HomeMy WebLinkAboutPension & Audit Committee October 13, 2014
PENSION & AUDIT COMMITTEE COMMITTEE ROOM – October 13, 2014
11:30 A. M.
PRESENT: Hons. Corey Johnson, Mayor Pro Tem; Wayne Guilfoyle, Finance
Committee Chairman; Donna Williams, Finance Director; Lena Bonner, Clerk of Commission.
ABSENT: Hons. Deke Copenhaver, Mayor; Tameka Allen, Interim Administrator.
1.Receive investment report from the 1945/1949 plan from Mr. Charles May,
Morgan Stanley.
At this time Mr. May gave a report on the status of the 1945 and 1949 pension plans.
Ms. Williams: Motion to receive as information.
Mr. Guilfoyle: The net investment on the performance side is 4.7 for the ’49 and 5.8.
We are supplementing this plan out of our general fund to maintain it.
Ms. Williams: Yes, sir.
Mr. Guilfoyle: Does this money offset what we put it?
Ms. Williams: The amounts are required out of the general fund are an additional
calculation over and above after the investments have been deposited in the plan. That’s
reviewed once a year through our actuarial studies and we have a representative here from the
firm to address some of the actuarial issues. The level that is deposited from the general fund is
required to keep the plan fully funded as is required by the State of Georgia.
Mr. Guilfoyle: How do you determine if a plan is fully funded? Is it based on the
retirees or the people that’s part of the pension plan?
Mr. Speaker: I can answer that question. We look at the value of all future benefits that
are expected to be paid from the plan. We look at every participant in the plan when we think
they’re going to retire or if they’re already retired, when they might pass away and when their
spouses or beneficiaries might pass away. So we do a projection of all the future expected
benefit payments from the plan and do a present value calculation of that amount. That’s the
amount of money you have to have set aside today based on the assumed rate of return on the
plan’s assets to fully pay all future benefits. So if you had that pot of money today you would
never have to supplement any additional monies from your general fund, your plan would be
fully funded. But as long as you need to fund that shortfall your assets are less than the present
value of all future payments from the plan, then the plan is underfunded.
Mr. Guilfoyle: Thank you.
Mr. Williams: How many is in this plan?
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Ms. Williams: The split is, the ’49 plan we have 59 active and 191 retirees, beneficiaries
and 7 that were deferred, vested, have not retired yet or done anything but they are fully vested in
the plan. On the ’45 plan you have 2 active, 22 retirees and beneficiaries and you have one that
is disabled that is also a retiree. It just falls into a different category.
Mr. Williams: That goes back to what we’ve been dealing with with the ’45. With the
number in the ’49 plan versus the number in the ’45 plan where there’s 23 and 2. The same
scenario works with the ’45 as far as keeping the money there?
Ms. Williams: The plan assets stay with the individual funds as they’re broken down
here. All the assets of the ’45 plan stay in that plan and all the assets of the ’49 plan stay in it but
each one of those requires an amount of funding from the general fund, approximately $300,000
from the general fund to additionally fund the 1945 plan and a little over $2 million dollars to
fund the 1949 plan and those assets, all assets for the 1945 plan come from the general fund
because that’s where those people reside in the general fund. Those folks retired from general
fund departments. The total of $2 million dollars out of the ’49 plan is distributed based on
where, what department those folks retired from. They are heavily weighted toward the general
fund law enforcement because they were general fund and police officers and there is also a large
amount from the Fire Department that is used to fund that and the breakdown is $387,000 comes
from the general fund, $37,000 from 911, 12 from Housing and Neighborhood, $5,000 from the
former Urban Service District, $563,000 from the Law Enforcement/Sheriff’s Department area,
$431,000 from the Fire Department, $11,250 from Street Lights, $6,500 from sales tax, $277,000
from Utilities, $88,000 from, I think 546 is transit and $108,000 from the fund that belongs to the
airport.
Mr. Williams: (inaudible)
Ms. Williams: It is a moving population and it is done every year by the actuaries. They
determine the level and look at all the plan assets, all the plan expenditures and the projections,
like he said of the projection of the length of time that all the benefits will be paid out, the
number of active people that are still in the plan and then they make the determination based on
formulas for use in the industry that tell us what the remaining amount that has to be put into the
plan that is required by the government.
Mr. Speaker: (inaudible) certain formula to determine how much that minimum funding
contribution has to be. After we do that projection of all the future benefits (inaudible), discount
that back (inaudible) future benefits and the current assets in the plan, there is a schedule and it
tells us what the required contribution is for fully funding (inaudible) sufficient assets to cover
all (inaudible) of the plan.
Mr. Hasan: When you’re talking about life span, what numbers are you talking about and
is that part of the process you gave about 8 or 9 things that you’re looking at and so what are you
looking at about the life span of retirement and (inaudible)?
Mr. Speaker: Okay, we use a standard mortality table that is developed specifically for
pension plans across the country. That is (inaudible) 1983 (inaudible) mortality table and just to
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put it into perspective for you a little bit, that assumes that a participant who was 60 when he
retired, he would have about 21 more years of life span. A participant who was 80 would have
about seven and a half or eight years of future payments coming to them. And so we use that
table now I do want to kind of point out I’ll get to it later on when I get (inaudible) use of
presentations the society of the actuaries are actually working on developing a new and updated
mortality table based on more recent experience and it is showing that people are actually living
a little bit longer than was projected in 1983. About a year, year and a half of life expectancy
across the board and probably will wind up increasing the plan’s funding by about 5% if that
table was adopted today. The table is not out yet. It’s in (inaudible) now and is expected to be
released by sometime in November, maybe early December and it is something we would
probably wind up making a recommendation to the committee that they adopt new mortality
table for the fiscal year ’15 evaluation as part of that process.
Mr. Hasan: What is the difference or is the number the same in terms of a retiree and the
spouse? You lose the retiree and the spouse receives their benefits, what is the difference there
or is there a difference?
Mr. Speaker: Well, it depends on what option (inaudible) but then we still kind of look at
what the spouse’s age is (inaudible), somebody said okay, there is a probability that that
individual participant will pass away and that spouse will continue on enjoying life benefit
depending on the option (inaudible).
Mr. Hasan: (inaudible)
Mr. Speaker: Donna, do you know what the (inaudible) are?
Ms. Williams: It depends on when the retiree goes to fill out their retirement paperwork.
They have an option of election on their benefits. If they want to receive, if they want their
spouse to receive no benefits at their death then obviously they get a slightly higher payment.
There is a 100%, a 75% and a 50%, help me out there. Karen is usually here to help but I believe
those are the options that are available. Obviously the election that is made that leaves the entire
amount to the spouse, there is a bigger up front deduction and the employee receives less going
in on a monthly basis but that is entirely up to the person that retires at the point of retirement.
Mr. Speaker: And all of the forms (inaudible) if somebody who (inaudible) and pulls
100% which means that the entire benefit is payable upon their death and those benefit payments
have been adjusted so that the joint and 100 is a little bit less than the regular (inaudible).
Mr. Williams: Who decides where the remaining funds go to, how are they disbursed
when it comes down to a smaller number and that number (inaudible) We don’t know what life
holds but none of us, we can project all we want to but (inaudible) but I’m asking a question
what happens to the money that’s left, whether it’s 25 or whether it’s 10, who makes that
decision and how is that brought to the table?
Ms. Williams: It is actually included in the plan documents the disbursement of funds
after there are no participants left in the plan and there is (inaudible) quarterly progression of the
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distribution of any assets that are left in that plan. It eventually comes back to the document.
But it tells how each one of the obligations are met in the event of any circumstance. If the
government took the unprecedented position to dissolve the plan effectively now it has a
distribution of assets schedule laid out in there. Obviously the retirees and the active folks who
have put money in that plan they’re owed some out back so it’s all laid out there in the event of
whatever happens to those assets.
Mr. Guilfoyle: Second the motion.
Motion carries 3-0.
2.Receive information and cost analysis related to increased benefits requested by
1945 and 1949 plan retirees.
Mr. Al Winters made a presentation regarding the request related to increased benefits for
the retirees of the plans.
After a lengthy discussion, Mr. Guilfoyle: I move that we continue the discussion,
retain it in committee and come back in two to three weeks.
Ms. Williams: Second.
Motion carries 3-0.
3.Discuss impact of GASB 68 pronouncement on financial reports.
Ms. Williams: I move that we receive this item as information.
Mr. Guilfoyle: Second.
Motion carries 3-0.
4.Discuss various matters related to GMEBS plan.
Mr. Guilfoyle: I move that we defer this item to the next meeting.
Ms. Williams: Second.
Motion carries 3-0.
5.Request by 911 Director to include 911 employees under Public Safety group
eligible to opt for full retirement benefits at age 55.
Ms. Williams: I would make a motion that we contact GMEBS regarding the
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financial impact of allowing the 75 to 80 employees of 911 to be considered under the
Public Safety group who would be eligible to opt for full retirement at age 55 and also for
the Law Department to come back with the amendment to the plan for this purpose.
Mr. Guilfoyle: Second.
Motion carries 3-0.
ADJOURNMENT: There being no further business, the meeting was adjourned.
Lena J. Bonner
Clerk of Commission
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