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HomeMy WebLinkAbout09611RESOLUTION NO. 9611 A RESOLUTION REGARDING PLAN AMENDMENTS TO THE FIRE & POLICE PENSION ASSOCIATION STATEWIDE DEFINED BENEFIT PLAN WHEREAS, pursuant to the authority granted in Section 31 -31 -408, C.R.S., the Board of Directors of the Fire and Police Pension Association has proposed certain plan amendments to the pension benefits set forth in Part 4, Article 31, Title 31, Colorado Revised Statutes and as those benefits have been previously amended, with respect to members of the Statewide Defined Benefit Plan, said proposed plan amendments including four separate amendments to the Statewide Defined Benefit Plan; and WHEREAS, the proposed plan amendments are set forth in the FPPA's Resolution 2002 -2, adopted by the FPPA Board of Directors on February 27, 2002; and WHEREAS, the FPPA Board of Directors, as determined in its Resolution 2002- 3, adopted on February 27, 2002, has certified that the proposed plan amendments will maintain or enhance the actuarial soundness of the plan, do not require an increase in the employer and member contribution rates, do not adversely affect the Plan's status as a qualified plan, do not adversely affect the pension benefits of retired members, and do not reduce the Plan's normal retirement age below what is permitted by law; and WHEREAS, the City Council of Pueblo, Colorado, has reviewed said proposed plan amendments set forth in the FPPA Resolution 2002 -2; and WHEREAS, the City Council finds that it is in the best interest of the City of Pueblo and the employees thereof to register its vote on said plan amendments. BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The City Council hereby casts a vote for each of the four plan amendments proposed by the FPPA Board of Directors in Resolution 2002 -2 as follows: Amendment 1 COLA calculation X Yes No Amendment 2 Self- direction of SRA X Yes No Amendment 3 Self- direction of DROP X Yes No Amendment 4 DROP -early and vested retirement X Yes No 42Cr% - r1nK1 7 The City Council further directs its administrative staff to deliver a copy of this resolution to the Fire and Police Pension Association for inclusion in its plan amendment election tally. INTRODUCED: May 28, 2002 BY: Al Gurule COUNCILPERSON APPROVED: PRESIDENT OF CITY COUNCIL - _ 1 -_ m i 11 CLERK �rR� Background Paper for Proposed RESOLUTION DATE: MAY 28, 2002 fivo, - I`9(o I/ AGENDA ITEM # (�- I s a,;t1 DEPARTMENT: POLICE -JAMES BILLINGS, FIRE -GREG MILLER HUMAN RESOURCES - BETH VEGA TITLE A RESOLUTION REGARDING PLAN AMENDMENTS TO THE FIRE & POLICE PENSION ASSOCIATION STATEWIDE DEFINED BENEFIT PLAN ISSUE Should the City Council approve the FPPA plan amendment changes RECOMMENDATION That the Council vote on these plan amendments BACKGROUND The Fire and Police employees have voted overwhelmingly to approve these changes. However, these amendments require 60% voting "Yes "; a number of employees elected not to vote. Council has the opportunity to cast two votes; one is for Police and one is for Fire. Fire Vote YES NO No Vote Amendment 1 62 0 37 Amendment 2 58 4 37 Amendment 3 58 4 37 Amendment 4 1 62 0 37 Police Vote YES NO No Vote Amendment 1 99 1 68 Amendment 2 96 4 68 Amendment 3 97 3 68 Amendment 4 96 4 68 FINANCIAL IMPACT Unknown u�TS I uR�,and�d -� FP PA ' 1©. 640L-- FIRE AND POLICE PENSION ASSOCIATION BOARD OF DIRECTORS RESOLUTION NO. 2002 -3 WHEREAS, pursuant to the authority granted in Section 31 -31 -408, Colorado Revised Statutes, as amended, the Board of Directors of the Fire and Police Pension Association ( "the Board ") has proposed certain modifications to the pension benefits set forth in Part 4, Article 31, Title 31, Colorado Revised Statutes, as amended, with respect to the members of the Statewide Defined Benefit Plan ( "the Plan "); and WHEREAS, the proposed modifications to the Plan are set forth in the Board's Resolution No. 2002 -2, adopted by the Board on February 27, 2002; and WHEREAS, FPPA Rule 704.02(b) requires that prior to an election by employers and members on any proposed modification to the Plan, the Board shall provide employers with a certification that the proposed modifications comply with the requirements set forth in Section 31 -31 -408, Colorado Revised Statutes, as amended; NOW, THEREFORE, BE IT RESOLVED, that the Board hereby certifies that the proposed modifications to the Plan set forth in Board Resolution No. 2002 -2 comply with the requirements set forth in Section 31 -31 -408. The Board finds and determines the following: 1. The proposed modifications will maintain or enhance the actuarial soundness, as specified in Section 31 -31 -102 (1), of the Plan. 2. The proposed modifications do not require an increase in the employer and member contribution rates established as of January 1, 1980, pursuant to Section 31 -31 -402. 3. The proposed modifications do not adversely affect the Plan's status as a qualified plan pursuant to the "Internal Revenue Code of 1986," as amended. 4. The proposed modifications do not adversely affect the pension benefits of retired members. 5. The proposed modifications do not reduce the Plan's normal retirement age below that Resolution 2000 -3 permitted by Section 31 -31 -403 (1) (b). Page 2 IN WITNESS WHEREOF, I have hereunto set my hand on this 27th day of February, 2002. FIRE AND POLICE PENSION ASSOCIATION, a political subdivision of the State of Colorado By: Ron Lappi, Chair Board of Directors STATE OF COLORADO ) ss. County of Arapahoe ) The foregoing Resolution was acknowledged before me this 27 day of February, 2002, by Ron Lappi, Chair of the Board of Directors, Fire and Police Pension Association, a political subdivision of the State of Colorado. Witness my hand and official seal. My commission expires: Notary Public (Seal) FIRE AND POLICE PENSION ASSOCIATION BOARD OF DIRECTORS RESOLUTION NO. 2002 -2 WHEREAS, Section 31 -31 -408, C.R.S., as amended, authorizes the Board of Directors of the Fire and Police Pension Association ( "the Board ") to modify the pension benefits and the age and service requirements for pension benefits set forth in Part 4, Article 31, Title 31, Colorado Revised Statutes, as amended, with respect to the members of the Statewide Defined Benefit Plan ( "the Plan "); and WHEREAS, Section 31 -31 -408, C.R.S., as amended, sets forth certain conditions which must be met before the Board may adopt any modification to the Plan, including approval by at least sixty -five percent of the active members of the Plan and more than fifty percent of the employers having active members covered by the Plan; and WHEREAS, pursuant to the authority granted in Section 31 -31 -408, C.R.S., as amended, the Board has adopted Rules establishing the procedure which the Board will follow with respect to its adoption of any modification of the Plan; and WHEREAS, FPPA Rule 704.01 requires that the Board provide a copy of the language of each proposed plan modification to employers for distribution to each member of the Plan; and WHEREAS, if adopted, the proposed amendments will only affect the Statewide Defined Benefit Plan; NOW, THEREFORE, BE IT RESOLVED, that the Board hereby proposes the following modifications to the Plan which shall be submitted for approval to Plan employers and Plan members pursuant to the provisions of Section 31 -31 -408, C.R.S., as amended, and FPPA Rule 704. Amendment One: Removal of consumer -price index limitation on statewide defined benefit plan: Section 31- 31407(2) and (3) C.R.S. to be amended as follows: 2) (a) emeept for- teta� di sa bilit y b fi+ paya + to ,be 3 1 3 1 803 (1) an d 3 1 3 1 806.5 (T)he rvcncnrspajisvi�pai�aia - c v - ic......,..� ., � ., . .,.,., �.� ...... ,. s ,.. ...,.,..., redetermination of benefits payable under subsection (1) of this section shall be computed as follows: The amount of the benefit on the effective date of the benefit shall be increased by a percentage to be determined by the board but no more than three percent for each full year contained in the period commencing with the effective date of the benefit and ending with the effective date of the redetermination. Beginning in 2002, the amount of the benefit on the effective date of the benefit shall be increased by a percentage to be determined by the board but not more than three percent of the prior year's benefit. In no event shall the benefit be decreased. Amendment Two: Self Direction for SRA monies for retired and DROP members. A new Section 31 -31 -406.5 to be adopted as follows: 31 -31 -406.5 Self Direction of separate retirement account. If a retired member elects to receive payment of the member's separate retirement account funds in periodic installments or elects to defer receipt of funds, the unpaid balance in the member's separate retirement account will continue to accrue actual earnings based on the member's direction for the investment of the separate retirement account. The separate retirement account assets shall be held for investment purposes as part of the fire and police members' self - directed investments fund, subject to such rules as may be adopted for the administration of the member self - directed investments. The Board shall be authorized to charge each account a fee for the administration of the separate retirement account. The Board shall direct the investment of the member's separate retirement account until the member provides direction on the investment of the account. A new Section 31 -31- 405(4.5) to be adopted as follows: (4.5) For purposes of this Section 31 -31 -405 C.R.S., members of the deferred retirement option plan shall be deemed to have terminated service. ._. Amendment Two: Self Direction for SRA monies for retired and DROP members. A new Section 31 -31 -406.5 to be adopted as follows: 31 -31 -406.5 Self Direction of separate retirement account. If a retired member elects to receive payment of the member's separate retirement account funds in periodic installments or elects to defer receipt of funds, the unpaid balance in the member's separate retirement account will continue to accrue actual earnings based on the member's direction for the investment of the separate retirement account. The separate retirement account assets shall be held for investment purposes as part of the fire and police members' self - directed investments fund, subject to such rules as may be adopted for the administration of the member self - directed investments. The Board shall be authorized to charge each account a fee for the administration of the separate retirement account. The Board shall direct the investment of the member's separate retirement account until the member provides direction on the investment of the account. A new Section 31 -31- 405(4.5) to be adopted as follows: (4.5) For purposes of this Section 31 -31 -405 C.R.S., members of the deferred retirement option plan shall be deemed to have terminated service. Section 31- 3- 409.5(8), as adopted as part of Amendment 5, Fire and Police Pension Association, Board of Directors Resolution No. 98 -2, dated February 23, 1998, to be amended as follows: (8) Upon commencement of the member's participation in the DROP, the member shall remain an active member. Nevertheless, the member shall earn no additional service credit or additional benefits under the Statewide Defined Benefit Plan. For purposes of Section 31 -31- 405 C.R.S., a member participating in the DROP shall be deemed to have terminated service. A new Section 31 -31 -409.6 to be adopted as follows: 31 -31 -409.6 Fire and police members self - directed investments fund - creation - management. (1) (a) There is hereby created the fire and police members' self - directed investments fund that shall consist of the assets of member self - directed funds administered and managed by the board pursuant to sections 31 -31 -406.5 and 31 -31- 409.5(10), as adopted as part of Amendments 2 and 3, Fire and Police Pension Association, Board of Directors Resolution No. 02- dated 2002. The board shall keep an accurate account of each such individual fund. In addition, the board shall keep an accurate account of each member's separate account in any such individual fund. The board may allow a member to exercise control of the investment of part or all of the member's accrued benefit under the member's plan. In allowing a member to exercise such control, the board shall: (I) Select at least three investment alternatives, each of which is diversified in itself, that allow the member a broad range of investments and a meaningful choice between risk and return in the investment of the member's accrued benefit; (II) Allow the member to change investments at least once each calendar quarter, and (III) Provide the member with information describing the investment alternatives, the nature, investment performance, fees, and expenses of investment alternatives, and other information to enable a member to make informed investment decisions. (b) The board shall adopt rules governing the calculation and allocation of earnings and losses under the various investment alternatives that it may offer, the transfer of assets between funds under each alternative, the allocation of a member's account between investment alternatives, and such other matters as may be necessary to its administration and management of the fund created pursuant to this section. (2) The board shall be the trustee of the fire and police members' self directed investments fund subject to the members' allocation of moneys in their accounts to the alternatives offered by the board. A member who exercises control over the plan assets in the member's account shall not be deemed to be a fiduciary by reason of such exercise of control, and the board shall not be liable for any loss that results from such exercise of control. (3) The board shall designate one or more financial institutions as custodians of the fund. All moneys paid or transmitted to the custodian shall be credited to appropriate accounts in the fund, and the custodian shall maintain a current inventory of all investments of the fund. (4) Disbursements from the fund shall be made, subject to the approval of the board, only for payment of the expenses of the association in connection with the administration of the fund, refunds to the members, benefits, and investment purposes. (5) Reserved. (6) Reserved. (7) The board shall submit an annual audit of the fund to the general assembly and to each employer that has active or retired members with balances in the fund. Each employer shall make the audit and study available for review by its members. Amendment Three: Member Self Direction of Deferred Retirement Option Plan (DROP) Assets Section 31 -31 -409.5 (10), as adopted as part of Amendment 5, Fire and Police Pension Association, Board of Directors Resolution No. 98 -2, dated February 23, 1998, to be amended as follows: (10) The DROP assets shall be held in trust for investment purposes as part of the fire and police members' self - directed investments fund, subject to such rules as may be adopted for the administration of the trust. eentinue te b ee . of ed f investment par-peses as put of the fire and peliee member-s' benefit f6nd and shall be efedited v*h net investment eawtings and lesses at the same r-eAe as ether- assets in the The Board shall be authorized to charge each account a fee for the administration of the DROP. A new Section 31 -31 -409.6 to be adopted as follows: 31 -31 -409.6 Fire and police members' self - directed investments fund - creation - management. (1) (a) There is hereby created the fire and police members' self-directed investments fund that shall consist of the assets of member self- directed funds administered and managed by the board pursuant to sections 31 -31 -406.5 and 31 -31- 409.5(10), as adopted as part of Amendments 2 and 3, Fire and Police Pension Association, Board of Directors Resolution No. 02- ' dated , 2002. The board shall keep an accurate account of each such individual fund. In addition, the board shall keep an accurate account of each member's separate account in any such individual fund. The board may allow a member to exercise control of the investment of part or all of the member's accrued benefit under the member's plan. In allowing a member to exercise such control, the board shall: (I) Select at least three investment alternatives, each of which is diversified in itself, that allow the member a broad range of investments and a meaningful choice between risk and return in the investment of the member's accrued benefit; (II) Allow the member to change investments at least once each calendar quarter; and (III) Provide the member with information describing the investment alternatives, the nature, investment performance, fees, and expenses of investment alternatives, and other information to enable a member to make informed investment decisions. (b) The board shall adopt rules governing the calculation and allocation of earnings and losses under the various investment alternatives that it may offer, the transfer of assets between funds under each alternative, the allocation of a member's account between investment alternatives, and such other matters as may be necessary to its administration and management of the fund created pursuant to this section. (2) The board shall be the trustee of the fire and police members' self directed investments fund subject to the members' allocation of moneys in their accounts to the alternatives offered by the board. A member who exercises control over the plan assets in the member's account shall not be deemed to be a fiduciary by reason of such exercise of control, and the board shall not be liable for any loss that results from such exercise of control. (3) The board shall designate one or more financial institutions as custodians of the fund. All moneys paid or transmitted to the custodian shall be credited to appropriate accounts in the fund, and the custodian shall maintain a current inventory of all investments of the fund. (4) Disbursements from the fund shall be made, subject to the approval of the board, only for payment of the expenses of the association in connection with the administration of the fund, refunds to the members, benefits, and investment purposes. (5) Reserved. (6) Reserved. (7) The board shall submit an annual audit of the fund to the general assembly and to each employer that has active or retired members with balances in the fund. Each employer shall make the audit and study available for review by its members. Amendment Four: DROP for early and vested retirements. Section 31 -31- 409.5(2), as adopted as part of Amendment 5, Fire and Police Pension Association, Board of Directors Resolution No. 98 -2, dated February 23, 1998, to be amended as follows: (2) The provisions of this section are applicable with respect to those otherwise eligible members of the Statewide Defined Benefit Plan whose election to participate in the Deferred Retirement Option Plan occurs on or after the effective date of this section. An "eligible member" is any member who is eligible for normal retirement in accordance with section 31 -31 -403 C.R.S., who has reached retirement age but has not reached the required service, who is eligible for a vested retirement in accordance with section 31 -31- 404(2) C.R.S., or who is eligible for an early retirement in accordance with section 31- 31- 403(4)C.R.S. Section 31 -31- 409.5(9), as adopted as part of Amendment 5, Fire and Police Pension Association, Board of Directors Resolution No. 98 -2, dated February 23, 1998, to be amended as follows: (9) Upon commencement of the member's participation in the DROP, the nernal retirement benefits provided in this part 4 and the member contributions provided in this part 4 shall be paid into the member's Deferred Retirement Option Plan account. In no case shall the employer contribution be used to fund the DROP. Upon approval by the members and the employers, these amendments shall become effective October 1, 2002. IN WITNESS WHEREOF, I have hereunto set my hand on this 27th day of February,2002. FIRE AND POLICE PENSION ASSOCIATION, a political subdivision of the State of Colorado By Ron Lappi, Chairm Board of Directors STATE OF COLORADO ) ) ss. County of Arapahoe ) The foregoing Resolution was acknowledged before me this 27 day of February, 2002, by Ron Lappi., Chairman of the Board of Directors, Fire and Police Pension Association, a political subdivision of the State of Colorado. Witness my hand and official seal. My commission expires: Notary Public (Seal)