pension Benefit A, a Group V Firefighter under this subsection 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 V Firefighter's Standard Pension Benefit A 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 V Firefighter's Pre- January 10, 2015 Standard Pension Benefit A, which lump sum shall be payable on the date benefits commence under (ii); and (ii) 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 V Firefighter's Alternative Pension Benefit. I (3) 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 2.5-66, death benefit under Section 2.5-67, or Vested Termination Pension under Section 2.5-64, nor shall it be available to any Group V Firefighter who is receiving pension benefits as of the effective date of the Alternative Pension Benefit provisions of this Section, nor shall it be available upon re- j retirement to any retired Group V Firefighter who becomes re-employed by the City. (b) Pensions Commencing On or After January 10, 2015 (1) Pensions Commencing upon Normal Retirement Date for Group V Firefighters Hired and Vested prior to October 23, 2007, Whose Pension Commences On or After January 10, 2015 (not subject to the earnings cap): A Vested Group V Firefighter hired and Vested prior to October 23, 2007, who retires on or after the Group V Firefighter's Normal Retirement Date and requests commencement of the Group V Firefighter's pension on or after January 10, 2015, or a Group V Firefighter who terminates j employment on or after January 10, 2015, and prior to the Group V 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 calculated by adding the following: j a. Three percent (3%) of the Group V Firefighter's Compensation Base as i defined by Section 2.5-63(a)(1) multiplied by the Group V Firefighter's years of i Resolution No.21510-10-2014 Page 29 of 37 I r i Credited Service from date of hire until January 9, 2015; and b. Two and one half percent (2.5%) of the Group V Firefighter's Compensation j Base as defined by Section 2.5-63(b) multiplied by the Group V Firefighter's years of Credited Service from January 10, 2015 until date of termination. f (2) Pensions Commencing Upon Normal Retirement Date for Group V Firefighters f Who Were Hired Prior to January 10, 2015, But Were Not Vested by October 23, 2007, and Whose Pension Commences On Or After January 10, 2015 (subject to the earnings cap): A Group V Firefighter hired prior to January 10, 2015, but not Vested by October f 23, 2007, who retires on or after the Group V Firefighter's Normal Retirement Date and j requests commencement of the Group V Firefighter's pension, and whose pension commences on or after January 10, 2015, or who terminates employment on or after January 10, 2015, but prior to his or her 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 calculated by adding the following: p I a. Three percent (3%) of the Group V Firefighter's Compensation Base as defined by Section 2.5-63(a)(2) multiplied by the Group V Firefighter's years of Credited Service from date of hire until January 9, 2015; and b. Two and one half percent (2.5%) of the Group V Firefighter's Compensation i Base as defined by Section 2.5-63(b) multiplied by the Group V Firefighter's years of Credited Service from January 10, 2015, until date of termination. (3) The pension should be payable monthly on the first day of each month commencing with the month following the Board's approval of the Group V Firefighter's pension. This retirement pension shall be defined as the "Group V Firefighter Standard Pension Benefit B." I (c) Alternative Pension Benefit. In lieu of the Group V Firefighter Standard Pension Benefit B, a Group V Firefighter may irrevocably elect with his or her spouse's consent (where I applicable), in advance of his or her retirement and pursuant to regulations and requirements the i Board in its discretion may adopt, to receive an "Alternative Pension Benefit" which shall be Actuarially Equivalent to the Group V Firefighter's Standard Pension Benefit B 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 V Firefighter's Standard Pension Benefit, which lump sum shall be payable on the date benefits commence under (ii); and (ii) 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 j V Firefighter's pension. i (d) 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 benefit under Section 2.5-66, death benefit under Section 2.5-67, or Vested Termination Pension under Section 2.5-64, nor shall it be available to any retired employee who j Resolution No.21510-10-2014 Page 30 of 37 i i I is receiving pension benefits hereunder as of the effective date of the Alternative Pension Benefit provisions of this Division, nor shall it be available upon re-retirement to any retired Group V Firefighter who becomes re-employed by the City. f Sec. 2.5-66 Disability Pension (a) See Section 2.5-7, for General Provisions related to Disability Pension (b) Disability in Line of Duty. If a Group V Firefighter, whether or not Vested, becomes disabled as defined in Section 2.5-7, while in the Line of Duty, the Group V Firefighter shall receive an annual life pension, the amount of which shall be the specified percentage of the Group V Firefighter's Compensation Base multiplied by the Group V Firefighter's total years of r Credited Service which would have accrued if the Group V Firefighter had worked to the Group f V Firefighter's 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 V Firefighter's Compensation Base shall be two and three quarters percent (2.75%), unless the f Group V Firefighter is already eligible to retire on or after the Group V Firefighter's Normal Retirement Date, in which case the Group V Firefighter shall receive the Standard Pension Benefit. I i (c) Disability Not in Line of Duty for Vested Group V Firefighters Whose Disability Pension Commences Prior to January 10, 2015: If a Vested Group V Firefighter becomes disabled as defined in Section 2.5-7, while not in Line of Duty, and the Group V Firefighter's pension commences prior to January 10, 2015, the Group V Firefighter shall receive an annual life pension, the amount of which shall be the specified percentage of the Group V Firefighter's Compensation Base, multiplied by the Group V Firefighter's total years of Credited Service to date of actual retirement. For purposes of the preceding sentence, the specified percentage of the Group V Firefighter's Compensation Base shall be two and three quarters percent (2.75%), unless the Group V Firefighter is already eligible to retire on or after the Group V.Firefighter's Normal Retirement Date, in which case the specified percentage shall be three percent (3%). (d) Disability Not in Line of Duty for Vested Group V Firefighters Whose Disability Pension Commences On or After January 10, 2015: If a Vested Group V Firefighter becomes disabled as defined in Section 2.5-7, while not in Line of Duty, and the Group V Firefighter's pension commences on or after January 10, 2015, the Group V Firefighter shall receive an annual life pension, the amount of which shall be determined by adding the following: (1) a specified percentage of the Group V Firefighter 's Compensation Base as defined by Section 2.5-63(a)(1) if hired and Vested prior to October 23, 2007, or a specified percentage of the Group V Firefighter's Compensation Base as defined by Section 2.5-63(a)(2) if hired prior to January 10, 2015, and not Vested by October 23, 2007, multiplied by the Group V Firefighter 's years of Credited Service from date of hire i until January 9, 2015. For purposes of the preceding sentence, the specified percentage s of the Group V Firefighter's Compensation Base for Credited Service pursuant to this subsection shall be two and three quarters percent (2.75%); and C I Resolution No.21510-10-2014 Page 31 of 37 I i i I (2) a specified percentage of the Group V Firefighter's Compensation Base as defined by Section 2.5-63(b) multiplied by the Group V Firefighter's years of Credited Service from January 10, 2015, until the date of disability. For purposes of the preceding sentence, the specified percentage of the Group V Firefighter's Compensation Base for Credited Service pursuant to this subsection shall be two and one quarter percent (2.25%). r (e) Disability Not in Line of Duty for Non-Vested Group V Firefighters. If a Group V Firefighter becomes disabled while not in Line of Duty before the Group V Firefighter is Vested, then such Group V Firefighter shall be entitled to receive a contribution refund in accordance i with Section 2.5-64(a). Sec.2.5-67 Death Benefits for Group V Firefighters i i (a) While in Line of Duty. f 0 (1) If a Group V Firefighter dies before retirement while in Line of Duty and as a result of the performance of that Group V Firefighter's duties, the surviving widow or I widower shall be entitled to receive a monthly pension, the amount of which shall be seventy-five percent (75%) of the Group V Firefighter's standard pension, based on the number of years of Credited Service that would have accrued had the Group V Firefighter i lived to the Group V Firefighter's Normal Retirement Date, but not less than two hundred fifty dollars ($250.00). (2) Each dependent child under eighteen (18) years of age of such Group V Firefighter shall be entitled to receive a monthly pension, the amount of which shall be l 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 pension, the amount of which shall be seventy-five percent (75%) of the Group V Firefighter's pension, based on the number of years of Credited Service that would have accrued had the Group V Firefighter lived to the Group V Firefighter's Normal Retirement Date, but not less than two hundred fifty dollars ($250.00). (3) If a Group V 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 V Firefighter's accrued pension projected to the Group V Firefighter's Normal Retirement Date, but not less than two hundred fifty dollars ($250.00). i (4) The survivor's monthly pension benefit for a Group V Firefighter who dies in Line of Duty shall be calculated using a multiplier of three percent (3%). i (b) While Not in Line of Duty. 1 Resolution No.21510-10-2014 Page 32 of 37 I I I i I i i (1) Vested Group V Firefighter Who Dies Not in Line of Duty and Whose Survivor's I Monthly Pension Begins Prior to January 10, 2015: I a. If a Vested Group V Firefighter dies before retirement, while not in Line of i Duty, and the survivor monthly pension benefit begins prior to January 10, 2015, then 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 V j Firefighter's accrued pension but not less than one-hundred fifty dollars ($150.00). j b. Each dependent child under eighteen (18) years of age of such Vested Group V 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 pension, the amount of which shall be seventy-five percent (75%) of the Group V Firefighter's accrued pension, but not less than one hundred fifty dollars ($150.00). c. If a Vested Group V Firefighter dies while not in Line of Duty and leaves no widow or widower or children eligible to receive a benefit under this section, but is survived by a dependent parent or parents, such dependent parent(s) or the j surviving dependent parent, shall be entitled to receive a monthly pension, the amount of which shall be seventy-five percent (75%) of the Group V Firefighter's accrued pension, but not less than one hundred fifty dollars ($150.00). I d. For purposes of Section 2.5-67(b)(1), a Group V Firefighter's accrued pension shall be calculated using a multiplier of two and three quarters percent (2.75%), unless the Group V Firefighter had reached the Group V Firefighter's Normal Retirement Date prior to death, in which event the multiplier shall be three j percent (3%). (2) Vested Group V Firefighter Who Dies Not In Line of Duty and Whose Survivor's Monthly Pension Begins On or After January 10, 2015: I i a. If a Vested Group V Firefighter dies before retirement, while not in Line of Duty, and the survivor pension begins on or after January 10, 2015, then 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 V Firefighter's accrued pension but not less than one hundred fifty dollars ($150.00). The accrued pension shall be calculated by adding the following: j 1. A specified percentage of the Group V Firefighter's Compensation Base as defined by Section 2.5-63(a)(1) if hired and Vested prior to October 23, 2007, or a specified percentage of the Group V Firefighter's Compensation Base as Resolution No.21510-10-2014 Page 33 of 37 i i I defined by Section 2.5-63(a)(2) if hired prior to January 10, 2015, and not Vested by October 23, 2007, multiplied by the Group V Firefighter's years of I Credited Service from date of hire until January 9, 2015. For purposes of the preceding sentence, the specified percentage of the Group V Firefighter's Compensation Base for Credited Service for this time period shall be two and three quarters percent (2.75%); and 2. a specified percentage of the Group V Firefighter's Compensation Base as defined by Section 2.5-63(b), multiplied by the Group V Firefighter's years of Credited Service from January 10, 2015, until the date of death. For purposes of the preceding sentence, the specified percentage of the Group V Firefighter's Compensation Base for Credited Service for this time period shall be two and one quarter percent(2.25%). b. Each dependent child under eighteen (18) years of age of such Vested Group V 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 pension, the amount of which shall be seventy-five percent (75%) of the Group V Firefighter's accrued pension, but not less than one hundred fifty dollars ($150.00). c. If a Group V Firefighter dies while not in Line of Duty and leaves no widow or I widower or children eligible to receive a benefit hereunder, but is survived by a dependent parent or parents, such dependent parent(s) shall be entitled to receive a monthly pension, the amount of which shall be seventy-five percent (75%) of the Group V Firefighter's accrued pension, but not less than one hundred fifty dollars ($150.00). (3) Group V Firefighter Not Vested at Time of Death. If a Group V 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 V Firefighter paid into the Fund during the Group V Firefighter's life plus Regular Interest thereon (at the Regular Interest rate in 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 V Firefighter. I (c) After Retirement. I (1) Upon the death of a Group V Firefighter, 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 pension being paid to the Group V Firefighter, provided that the Group V Firefighter and surviving widow or widower had been married for at least one (1) year immediately prior to the Group V Firefighter's retirement. Notwithstanding the preceding sentence, a surviving widow or widower who was not married to the deceased Resolution No.21510-10-2014 Page 34 of 37 i Group V Firefighter for at least one (1) year immediately prior to the Group V Firefighter's retirement shall be eligible to receive a monthly pension if the Group V i 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 V Firefighter's completion of two (2) years of marriage to the Group V Firefighter's 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 date of the I Group V Firefighter's election to receive a reduced monthly pension. If such an election has been made, the surviving widow or widower shall receive a monthly pension for life equal to seventy-five percent (75%) of the Group V Firefighter's reduced monthly pension. (2) Upon the death of a Group V Firefighter who was not married at retirement, a Beneficiary designated by a Group V Firefighter at retirement may be eligible to receive a monthly pension if the Group V Firefighter has elected to receive a reduced monthly pension, on a form and subject to procedures developed by the Executive Director. The Group V 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 V Firefighter's election to receive a reduced monthly pension. If such an election has been made, the Group V Firefighter's designated Beneficiary shall receive a monthly pension for life equal to one hundred percent (100%), seventy-five percent (75%), fifty percent (50%), or twenty-five percent (25%) of the Group V Firefighter's j reduced monthly pension. If a Group V 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 deceased Group V Firefighter shall be entitled to receive a monthly pension, the amount of which 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); provided, however, that if no surviving widow, widower, or designated Beneficiary shall be entitled to a monthly pension pursuant to the terms of this Section, all such dependent children shall share equally a monthly pension, the amount of which shall be seventy-five percent (75%) of the pension being paid to the Group V Firefighter at the time of his or her death. (d) Death of Vested Terminated Group V Firefighter Prior to Pension Commencing. If a terminated Group V Firefighter entitled to a pension under the provisions of Section 2.5-64 dies before the Group V Firefighter's pension commences, the Group V Firefighter's designated Beneficiary, or if none, the Group V Firefighter's estate shall receive an amount equal to the Group V Firefighter's total contributions to the Fund, plus Regular Interest (at the Regular Interest rate in effect on the date of such payment). If the Vested Group V Firefighter's years of age and years of Credited Service total at least sixty-five (65) as of the date of the Group V Firefighter's termination, the Group V Firefighter's eligible dependents shall receive the benefit specified under Section 2.5-67(b), based on the pension to which the Group V Firefighter would have been entitled as of the date of the Group V Firefighter's death, in lieu of the payment of i contributions plus Regular Interest (at the Regular Interest rate in effect on the date of such I Resolution No.21510-10-2014 Page 35 of 37 I_ f I 4 C payment). If the Group V Firefighter's years of age and Credited Service did not total at least 1 sixty-five (65) as of the date of the Group V Firefighter's termination, the Group V Firefighter's eligible dependents may choose between the refund of contributions, the payment of the survivor I benefit at the date the Group V Firefighter would have been eligible to draw the benefit, or an I immediate benefit at an actuarially reduced rate. I Sections 2.5-68 through 2.5-69 Reserved SECTION 3. This ordinance shall be cumulative of all provisions of ordinances of the Code of the City of Fort Worth, Texas (1986), as amended, except where the provisions of this ordinance are in direct conflict with the provisions of such ordinances and such Code, in which event conflicting provisions fi of such ordinances and such Code are hereby repealed. ` I SECTION 4. II 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, i sentence, paragraph or section of this ordinance shall be declared unconstitutional by the valid I judgment or decree of any court of competent jurisdiction, such unconstitutionality shall not affect any of the remaining phrases, clauses, sentences, paragraphs and sections of this ordinance, since i the same would have been enacted by the City Council without the incorporation in this ordinance , of any such unconstitutional phrase, clause, sentence,paragraph or section. r SECTION 5. j The City Council finds that all acts, conditions and things required by provisions of the 0 i f 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. i Resolution No.21510-10-2014 r Page 36 of 37 d I SECTION 6. This ordinance shall be in full force and effect from and after its adoption. i i I As istant i ttorne Ka ty y Aary , ity cretary ' I I A Adopted and Effective: October 21, 2014 I I i P I f i d I� i i I d I d i I i i f P I l 1 i Resolution No.21510-10-2014 Page 37 of 37 I I City of Fort Worth, Texas Mayor and Council Communication ! COUNCIL ACTION Approved on 10/21/2014 Ordinance No X21510 10-201:_4 DATE: Tuesday, October 21, 2014 REFERENCE NO.: G-18343 LOG NAME: 12PENSION CHANGES CURRENT FIREFIGHTERS 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 Prior to January 10, 2015 (ALL COUNCIL i DISTRICTS) i ! 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 ! prior to January 10, 2015. I 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. The Cost-of-Living Adjustment (COLA) In 1999, the City Council adopted Ordinance No. 13842, effective January 1, 2000, giving all members of ; the Plan a guaranteed two percent simple COLA during their retirement. In 2007, the City Council adopted an ordinance providing for a compounded ad hoc COLA for all non-vested members and all future employees that would be given based on the amortization period of the Fund. (Ordinance Number 17839-10-2007). Vested employees were given the option of choosing between the guaranteed simple two percent COLA and the ad hoc COLA. The ad hoc COLA would be given as follows: i • Four percent if the amortization period of the Fund is 18 years or less; • Three percent if the amortization period of the Fund is between 18.1 years —24.0 years; • Two percent if the amortization period of the Fund is between 24.1 years—28 years; ! • No COLA if the amortization period is greater than 28.1 years. I The purpose of the ad-hoc COLA was to allow members of the Fund to share in the risks and benefits of the investment results of the Fund. However, history has shown that the ad hoc COLAs were triggered by changes to the Plan and increases in contributions rather than investment returns. The Fund's actuary projected in 2014 that another ad hoc COLA would not be awarded for 16 years if no changes are made and all current assumptions are met. This could result in a significant challenge for current retirees who have no inflation protection as intended. i Logname: 12PENSION CHANGES CURRENT FIREFIGHTERS 2014 Page 1 of 3 i I Previous Benefit Reductions i 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 years of earnings to highest five years of earnings and the elimination of all COLAs, among others. In 2012, the City Council adopted Ordinance No. 20471-10-2012, which implemented similar benefit i reductions for police officers hired on or after January 1, 2013. The ordinance also reduced pension benefits on future service accruals for general employees hired prior to July 1, 2011, and police officers i hired prior to January 1, 2013, and assigned a two percent simple guaranteed annual adjustment for future service for police officers hired prior to January 1, 2013 and for general employees hired prior to July 1, 2011. Police officers and general employees who were subject to the ad hoc COLA were given the opportunity to select the guaranteed two percent simple annual adjustment for past years of service. Retirees and beneficiaries subject to the ad hoc COLA were given the opportunity to select the two percent simple guaranteed annual adjustment for the future, based on their starting pension amounts with the first payment occurring in January 2014. The City Council did not modify pension benefits for Firefighters 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). On September 16, 2014, the City Council adopted Ordinance 21459-09-2014, which implemented benefit reductions for Firefighters hired on or after January 10, 2015. These reductions were made in accordance with Article 16, Section 2 of the 2010 CBA, which stated that Firefighters hired after September 30, 2013 were "eligible for the same benefits offered to all other employees at that time." These reductions were similar to the reductions for general employees hired on or after July 1, 2011, with the exception that "built -in overtime"was included in the definition of earnings for Firefighters. Collective Bargaining Negotiations After beginning negotiations in September 2012, the City and the Association reached an impasse in their collective bargaining on December 31, 2013. The Association sued the City alleging bad faith in its negotiations but the parties, in a Rule 11 Agreement, agreed to maintain certain provisions of the Collective Bargaining Agreement, including pension benefits for existing firefighters, until January 10, 2015. The evergreen period in the Collective Bargaining Agreement between the City and the Association expired on September 30, 2014. The City and the Association resumed negotiations and agreed, subject i to ratification by the City Council and the Association, to a new Collective Bargaining Agreement, but excepted the issue of pension benefits from its maintenance of standards provisions as the parties were unable to agree to specific pension benefits for firefighters. P 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 i Retirement Ordinance for firefighters to reduce non-accrued benefits provided by the Plan. The proposed amendments to the ordinance will: j I 1. Add definitions for Group V Firefighter; 2. Amend current definitions to include Group V Firefighters; i 3. For Firefighters Hired Prior to January 10, 2015 (Referred to as Group V Firefighters): a. Pension Benefits will be subject to a two percent simple cost of living adjustment for all credited service earned or purchased on or after January 10, 2015. Group V Members who were subject to the ad- i Logname: 12PENSION CHANGES CURRENT FIREFIGHTERS 2014 Page 2 of 3 I i I hoc cost of living adjustment will be given the option of selecting the two percent simple cost of living adjustment for credited service earned or purchased prior to January 10, 2015; b. Compensation base for credited service earned or purchased on or after January 10, 2015 will be High 5 and will not include overtime, except for Built-In Overtime as defined by the ordinance. City contributions will continue to be made on all overtime for Group V Firefighters; I c. Multiplier for normal retirement and vested termination benefit will be 2.5 percent for credited service earned or purchased on or after January 10, 2015; i d. Multiplier for credited service earned or purchased on or after January 10, 2015 will be 2.25 percent for vested termination pension drawn before normal retirement date (early retirement), benefits for death i not in the line of duty for vested employees, and disability not in the line of duty for vested employees; and i e. Multiplier and compensation base for vested termination pension will be the multiplier and compensation base in effect on the date the credited service was earned or purchased. 4. For Members and Beneficiaries Receiving Benefits from the Fund: All Firefighter members and beneficiaries currently receiving benefits from the Fund, who were subject to the 2010 Collective Bargaining Agreement, and who are under the ad-hoc cost of living adjustment will be allowed to choose the two percent simple cost of living adjustment to begin in January 2016. A member or beneficiary who chooses the two percent simple cost of living adjustment will receive an annual cost of living adjustment of two percent of the member's base salary at the time of the member's retirement, which will be added to their current retirement. 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. FUND CENTERS: j TO Fund/Account/Centers FROM Fund/Account/Centers d CERTIFICATIONS: I Submitted for City Manager's Office by: Susan Alanis (8180) i Originating Department Head: Sarah Fullenwider (7606) ; Additional Information Contact: Laetitia Brown (6639) I I I I r I I I Logname: 12PENSION CHANGES CURRENT FIREFIGHTERS 2014 Page 3 of 3