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05-30-1985 - Joint GEPB/PPB Now Now CITY OF EDGEWATER JOINT MEETING GENERAL EMPLOYEES RETIREMENT PLAN POLICE RETIREMENT PLAN MAY 30, 1985 MINUTES Mayor Baugh called the General Employees portion of the meeting to order at 2:10PM in the Community Center. ROLL CALL Mayor Earl Baugh Present City Clerk Connie Martinez Present Raymond Basham Absent Vincent Perrotta Absent David Pettit Present Reverend Harvey Hardin Present Also present was Mr. Jack Ascherl, consultant for the plans. Mr. Ascherl stated that the Boards meet each year to review the Fund Statement and look at the Actuarial Valuation that's calcu- lated by Bankers Life to determine how much is needed to be deposited for 1985. He said the average annual rate of return for 1984 was 11.62%, which was from 1/1/84 through 12/31/84. He stated that they had cash received of $35,338.00 and cash reinvested of $17,386.86. He pointed out there are different accounts they can invest in but they're in the best account now until something changes and he'd recommend to stay there. He added that it's a good rate of return for the money. He reviewed the balance at the beginning of the year and additions and withdrawals with the balance at the end of the period of $309,076.61. He reviewed a breakdown of the expenses charged to the account with a total of $2,440.37. He said the Allocation for Retired Participants is set aside for the two employees who have already retired, for a total of $21,607.55. He noted that the money would come back into the account if the person were no longer living and didn't have beneficiary provisions. Mr. Ascherl then reviewed the Analysis of the Actuarial Report and pointed out the auditors for the City have a more detailed breakdown for their review. He said these are estimated costs and projections for all the people in the account and a determination is made of what will be required to put in this year to keep it in a good financial condition. He said the normal cost for future accruing benefits is $34,291. He pointed out that when they started the plan they gave credit for past service, and they fund for future service and for past service liability. He said the minimum employer deposit would be $33,111. for this year, and the decrease was because of the younger ages of those in the plan. He said originally they planned for about 10% return and the money has been earning good interest and the funding level is at 5.2% but that fluctuates as people come and go. Mr. Ascherl said the Minimum Funding Account for 10/1/83 to 10/1/84 did not have a funding deficiency. He pointed out that the plan was set up for an employee staying 10 years but they went to a 5 -year vesting schedule about two years ago and the cost to make that change is amortized and most of it is in the $9,236. He reviewed the credits to the minimum funding account with an accumulated credit balance of 4,182. Mr. Ascherl reviewed the Emerging Retirement Liability based on the current employees. He then reviewed the Census Data and Asset Display. % Nor Nsoor Mr. Pettit asked the percentage of decrease if a person retires at age 62 instead of 65, and Mr. Ascherl replied that it's about 5% per year. He noted that for General Employees, it's age 65 with 10 years of service, and for Police Department the normal retirement age is 60. Reverend Hardin stated that it was suggested they go out for bids but he feels they have a good company and should be slow about making changes since they have equity built up. Mr. Ascherl said that it isn't a bid process and he reviewed the pro- cedure involved previously. He added that he's worked with the City of New Smyrna Beach and Bankers Life for about 10 years, and the administrative charges are very low. He pointed out that if they want to change, they are penalized because of the long term investments that are made. Mayor Baugh stated that he didn't recommend moving to another plan. Mayor Baugh then called the Police Retirement Plan portion of the meeting to order. ROLL CALL Mayor Earl Baugh Present Sergeant William Lenz Arrived Later Officer Bret Teitelbaum Present Reverend Lawrence Tee Present Also present was Mr. Jack Ascherl, consultant for Bankers Life. Mr. Ascherl stated that this account had 11.56% rate of return and it's different from the other because money was invested at different times. He said $24,528.97 was deposited last year and $10,043.72 was reinvested. He noted the beginning balance was $123,856.57 with cash received of $24,528.97 and qualified State money of $14,029.00. He added that if they had been been in the State plan, that money would have gone directly to the State. He said this money is to provide additional beneits to the Police Department and they have an earlier retirement. Officer Teitelbaum asked which plan the civilian Police employees are in and Mr. Ascherl said he doesn't have that definition. City Clerk Martinez stated that they're under the Police plan if they're civilian or sworn Police. Mayor Baugh agreed they're included in the Police Pension Plan. Mr. Ascherl read the payment to the one retiree, Norman McCall, and reviewed the Itemized Expense Charges. He pointed out that he had questioned the difference in the consultant's compensation and didn't understand the reply he got. Mr. Ascherl noted that they've allocated $28,585.50 for retired participants for Norman McCall. Mr. Ascherl said the normal cost is $8,903. and it went from 6.7% to 4.7% because of substantial employee terminations in the Police Department who had not vested their ownership of the plan. He noted they also had to recognize Florida Statute 112.65 regarding the fact that they can't collect more than 100% of what they were earning with social security. Sergeant Lenz arrived at the meeting at this time, 2:50 P.M. City Clerk Martinez asked if a person is terminated and then comes back later if the 5 -year vesting starts again or if it can be continued. Mr. Ascherl said there is usually a provision for a break in service and they have to stay for a certain period of time to bridge that old service. -2- Joint General Employees & Police Retirement Plan Meeting Minutes May 30, 1985 Nisr vow City Clerk Martinez asked if the benefits are different for the widow if the person was in the General Employees or Police Plan. Mr. Ascherl replied that it's in the booklet and he thinks it's better for the Police if they're killed in the line of duty. Mr. Ascherl said the Minimum Funding Account shows they're in excellent shape. He reviewed the Charges and Credits to the Minimum Funding Account. He noted that the State money will be deposited in this account and will keep this account very well funded with a lot of flexibility. Mr. Ascherl reviewed the Emerging Retirement Liability and said only one person is planning retirement this year and the next person retiring is 10 years from now. He pointed out that one - half of the Police force is under 30 years old. He said he didn't see any reason to make any investment changes now and this account is paying as good as they can get but they could go into a Fixed account which would lock it up for about a 5 -year period. Mr. Ascherl suggested that if anyone has any questions that he be called. Reverend Hardin said it's better to have secure investments rather than speculative. Mr. Ascherl pointed out that there's a lot of stability here and they're getting new money interest rates as they put money in. Mayor Baugh asked Mr. Ascherl to check on the Police fund to see if the money coming from the State in excess of the City's contri- butions is an extra benefit. He added that the City should continue their portion of contributing into the Pension Plan and the benefits would be greater. Mr. Ascherl said the State funding would be sufficient to cover the amount and the City's contribution could help to pay off the past liability earlier and that puts them in a position to increase the benefits. He said the average compen- sation for the past 10 years is used and they could change that to the past 5 years or increase the benefits to get larger amounts at retirement but that would cost more for the plan. Mayor Baugh said he'd rather see the past debts paid off and then make the changes. Mr. Ascherl said they don't have to worry about it as long as they're on schedule and they could accelerate it to 20 years rather than 40 years. There was a discussion about the 10% that was figured when they designed the plan and Mr. Ascherl noted that with experience they have gone down. Mayor Baugh stated that if they can get more in the end, that's what the plan is designed for and he'd like to see them get the maximum amount. Mr. Ascherl said he'd get some cost figures from Bankers to do these certain things, and he added that they could put it 20 years or 25 years of service or 55 years old, and he'll work up some options. Officer Teitelbaum said he'd like to see a reduction of the retirement age or 20 to 25 years of service. Reverend Hardin asked the difference in benefits for the Police employees and Mr. Ascherl said it's a retirement age of 60. City Clerk Martinez noted that General Employees can't draw until age 65. Mr. Ascherl added that it can be at an earlier age but with reduced amounts. Officer Teitelbaum asked at what age an employee can collect if they set it at 20 years and he only stayed here 8 years. Mr. Ascherl said it would be at the end of 20 years, but the 20 -year change would cost more. Reverend Tee moved to adjourn the meeting. Sergeant Lenz seconded the motion. Meeting was adjourned at 3:10 P.M. Minutes submitted by: Lura Sue Koser -3- Joint General Employees & Police Retirement Plan Meeting Minutes May 30, 1985