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06-22-1999 GENERAL EMPLOYEES PENSION BOARD MEETING June 22, 1999 CALL TO ORDER: The General Employees Pension Board meeting was called to order by Recording Secretary, JoAnn Richard, in the City Hall Conference Room, Tuesday, June 22, 1999 at 2:04 p.m. ROLL CALL: James Gornto Present Karen Rickelman Present Jack Corder Present Lisa Miller Present Mike Tenney Not Present James Hoppe Not Present Also present was Jack Ascherl, Consulting Agent of Record, Mark Cusumano, Principal Group Representative, and JoAnn Richard, Recording Secretary. APPROVAL OF MINUTES: A motion was made by Karen Rickelman to approve the minutes from May 12, 1999 with second by Jack Corder. Motion CARRIED. OLD BUSINESS: There was discussion regarding using Principal's Defined Benefit Fund Selection Service, and the cost involved. Mr. Ascherl explained that the more money the Plan makes the more money the City pays in fees. Fees are paid quarterly. Mr. Ascherl summarized the plus and minuses of utilizing this service. Principal Representative, Mark Cusumano, distributed a Generic Proposal and explained how this service works in conjunction with Principal Financial Advisors. He stated that this service is owned by the Principal Financial Group and that they are registered investment advisors. He explained the purpose of using this group is that they are responsible for coming up with a target mixed investment strategy for our Plan. They look at our plan specifically, and take into account the overall market risk of each investment. If someone is coming close to retirement then the plan needs to prepare for that. They would adjust the asset mix accordingly. He reviewed in detail the Generic Proposal and the way it would be set up for our Plan. He explained that it would take approximately two (2) years to reach our goal (our target mix) . Mr. Gornto asked the length of commitment to this service. Mr. Ascherl explained that the City could drop the service at anytime if they were not happy with the way the funds were allocated. Jack Corder asked what the cost would be for this service. Mr. Cusumano said it would cost the City approximately $3,600.00 annually. Lisa Miller suggested cost shopping for these services through other companies. Mr.Ascherl stated that through his experience Principal was very competitive, and their service costs were lower than Fidelity. Nee Mr. Gornto stated for $3,600.00 annually for professionals to do the job would be well worth it. Jack Corder stated that if we were paying $1,800.00 for a six (6) month period, and they saved us $5,000.00 it would be worth it. Mr. Ascherl spoke of other cities, as examples, using this Fund Selection Service, and how they did on their returns. He also told the board that the Police Pension Plan was already utilizing this service. Mr. Gornto asked the other board members if they wanted to decide whether to utilize this service at this meeting or not. Lisa Miller suggested that the board review the overall picture before making any decisions since the board had pending changes to also discuss today. Mr. Cusumano said that Principal would put together a full fledge plan after the board tells them how they want to allocate the funds. A motion was made by Karen Rickelman to make a decision at the next meeting whether to accept these services, and who needs to sign the contract. The motion was seconded by Eric Bosse. Motion CARRIED. Mr. Ascherl suggested having a meeting the third week in July, and Principal will let him know when they're ready with the proposal for the board. Discussion began among the board members regarding changes to the current plan. Ms. Rickelman suggested changing the Plan to read (attain age fifty five (55) or twenty -five (25) years of accrued service) whatever comes first. Also change twenty (20) years of service or fifty (50) years of age with an early retirement penalty of 50. There was discussion regarding employee contribution. Mr. Ascherl reminded the board that the employees have that choice with their Deferred Compensation Plan they contribute to. The members agreed to discuss changes in more detail at the next meeting. ADJOURNMENT: Motion was made for adjournment by Jack Corder second by Eric Bosse. Motion CARRIED. Meeting adjourned 3:54 p.m. Minutes submitted by: JoAnn Richard ) Now Nor This booklet draft contains suggested wording for your summary plan description. It is a summary of our interpretation of the provisions of your plan in language understandable to the average participant. This draft also provides details of administrative operations and statement of ERISA protected rights. It may or may not accomplish these objectives. You will want to consult with your lawyer on whether it does or not. NOTE: Please review accuracy of the More Important Information section located in the back of the booklet draft. Retirement Plan for General Employees of City of Edgewater, Florida 06/99 Ni./ PLAN HIGHLIGHTS GA 4 -29487 (7.7) Plan Highlights briefly describes your plan. The rest of this booklet explains in greater detail how the plan works. We started your retirement plan on February 1, 1978. Your retirement plan: • Gives you a dependable source of income when you retire. Knowing how much you'll receive from the plan makes planning for your retirement easier. • Bases the ownership of your retirement benefit on your service. • May provide a death benefit for your spouse or another person you name as beneficiary if you die before retirement. • Provides benefits before retirement if you become disabled as defined in the plan. • Is funded entirely by our contributions. • Offers several different ways to receive your benefits. You choose the right way for you. About This Booklet This booklet is the summary plan description. It explains how your plan currently works, when you qualify for benefits, and other information. The plan is much more detailed and it governs your benefits. 1 'tow Nine Ask your plan administrator if you have questions. Part 7 of this booklet lists your plan administrator's name and address. 2 *iv TABLE OF CONTENTS JOINING THE PLAN PART 1 • When You Join • Changes in Your Membership YOUR EARNED BENEFIT PART 2 • Figuring Your Earned Benefit • Helpful Terms • Who Provides Your Earned Benefit RETIREMENT BENEFITS PART 3 • At Normal Retirement Date • At Early Retirement Date • At Late Retirement Date • Adjustments to Your Benefits BENEFITS FOR INACTIVE MEMBERS PART 4 • Your Vested Benefit • When Your Vested Benefit Starts • Before Your Vesting Percentage Is 100% • Disability Benefits DEATH BENEFITS BEFORE RETIREMENT PART 5 • A Spouse's Benefit • Single Sum Death Benefit • Benefits Between Normal and Late Retirement 3 %✓ Noe HOW THE PLAN PAYS BENEFITS PART 6 • Forms to Choose • Choosing at Retirement • Choosing Pre - retirement Death Benefits • Tax Considerations IMPORTANT INFORMATION FOR YOU PART 7 • The Plan Administrator • Direct Rollovers • Assigning Your Benefits • Your Social Security Benefits • Claiming Benefits Under the Plan • Changing the Plan • Stopping the Plan • Facts About the Plan 4 PART 1 JOINING THE PLAN When You Join On and after October 1, 1996, no further employees will become active members under the plan. Changes in Your Membership You become an inactive member on the date you: • Are no longer an eligible employee. Eligible employee means you are employed as a general employee. You stop being a member on: • The date you get a single sum payment in place of all other benefits. • The date of your death. • The date you stop working for us if your vesting percentage is zero (see Part 4). Once you become an inactive member, you may not rejoin the plan. 5 tor Nori PART 2 YOUR EARNED BENEFIT As you work for us, you earn your retirement benefit. This earned benefit grows with your service and pay. Figuring Your Earned Benefit This formula is used to figure your earned benefit: (1) 2% of your average monthly pay multiplied (2) your benefit service Helpful Terms Average monthly pay is the average of your monthly pay for the 3 consecutive pay years out of the 10 latest pay years which give the highest average. Benefit service means the sum of your current and prior periods of service. A period of service begins when you start working for us. It ends on the date you stop working (you quit or are discharged). Monthly pay for any year is the monthly average of your total pay for such year. Pay year means a one -year period ending on June 30. Who Provides Your Earned Benefit Your earned benefit is provided entirely by our contributions to the plan. 6 *es Noe The contributions are invested and accumulate to provide benefits under the plan. The plan funds are for the exclusive benefit of members and their beneficiaries. 7 4 rr/ PART 3 RETIREMENT BENEFITS Your plan is designed to provide a retirement income for you. The amount you receive each month when you retire is based on your earned benefit. At Normal Retirement Date Unless you choose otherwise, your retirement benefit begins on your normal retirement date if you have an earned benefit (see Part 2) and you stop working for us. Even if you continue to work for us, you may choose to begin your retirement benefit on your normal retirement date. Normal retirement date means the first day of the month on or after the earlier of: • The date you complete 30 years of benefit service (see Part 2). • The date you have reached age 60 and completed 5 years of benefit service (see Part 2). If normal retirement date is or has been changed to a later date while you're a member, your normal retirement date won't be changed to the later date. At Early Retirement Date If you choose to retire early, your earned benefit will be less than the amount you could have earned by working until normal retirement date. You receive a percentage of your earned benefit because payments begin at a younger age and are expected to continue longer. The percentage is based on the number of years you retire early and is shown in the following table: 8 Approximate Years You Percentage of Retire Early Earned Benefit 1 93 2 86 3 80 4 73 5 66 The percentage is adjusted for parts of a year. Early retirement date means the first day of any month you choose which is on or after the latest of: • The date you stop working for us. • The date you reach age 55. • The date you have 5 years of participation in the plan. At Late Retirement Date You may choose to start benefits on your late retirement date. When you retire late, your earned benefit as of your normal retirement date is increased by a percentage because payments begin at an older age and are expected to continue for a shorter time. The percentage is based on the number of years you retire late and is shown in the following table: Percentage Years You Increase to Your Retire Late Earned Benefit 1 6 2 12 3 19 4 26 5 34 9 r Now' Percentage Years You Increase to Your Retire Late Earned Benefit 6 42 7 50 8 59 9 69 10 79 The percentage is adjusted for parts of a year. Your plan administrator can give you the factors for other years. Your income won't be Tess than your earned benefit as of your late retirement date. Late retirement date means, if you continue working for us after your normal retirement date, the first day of the month on or after the date you stop working. You may choose to have your benefits start on the first day of any month after your normal retirement date and before you stop working. If you do, that date becomes your late retirement date. It's possible to have your benefits begin after your retirement date. If you think you would like to delay your benefits, talk to the plan administrator before your retirement date. Your benefits must start by the April 1 following the calendar year in which you reach age 70 1/2 or the date you stop working for us, whichever is later. Special rules apply if you were age 70 1/2 before January 1, 1989. Adjustments to Your Benefits The amount you receive will be adjusted if your retirement benefit is not paid under the normal form of income. Normal form of income means a form which pays you monthly income for life and pays no benefits after your death. 10 lairr Part 6 explains the other forms you may choose. If the value of your vested benefit has never been more than 55,000, when you retire, it will be paid to you in a single sum. There is no choice to make. The law limits the benefits under all the plans of a single employer. These limits are fairly high so few people should be affected. Ask your plan administrator if you want to know more about these limits. 11 iNste Noe PART 4 BENEFITS FOR INACTIVE MEMBERS Each year as you work for us, you earn a right to a benefit if you stop working for us before retirement. This benefit is called your vested benefit. Your Vested Benefit Your vested benefit is equal to: (1) your earned benefit multiplied (2) your vesting percentage If you become an inactive member because you are no longer an eligible employee (see Part 1), but you are still working for us, your participation in the plan after you become an inactive member is used to figure your vesting. However, no further years of service will be applied to figure your earned benefit. Your vesting percentage will be 100% if you are working for us on or after the earlier of these dates: • The date you meet the requirements for early retirement (see Part 3). • The date you reach your normal retirement date (see Part 3). Before that date, the following schedule determines your vesting percentage: 12 Nee' vare Years of Participation Vesting in the Plan Percentage Less than 5 0 5 or more 100 When Your Vested Benefit Starts If you become an inactive member, you will start receiving your vested benefit on your retirement date. Part 3 explains when you may retire and how your vested benefit is adjusted if you retire early or late. Your vested benefit is the amount you will receive under the normal form of income. Normal form of income means a form which pays you monthly income for life and pays no benefits after your death. Part 6 explains other forms of benefit you may choose when you retire and tax considerations. If the value of your vested benefit has never been more than $5,000, it will be paid to you in a single sum when you stop working for us. There is no choice to make. You need to tell us your current address when you wish payments to begin. Before Your Vesting Percentage Is 100% You forfeit your earned benefit if you stop working for us when your vesting percentage is zero. Disability Benefits You receive a monthly disability benefit if you meet all of the following: • You are totally disabled as defined in the plan. 13 • You have been an active member for at least 5 years when you become disabled. The monthly disability payments equal your earned benefit. The payments won't be Tess than 25% of your average monthly pay (see Part 2). Payments continue for as long as you are disabled or until your early or normal retirement date. At retirement date, retirement payments begin. The amount of your monthly retirement income depends on the form you choose (see Part 6). If you choose the normal form of income, your monthly payments won't change after retirement. If you recover before retirement and come back to work, your payments stop. If you recover before retirement and don't come back to work, you are treated as though you had stopped working for us on the date you became totally disabled. Your earned benefit will be determined as of the date you became totally disabled. 14 rr PART 5 DEATH BENEFITS BEFORE RETIREMENT The primary purpose of your plan is to provide income for you during your retirement years. However, if you die before you retire, a death benefit may be payable to your beneficiary or spouse. A Spouse's Benefits A death benefit is paid to your spouse if these requirements are met: • You die before retirement benefits start and before your normal retirement date. • You were married for the full year before your death. • Your vesting percentage is greater than zero (see Part 4). The death benefit equals the survivor's benefit under a 50% survivor form. The benefit is payable to your spouse as of the earliest date you could have retired on or after the date of your death. (This will be your normal retirement date if you had not met the participation requirement for early retirement.) Your spouse may choose to begin benefits on a later date. The amount of the benefit is based on your vested benefit when you die. If you are not working for us then, it is based on your vested benefit when you stopped working for us. If your spouse starts receiving this death benefit before or after what would have been your normal retirement date, your vested benefit is adjusted for early or late retirement as explained in Part 3. Your vested benefit is also adjusted for the 50% survivor form. One -half of this reduced amount is payable to your spouse monthly for life. (If, during the election period for retirement forms, you choose a survivor form with a 15 *sr different survivor percentage for your spouse, that percentage applies instead.) The spouse's benefit won't be Tess than the monthly income which can be provided by the single sum death benefit described below. If your spouse dies before benefits start, the single sum death benefit will be paid to your spouse's beneficiary. If the value of the spouse's death benefit has never been more than $5,000, it will be paid to your spouse in a single sum in place of the monthly income. Single Sum Death Benefit On and after January 10, 1990, a single sum death benefit is payable if you are an active member when you die and you die before your normal retirement date. It equals the amount that would be needed as of the date you die in order to provide your earned benefit on the normal form of income as of your normal retirement date. This amount is called the present value of that benefit. To figure the present value, we assume it would earn interest at a rate set by Federal guidelines until your normal retirement date. If a spouse's benefit is payable, the single sum death benefit described in this section is used to provide the spouse's benefit. If a spouse's benefit is not payable, the single sum death benefit is payable to your beneficiary. You and your spouse may choose not to have the single sum death benefit used to provide a minimum spouse's benefit. If you make this choice, the single sum death benefit will be paid to your beneficiary. The spouse's benefit will be reduced by the amount of benefit the single sum death benefit could have provided. If the value of the reduced spouse's benefit is not more than $5,000, your spouse may choose to receive that value in a single sum in place of the monthly income. 16 w Benefits Between Normal and Late Retirement If you die after your normal retirement date and before retirement benefits begin, death benefits are paid in this way: • If you are married for the full year before your death, death benefits are the same as if you had died before your normal retirement date. • If you are not married for the full year before your death, a death benefit may be payable depending on the optional form of retirement payments you chose before your death. If you chose a form with a death benefit, your beneficiary or survivor will receive that benefit as if you had retired on the date of your death. Federal law limits how death benefits may be paid. Your plan administrator can tell you what forms you may choose. You should choose before your normal retirement date to be sure of the death benefit of your choice. 17 Now var. PART 6 HOW THE PLAN PAYS BENEFITS You make an important choice when you decide how to receive your benefit. Things to consider include the money you will need every month, any death benefits you want to provide, and your tax situation. You may choose to have your retirement benefit paid under one or more of the optional forms available under the plan. Your plan administrator or tax advisor can help you make your choice. If the value of your earned benefit has never been more than $5,000, it will be paid to you in a single sum. There is no choice to be made. The amount of the payments will depend on the amount of your earned benefit, your age, the age of your survivor and the optional form chosen. Forms to Choose The plan offers the following ways for you to receive your benefit: • A monthly income to you for life. No benefits are payable after your death. • A monthly income to you for life. If you die before the end of a period (you may choose 5, 10 or 15 years), payments continue to your beneficiary to the end of that period. • A monthly income to you for life. You choose a percentage (50 %, 66 2/3 %, or 100 %) of your monthly income to continue for the lifetime of a survivor you name. 18 *my Imo Choosing at Retirement You may choose any of the optional forms of benefit. Your choice must be made within 90 days of the date benefits begin. (Federal rules may limit the forms available to you.) You may change or cancel your choice at any time before benefits start. If you don't have a choice in effect or your spouse revokes consent, your retirement benefits are paid in this way: • If you are married, retirement benefits are paid to you monthly for life. After your death, 50% of your monthly income is paid to your spouse for as long as your spouse lives. • If you are single, retirement benefits are paid to you monthly for life. No benefits are payable after your death. Choosing Pre - retirement Death Benefits You may name your beneficiary for any single sum death benefit. You may also choose to have the single sum benefit paid in another form. You may change or cancel a choice at any time. If you name a beneficiary but do not choose a form of payment, your beneficiary may choose the form. Because of Federal rules about the starting date for benefits, your beneficiary should contact the plan administrator Tess than one year after your death. Your spouse may choose to have the spouse's benefit described in Part 5 paid in another form. If the value of the spouse's benefit has never been more than $5,000, it will be paid to your spouse in a single sum. There is no choice to be made. 19 '`•r ■••, The optional forms of death benefit are any of the monthly income forms. Any choice by your spouse or beneficiary must be made before benefits begin. Tax Considerations Benefits you receive are normally subject to income taxes. You may be able to postpone or reduce the taxes that would otherwise be due. In addition, benefits you receive before age 59 1/2 may be subject to a 10% penalty tax. Each person's tax situation differs. Your financial advisor can help you decide the best way for you to receive benefits. 20 age Niue PART 7 IMPORTANT INFORMATION FOR YOU The Plan Administrator The plan administrator has the full power to decide what the plan provisions mean; to answer all questions about the plan, including those about eligibility and benefits; and to supervise the administration of the plan. The plan administrator's decisions are final. Direct Rollovers Certain benefits which are payable to you may be paid directly to another retirement plan, individual retirement account or individual retirement annuity. Your plan administrator will give you more specific information about this option when it applies. Assigning Your Benefits Benefits under the plan cannot be assigned, transferred, or pledged to someone else. The plan does make an exception for certain qualified domestic relations orders such as alimony payments or marital property rights to a spouse or former spouse. Your plan administrator will set up procedures to determine if a domestic relations order is qualified. Your Social Security Benefits Your benefits from this plan are in addition to your benefits from Social Security. You should make your application for Social Security (and Medicare) benefits 3 months before you wish Social Security payments to begin. 21 vor Claiming Benefits Under the Plan Apply for benefits to your plan administrator. You'll need to complete all necessary forms and supply needed information, such as the address where you will get your checks. Changing the Plan The plan can be changed at any time. We will notify you of any changes that affect your benefits. Stopping the Plan We hope to continue the plan, but the plan can be terminated (stopped). If the plan is terminated, the plan assets will be used up on a priority basis to provide retirement income for plan members. FACTS ABOUT THE PLAN The Plan Administrator and Sponsor Edgewater Police Pension Board Box 489 Edgewater FL 32132 -0489 22