Recommendation
Staff recommends that the Mayor and Council approve two amendments to the City's Pension Plan.

Discussion

This item contains two administrative pension plan amendments. The more significant Plan design element changes will be brought forward as a separate item at a later date. With a Plan vendor search underway, staff would like these amendments in place so that if a change in vendor is recommended by the Retirement Board (Board), that these two items can take place prior to the change.

At the Board meeting held on February 19, 2010 three Plan amendments were unanimously recommended by the Board.

I. Added Plan language to allow for De Minimis distributions of account balances less than $1,000.

This change to Plan language will allow the City to reduce its administration costs of the Plan by distributing small account balances to participants, so that the Plan does not have to do the associated recordkeeping with each account. Attachment A.

II. Added Plan language to allow for the Board to approve a window for buyback of service credit.

This change to Plan language will allow the Retirement Board to approve a temporary buyback window so that eligible employees meeting certain criteria can purchase up to a maximum of 36 months service credit in the City's DB Plan. There is no cost to the City for this amendment. Attachment B.

The Board at its meeting held on May 21, 2010, approved a temporary open window for the buyback of service credit, subject to Mayor and Council approval beginning July 1, 2010 and closing on August 31, 2010. Employees will be given notice of the open window beginning June 15, 2010. Attachment C.

III. Added Plan language that authorizes the Police to participate in the supplemental employee contribution program and changed the implementation date from calendar year to fiscal year. The Plan currently only authorizes the administrative and union employees to increase their contributions when Plan finances and circumstances dictate the need for increased employee contributions. The Retirement Board believes that all employees should participate in supplemental contributions when needed.

At this time, staff are only recommending items I. and II. be implemented. Item III. above is being deferred along with some other design elements that may be brought back to the Mayor and Council at a later date.

Two other administrative changes have been made by the Board that impact the Plan. These changes did not come to the Mayor and Council as they did not involve Plan language changes. On December 8, 2006, the Board approved changing the mortality tables utilized by the Plan actuary from 1983 Group Annuity table to RP-2000 Combined table projected to 2005 on Scale AA. This change was implemented as the Board recognized that people are living longer and that the new mortality tables would better reflect this reality. This change was implemented with the April 1, 2007 valuation report.

On September 4, 2009, the Board voted to extend the time period actuarial gains and losses are recognized over from four to five years. This change was implemented so that the funding impact to the City when losses occur would be less dramatic. This change will be implemented with the April 1, 2010 valuation report.

Mayor and Council History
This is the first time this item has been brought before the Mayor and Council.

Boards and Commissions Review
The items in this report were approved and recommended by the City's Retirement Board at its meetings held on February 19, 2010 and May 21, 2010.

Fiscal Impact
There is no fiscal impact associated with this agenda item.

Attachments

Department Head:



Gavin Cohen, Director of Finance
Approved on: 05/25/2010

City Manager:

Scott Ullery, City Manager
Approved on: 06/08/2010