Mayor and Council



   For the meeting on:

  January 28, 2013
   Department:   Finance
   Responsible staff:  Gavin Cohen, Chief Financial Officer
  phone: (240) 314 - 8402
  GCohen@rockvillemd.gov


Subject
Pension Plan Amendment - HEART Act Requirements and Plan, Year End Change

Recommendation
Staff recommends that the Mayor and Council approve the sixth pension plan amendment.

Discussion

HEART ACT
At the Retirement Board meeting held on November 16, 2012, staff notified the Board of a required Pension Plan amendment due to a new federal law called the HEART Act. The new law provides additional tax and pension benefits to individuals who are absent from work due to duty in the uniformed military service. See Attachment E for additional information on the HEART Act.

YEAR END CHANGE
On September 7, 2012, the Retirement Board agreed to recommend to the Mayor and Council that the Pension Plan year be changed from April 1 through March 31 to July 1 through June 30 to better align the Pension Plan year with the funding mechanism of the Plan, which is the City's fiscal year. This change, which was approved unanimously by the Board, should lead to less confusion in the future when discussing the City's Pension Plan and funding status of the Plan (Attachment D).

This modification will be accomplished by establishing a short fiscal year for the Plan, beginning on April 1, 2013 and ending on June 30, 2013. Thereafter, the Plan’s fiscal year will run from July 1 to June 30. Because the Plan will have a short year, certain IRS annual limitations on compensation and allocations must be adjusted on a pro rata basis. Also, interest crediting on employee contributions, which were calculated on a calendar year basis, will run on the new fiscal year of the Plan.

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

Boards and Commissions Review
The City's Retirement Board discussed these two changes to the Plan at their meetings held on September 7, 2012 and November 16, 2012.

Fiscal Impact
There could be a fiscal impact if the City has retirees with qualified military service.

Attachments

Attachment A - Sixth Amendment

Attach A -SIXTH AMENDMENT TO THE CITY OF ROCKVILLE PENSION PLAN.pdfAttach A -SIXTH AMENDMENT TO THE CITY OF ROCKVILLE PENSION PLAN.pdf

Attachment B - Sixth Amendment - Redline version

Attach B -pension plan 6th amendment redline.pdfAttach B -pension plan 6th amendment redline.pdf

Attachment C - Pension Plan including sixth amendment

Attach C-Rockville_ 2008 Pension Plan (with 1st, 2nd, 3rd,  4th,  5th and 6th Amend incorporated) CLEAN.pdfAttach C-Rockville_ 2008 Pension Plan (with 1st, 2nd, 3rd, 4th, 5th and 6th Amend incorporated) CLEAN.pdf

Attachment D - ROCKERS Board Meeting Agenda September 7, 2012

Attach D-RB AGENDA Fiscal Year Plan Date.pdfAttach D-RB AGENDA Fiscal Year Plan Date.pdf

Attachment E - ROCKERS Board Meeting Agenda November 16, 2012


Attach E-RB AGENDA HEART ACT.pdfAttach E-RB AGENDA HEART ACT.pdf

Department Head:



Gavin Cohen, Chief Financial Officer
Approved on: 01/18/2013

City Manager:

Barbara B. Matthews, City Manager
Approved on: 01/24/2013