HomeMy WebLinkAboutOrdinance 153347 ~-C,-^ ~ qrq ~ s , .
ORDINANCE NO / y~~
AN ORDINANCE AMENDING ORDINANCE NO. 13543, AS
PREVIOUSLY AMENDED BY ORDINANCE NOS. 13672, 13673, 13674,
AND 13842 CODIFIED AS CHAPTER 2, ARTICLE VI, DIVISION 1
ENTITLED "EMPLOYEES' RETIREMENT FUND," OF THE CODE OF
THE CITY OF FORT WORTH (1986), AS AMENDED, WHICH
ORDINANCES ESTABLISH A RETIREMENT SYSTEM, RETIREMENT
PLAN AND BENEFITS THEREUNDER FOR EMPLOYEES OF THE CITY
OF FORT WORTH; ESTABLISHING A DEFERRED RETIREMENT
OPTION PROGRAM UNDER THE RETIREMENT ORDINANCE; AND
PROVIDING MEMBERS WITH AN OPPORTUNITY TO PURCHASE
CREDITED SERVICE BY PAYING THE ACTUARIAL COST OF SUCH
SERVICE.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH,
TEXAS
That Ordinance No 13543, as previously amended by Ordinance Nos 13672, 13673,
13674 and 13842, codified as Chapter 2, Article VI, Division 1 of the Code of the City of Fort
Worth (collectively the "Retirement Ordinance"), is hereby amended as follows
SECTION 1.
That Chapter 2, Article VI, Division 1, Section 2-201 ("Definitions") of the Retirement
Ordinance is amended by deleting the definition of Base Pension and substituting the following
language m heu thereof:
"Base Pension" shall mean the annual life pension a Member
receives pursuant to Sec. 2-210.A.1, 2-210.A.2, or 2-210.A.4.g,
whichever applies, prior to any cost of living adjustments
pursuant to Sec. 2-210.B or 2-210.A.4.g. If a Member elects an
Alternative Pension benefit pursuant to Sec. 2-210.A.1 b or 2-
210.A.2.b, or participates in DROP pursuant to Sec. 2-210.A.4,
the Member's Base Pension shall not include the lump sum
amount or the DROP Account.
SECTION 2.
That Chapter 2, Article VI, Division 1, Section 2-201 ("Defmtions") of the Retirement
Ordinance is amended by adding the following at the end of the definition of Credited Service
Notwithstanding the preceding provisions of this definition of
Credited Service, the period of time following a Member's
effective DROP Election shall not be included when
determining a Member's Credited Service, provided the
Member completes at least one year of service with the City
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from the date of the effective DROP Election to his or her
actual retirement. A Member may have his or her proof of
Credited Service increased through the purchase of Permissive
Service Credits as provided in Sec. 2-205.C.
SECTION 3
That Chapter 2, Article VI, Division 1, Section 2-201 ("Definitions") of the Retirement
Ordinance is amended by adding the following new defirirtions
"DROP" shall mean the deferred retirement option program as
set forth in Sec. 2-210.A.4
"Drop Account" shall mean the account created pursuant to
Sec. 2-210.A.4. for a Member who has made a DROP Election.
"Drop Election" shall mean the election made by a Member
pursuant to Sec.2-210.A.4 to participate in the Deferred
Retirement Option Program.
"Permissive Service Credits" shall mean a Member's voluntary
purchase of additional periods of Credited Service pursuant to
Section 2-205.C.
SECTION 4
That Chapter 2, Article VI, Division 1, Section 2-201 ("Definitions") of the Retirement
Ordinance is amended by adding the following sentence at the end of the definition of Earnings
Notwithstanding the preceding provisions of this definition of
Earnings, Earnings shall not include any amounts paid
following a Member's effective DROP Election, provided the
Member completes at least one year of service with the City
from the date of the effective DROP Election to his or her
actual retirement.
SECTION 5.
That Chapter 2, Article VI, Division 1, Section 2-205 ("Credited Service") of the
Retirement Ordinance is amended by adding Section C as follows
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, Normal Retirement Date, and Special Retirement
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Date, pursuant to the provisions of this Section 2.205.C. The Actuary
shall prepare factors which shall be used to determine the voluntary
additional contributions that a Member must make to purchase
Permissive Service Credits, provided, however, that in no event shall a
Member be required to contribute an amount that exceeds the amount
necessary to fund the benefit attributable to the additional Credited
Service that is purchased.
2. Limitations. A Member cannot purchase more than five (5)
years of Permissive Service Credits that are attributable to Non-
Qualified Service, and a Member cannot purchase any Permissive
Service Credits for Non-Qualified Service prior to completion of five
(5) years of participation as a Member.
3. Non-Qualified Service. For purposes of this Section 2-205.C,
the term "Non-Qualified Service" means service for which Permissive
Service Credit is allowed 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 described in Section 415(k)(3) of the Code),
(ii) service (including parental, medical, sabbatical, and similar leave)
as an employee (other than as an employee described in clause (i)
above) of an education organization described in
Section 170(b)(1)(A)(ii) of the Code which is a public, private, or
sectarian school which provides elementary or secondary education
(through ,grade 12), as determined under state law, (iii) service as an
employee of an association of employees who are described in clause (i)
above, or (iv) military service (other than qualified military service
under Section 414(u) of the Code) recognized by such governmental
plan. In the case of service described in clauses (i), (ii), or (iii) above,
such service will be Non-Qualified Service if recognition of such service
would cause a Member to receive retirement benefits for the same
service under more than one plan.
4. Purchase of Permissive Service Credits. A Member may
purchase Permissive Service Credits pursuant to the rules, procedures
and forms as may be adopted and amended by the Board in its
complete discretion, which shall be uniform and nondiscriminatory
and which shall be interpreted in a manner that is consistent with the
provision of the Retirement Ordinance and applicable law Permissive
Service Credits may be purchased by a Member's direct payment to
the Trustee of the amount determined by the factors provided by the
Actuary, or through a trustee to trustee transfer of such amount from
the Member's account under an eligible deferred compensation plan
(as defined in Code Section 457) or a qualified plan within the meaning
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of Code section 401(a), including a 401(k) plan, or the Member's
annuity contract meeting the requirements of Code Section 403(b).
SECTION 6.
That Chapter 2, Article VI, Division 1, Section 2-207 ("Compensation Base for
Determining Benefits") of the Retirement Ordinance is amended by adding the following sentence
at the end thereof•
For purposes of computing the Compensation Base for a
Member who has completed at least one year of service
following the making of an effective DROP Election, the
Member's Compensation Base shall be calculated using the
Member's Earnings prior to the effective date of the DROP
Election.
SECTION 7.
That Chapter 2, Article VI, Division 1, Section 2-210 ("Retirement Pension") of the
Retirement Ordinance is amended by adding Section A.4 as follows
4. Deferred Retirement Option Program.
a. General.
In lieu of the Standard Pension Benefit or the Alternative Pension
Benefit, a Member who has attained his or her Normal Retirement
Date or Special Retirement Date may elect to remain in active service
with the City and to participate in the Deferred Retirement Option
Program ("DROP"). By making an election to participate in DROP
("DROP Election"), the Member's commencement of retirement
pension benefits will be deferred until the Member's actual retirement
and the Member will receive a lump sum payment (unless such person
elects installment payments pursuant to Sec. 2-210.A.4.k) of his or her
DROP Account (defined below) at the time the Member's actual
retirement pension benefits commence. No interest on earnings shall
be paid on the lump sum payment. Once a Member makes a DROP
Election and the DROP Election is approved by the Board, the election
is irrevocable and is effective as long as the Member remains in active
service with the City Distribution of a Member's DROP Account will
not be made, and commencement of the Member's retirement pension
benefits will not begin, until the Member retires from the City DROP
shall be administered in accordance with 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 provisions
of the Retirement Ordinance and applicable law.
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b. Procedure for DROP Election.
A DROP Election shall be made in accordance with the rules,
procedures and forms (including spousal consent, where applicable) as
may be adopted by the Board. The election form adopted by the
Board may be amended by the Board, and, except as otherwise
provided by the Board, the election form in effect at the time the
Member's DROP Election is effective shall control all DROP benefits
the Member may become entitled to receive upon retirement. A
Member shall not be subject to any fees, charges, or any other similar
expenses in connection with a DROP Election.
c. Timing and Irrevocability of a DROP Election.
A Member may make a DROP Election at any time on or after the
date that is 60 days prior to the date that the Member will attain his or
her Normal Retirement Date or Special Retirement Date. Once
effective, a DROP Election is irrevocable, provided, however, that a
Member's DROP Election shall not be effective until the Member
attains his or her Normal Retirement Date or Special Retirement Date.
d. The DROP Account.
A Member's DROP account is an individual account established on
behalf of the Member into which a monthly amount will be credited
once the DROP Election is effective ("DROP Account"). The monthly
amount credited to the Member's DROP Account will be equal to the
monthly pension benefit that the Member would have initially received
if the Member had retired from the City and commenced receipt of
pension benefits. Credits to a Member's DROP Account will continue
to be made until the Member's actual retirement, provided, however,
that amounts will be credited to a Member's DROP Account for a
maximum of five (5) years. No withdrawals may be made from the
DROP Account. Subject to the minimum service requirements set
forth below, a Member will receive his or her DROP Account in a
lump sum distribution at the time the Member's pension benefits
commence upon retirement, or, if elected by the Member, the DROP
Account will be distributed in installments, as provided in Sec.2-
210.A.4.k.
e. Required Service to Receive DROP Account.
If a Member makes a DROP Election but fails to complete a full year
of service with the City from the date the DROP Election is effective to
the Member's actual retirement, the DROP Election will be null and
void and the Member will only be entitled to the retirement benefits
otherwise provided pursuant to the Retirement Ordinance and the
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Member will not receive a distribution from his or her DROP Account.
If a Member makes a DROP Election and completes at least one year
of service from the date the DROP Election is effective to the
Member's actual retirement, the Member will be entitled to receive the
amount credited to his or her DROP Account, as provided above. In
no event will a Member's DROP Account be credited with interest or
earnings, nor will the amounts credited to a Member's DROP Account
be subject to a cost of living adjustment.
f. Continued Contributions to the Fund.
Once a DROP Election is effective, both the Member and the City shall
continue to make the same contributions to the Fund that would have
been made if the Member had not made a DROP Election. Neither the
Member's nor the City's contributions to the Fund will be credited to
the Member's DROP Account and the additional contributions will not
affect the Member's monthly pension upon actual retirement.
g. Monthly Pension and Cost of Living Adjustments.
Upon retirement following an effective DROP Election, the Member's
Base Pension will be the monthly pension benefits that the Member
had earned at the time the DROP Election became effective. Thus, the
Member's Earnings and Credited Service following the DROP Election
will not be included in calculating the Member's Base Pension and
monthly pension benefits. Notwithstanding the preceding two
sentences, if a Member fails to complete a full year of service with the
City after the DROP Election would otherwise be effective (and hence,
the Member's DROP Election becomes null and void as provided
above), the Member will be credited with Earnings and Credited
Service through the Member's actual retirement. Additionally, if (and
only if) a Member completes at least two years of service with the City
after his or her DROP Election is effective, then the monthly pension
benefit that the Member initially receives upon retirement will be
adjusted for intervening cost of living adjustments under Sec. 2-210.B.,
as if the Member's monthly pension benefit had commenced at the
time the DROP Election became effective. Further, such a Member
shall receive a cost of living adjustment on the following January 1,
regardless of whether the Member's pension benefits had commenced
by September 30. Notwithstanding the preceding provisions of this
Sec.2-210.A.4.g., when a Member's monthly pension is initially
scheduled to commence at retirement or death (following at least one
year of participation in DROP), the Member's monthly pension (and
Base Pension) shall be recalculated by adjusting the Member's
Credited Service for the Member's then accumulated sick leave and
major medical leave (if any) pursuant to Sec. 2-205.B.
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h. DROP Election and Death Benefits.
If a Member dies while his or her DROP Election is in effect, the
Member's DROP Account shall be paid to the Member's spouse, or if
there is no spouse, to the Member's estate. The person eligible to
receive the DROP Account shall receive the DROP Account in a lump
sum distribution, unless such person elects installment payments
pursuant to Sec. 2-210.A.4.k. The remaining portion of the Member's
pension benefit shall be paid pursuant to the death benefit provisions
of the Retirement Ordinance, with the amount determined as if the
Member had died at the time of the DROP Election.
i. DROP Election and Disability Benefits.
If a Member makes a DROP Election, the Member will not be eligible
to receive any disability benefits under the Retirement Ordinance. If a
Member does become disabled following an effective DROP Election,
the Member may retire from the City and receive the amount that has
been credited to the Member's DROP Account in a lump sum or in
installment payments pursuant to Sec. 2-210.A.4.k., and commence
receipt of a monthly pension benefit, with the amount of the benefit
calculated as if the Member had retired at the time the DROP Election
became effective.
j Alternative Pension Benefit.
A Member who has made a DROP Election shall not be eligible to elect
an Alternative Pension Benefit (the actuarial equivalent of the
Member's Standard Pension Benefit) pursuant to Sec. 2-210.A.1.b or 2-
210.A.2.b.
k. Installment Payments.
Notwithstanding the preceding provisions of Sec. 2-210.A.4., a Member
who is entitled to receive a lump sum payment of his or her DROP
Account may elect to receive (on a form adopted by the Board) the
DROP Account in five (5) substantially equal annual installment
payments, rather than a lump sum. The, first installment payment
shall be made at the time the Member's monthly pension benefits
commence, -and the other installments shall be made on or about the
anniversary of the initial installment. No interest on earnings shall be
paid on the installment payments.
1. Actuarial Study
No later than five (5) years following the adoption of this Deferred
Retirement Option Program, the Board shall cause the Actuary to
perform an actuarial study of the impact of DROP on the Retirement
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Fund and the general fund of the City, and the Actuary shall report
the results of the actuarial study to the Board and to the City Council.
In the event that the Actuary certifies that DROP has had, or will have,
a material adverse impact on the Retirement Fund or the general fund
of the City, the Council shall determine whether DROP shall be
terminated. If the City Council votes to terminate DROP, thereafter
no Member shall be permitted to elect to participate in DROP;
provided, however, that any Member who has elected DROP prior to
such Actuarial certification shall continue to participate in DROP until
such Member's DROP Account has been completely distributed.
SECTION 8.
That Chapter 2, Article VI, Division 1, Section 2-210 ("Retirement Pension") of the
Retirement Ordinance is amended by deleting Section B ("Cost of Living Adjustment") m its
entirety and substituting the following language m lieu thereof as Section B
B. Cost of Living Adjustment.
Annually, effective January 1, 2000, and on the first day of each January
thereafter, a cost of living adjustment shall be made on all Base Pensions of all
Members of the Fund who are receiving benefits (including disability
retirement), and to their survivors (including children), 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 30th of the prior year. Not withstanding the preceding
sentence, if a Member completes at least two years of service after making a
DROP Election, the Member's initial pension benefit upon retirement will
also receive cost of living adjustments for the DROP period as set forth in
Section 2-210.A.4 g. and the Member will receive the annual cost of living
adjustment thereafter regardless of the date his or her pension benefit
commences. A member who makes a DROP Election but who does not
complete at least two years of service after making the DROP Election will
only be eligible to receive a cost of living adjustment after the Member's
retirement, and then only as provided above.
SECTION 9
This Ordinance shall be cumulative of all ordinances of the City of Fort Worth, which
shall remain m foil force and effect except to the extent that provisions of this Ordinance are m
direct conflict with the provisions of such other ordinances, m which case the conflicting
provisions of such other ordinances are hereby repealed.
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SECTION 10.
The sections, paragraphs, sentences, clauses and phrases of this Ordinance are severable.
If any portion of this Ordinance is declared illegal or unconstitutional by the valid final judgment
or decree of any court of competent ~unsdiction, such illegality or unconstitutionality shall not
affect the legality and enforceability any of the remaining portions of this Ordinance.
SECTION 11.
This Ordinance shall be m full force and effect following its adoption by the City Council
of the City of Fort Worth.
AND IT IS SO ORDAINED
ADOPTED ~ ~ ` ~ ~ `~ ~
EFFECTIVE
~a131~a
APPROVED AS TO FORM AND LEGALITY
~~~
By~ G e ~ a ! c~ Pr ~ . ff
o~~~st~t Crty Attorney
P~/
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City of Fort WoYth, Texas
Mayor and Council Communication
DATE REFERENCE NUMBER LOG NAME PAGE
9/10/02 G-13730 AMENDED 12DROP 1 of 2
SUBJECT AMENDMENT OF ORDINANCE NO 13543, AS AMENDED BY ORDINANCE NOS
13672, 13673, 13674, AND 13842 CODIFIED AS CHAPTER'2, ARTICLE VI, DIVISION
1, ENTITLED "EMPLOYEES' RETIREMENT FUND" OF THE CODE OF THE CITY OF
FORT WORTH, TO ESTABLISH A DEFERRED RETIREMENT OPTION PROGRAM
AND TO PROVIDE MEMBERS WITH AN OPPORTUNITY TO PURCHASE CREDITED
SERVICE BY PAYING THE ACTUARIAL COST FOR ABUY-UP OPTION
RECOMMENDATION
It is recommended that the City Council adopt the attached ordinance amending Ordinance No 13543,
as amended by Ordinance Nos 13672, 13673, 13674, and 13842 codified as Chapter 2, Article VI,
Division 1, entitled "Employees' Retirement Fund" of the Code of the City of Fort Worth, to establish a
deferred retirement option program (DROP) and provide members with an opportunity to purchase
credited service by paying the actuarial cost for abuy-up option
,DISCUSSION
The Retirement Board seeks to provide the members of the Employees' Retirement Fund an
opportunity to participate in a deferred retirement option program in lieu of a Standard Pension Benefit
or Alternative Pension Benefit, by remaining in active service with the City beyond the normal
retirement date or the special retirement date and deferring the commencement of the retirement
pension benefits until the actual retirement date
The DROP program is a savings election to assist employees with their retirement planning This plan
will enable an employee to obtain his or her retirement fund receipts in a lump sum payment, if desired
The proposed ordinance provides for an actuaria'I review no later than _5 years after the ordinance is
adopted. If the review demonstrates that DROP has a material adverse impact on .the Employees'
.Retirement Fund, the City Council shall be so informed. "
The Retirement Board has been interested in providing such a program to the employees for several
years The Board has monitored the practices of other employers who have DROP programs and have
researched the program thoroughly The Board believes that the adoption of this program will make the
City more competitive with other municipalities' benefit plans
This ordinance also provides an option to purchase service credits for the purpose of calculating
retirement benefits to the retirement date
City of Fort Worth, Texas
Mayor and Council Communication
DATE
9/10/02 REFERENCE NUMBER
G-13730 ~AMENDEG LOG NAME
12DROP PAGE
2 of 2
SUBJECT AMENDMENT OF ORDINANCE NO 13543, AS AMENDED BY ORDINANCE NOS
13672, 13673, 13674, AND 13842 CODIFIED AS CHAPTER 2, ARTICLE VI, DIVISION
1, ENTITLED "EMPLOYEES' RETIREMENT FUND" OF THE CODE OF THE CITY OF
FORT WORTH, TO ESTABLISH A DEFERRED RETIREMENT OPTION PROGRAM
AND TO PROVIDE MEMBERS WITH AN OPPORTUNITY TO PURCHASE CREDITED
SERVICE BY PAYING THE ACTUARIAL COST FOR ABUY-UP OPTION
FISCAL INFORMATION/CERTIFICATION
The Finance Director certifies that upon adoption of the attached ordinance this action will require no
immediate expenditure of City funds The Plan actuary has found that there will be no additional cost to
the fund associated with these two amendments
CB•n
Submitted for City Manager's FUND ACCOUNT CENTER AMOUNT CITY SECRETARY
Office by: (to)
Charles Boswell 6183
Originating Department Head:
David Yett 7623 (from) APPROVED AS AMENDED
ORD.# 15334
Additional Information Contact:
Carolyn McFatridge 7612