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HomeMy WebLinkAboutPension & Audit Committee May 15, 2018 PENSION & AUDIT COMMITTEE COMMISSION CHAMBER May 15, 2018 PRESENT: Hons. Hardie Davis, Jr., Mayor; Sean Frantom, Finance Committee Chairman; Janice Jackson, Administrator; Donna Williams, Finance Director, members; Jody Smitherman, Sr. Staff Attorney; Sammie Sias, Ben Hasan, Dennis Williams, Commissioners; Lena Bonner, Clerk of Commission. ABSENT: Hon. Mary Davis, Mayor Pro Tem. The Mayor called the meeting to order. Ms. Smitherman: We have before you the Adoption Agreement, the General Addendum and the Service Purchase Credit Agreement for your approval today which effectuates the will of the Commission to amend the plan, the GMEBS 1 plan, to increase the multiplier from 1.65% to 2%, Classes 1, 3 5, 7, 8 and 9. That is effectuated pages 21 and 22 of the Ordinance which is the Adoption Agreement. The other thing that will be changed is that the employee contributions will increase for Classes 1 and 3 to 5.75% and to 6.25% for Classes 5, 7, 8 and 9. That is effectuated on page 34 of the Ordinance or Adoption Agreement that you have in front of you. On pages 22 and 23 of the General Addendum were changes to the Class 6 participants which were the 1977 plan participants who chose to stay in the 1977 plan and what has been effectuated here is really twofold. Currently under the 1977 plan those participants, if somebody were to pass away prior to retiring, all pension plans generally call for what’s called a pre-retirement death benefit. Under the current 1977 plan the beneficiary of that benefit is designated to a spouse and then if the person dies with no spouse it’s designated to any minor children. Additionally under the ’77 plan, there was, if the spouse remarried, her benefit was cut off and if the minor child turns 18, the benefit was cut off. So what we’ve done here is change that provision such that the pre-retirement death beneficiary can be named by the participant so it’s not limited to spouse and children only. It can be any person chosen by the participant and we’ve eliminated that remarriage or reaching age of majority provisions. So now it is in line with our other plans such that it can be any person and it lasts the lifetime of the person who has received the benefit rather than being cut off. That pre- retirement death benefit is 25% of the average earnings of the participant prior to that and the last change is just in Section 15UU of the Adoption Agreement and that is just a recognition that Augusta, Georgia has the right to resolve claims and disputes that as they apply to the plan to resolve claims that is in the best interest of the plan. Ms. Jackson: Excuse me, Jody, that was Section 15, is that what you said? Ms. Smitherman: Yes, ma’am, Subsection 15 in the General Addendum. Mr. Sias: And there are three things combined into this one document? Ms. Smitherman: No, there are three separate documents. There is the Adoption Agreement which is the ordinance. Then you have the General Addendum to the Adoption Agreement and then you have the Service Credit Purchase Addendum to the Adoption Agreement. 1 Only the Adoption Agreement is an ordinance but since the other ones are amendments or addendums to that ordinance, we always just pass it as one item. Mr. Mayor: And you have those, Commissioner. They were transmitted – Mr. Sias: Right, I have them. I just wanted to know what they included. Mr. Mayor: Any other questions? Mr. Frantom: I guess my question is pretty generic. Is everything that the Commission approved on March 6, is that exactly the way it is in this document? Ms. Smitherman: Yes, sir. Mr. Frantom: Okay. I make a motion to approve. Mr. Mayor: So we have a couple more questions. Mr. Hasan: Thank you, Mr. Mayor. Ms. Smitherman, you made mention, you said that all of the announcements you just made around inheritance of the plan and if there had been a death was in line with our other plans pretty much. What other plans are still out there? Ms. Smitherman: We currently have your GMEBS I plan which contained within that you have old City GMEBS plan and the 1977 plan. We also have completely separate from this the GMEBS II plan when we brought the Planning Commission employees into the government, they already had a GMEBS plan so when we brought those employees in, we adopted their GMEBS plan which we call GMEBS II and then you still have the 1998 Defined Contribution plan which is different from all the other plans. Mr. Hasan: But you say in terms of the death benefits all this makes it standard with the rest of them. Was that your point? Ms. Smitherman: Yes. They all now have the same pre-retirement (inaudible). Mr. Sias: One quick question. I’ve been asking this question. I went to Dr. Conner about it and I hope that Ms. Williams, I’m not sure, but the 1998 folks, that is the only category that will retire without a health benefit. Am I correct? There’s no health benefit for them after they retire where all the rest of them can carry this across, their health benefit. Mr. Mayor: So, Donna. Ms. Williams: And that’s because that plan was a defined contribution plan. It was not a benefit plan. That contribution plan more closely resembles a deferred compensation or a 457 savings retirement plan. It was not a pension plan in the sense of the word that most commonly is referred to which are defined benefit plans which give an employee retiring a benefit for their wife and most times if they have selected a beneficiary for some level of support for the survivor. A 2 defined contribution plan is more reliant on that employee to save enough and to invest those savings both theirs and the portion that the employer contributes to provide for their own retirement. Mr. Sias: But I guess I’m more concerned about the health benefit part of it. So here’s my question to everyone. Is there not anything that we can look into to help that one group because there’s a whole group that stuck with that. Was that a city or county plan, Ms. Williams? Ms. Williams: That was a county plan but I would ask everyone to be cognizant that the people that stayed in that plan made a choice to stay in that plan knowing the terms of the plan and we are finding that as those people get closer to retirement that they are rethinking those decisions. Mr. Sias: Because it’s alarming because as they get closer to retirement, they’ve got more health issues. Ms. Williams: I understand. Mr. Sias: But here’s my question. Can we research something to see if there’s anything that can be done even if they have to make a major purchase or something? I’m not saying we have to but what I’m saying is can we check it. Mr. Mayor: I think one of the things, one, yes, we can check it. In some communities and I’m sure, Ms. Jackson, you probably know better than I do, but people are extending AFLAC to their employee base which is an opportunity to again augment the shortfall they may have where their healthcare benefits are concerned and that may be something we can look into as well. Mr. Sias: I’m not saying the city would just take money and fork it over to take care of them but can we find some way to kind of steer them. Mr. Mayor: I think that’s certainly a worthy project for us to look into. Dr. Conner, could you research that and come back to us with some options and we can have a discussion about that at our next scheduled pension meeting? Dr. Conner: Yes, sir. Mr. Mayor: Ms. Jackson, do you want to comment on that as well? Ms. Jackson: The AFLAC policy is generally a supplemental policy. I’m not sure if you can use it after retirement. We’ll just have to look at what those options are and I understand, Commissioner Sias, you are well aware of the fact that it may be that those employees have to foot the bill for that service. Mr. Sias: Yes, but as it stands now they walk out of the door. They walk out of the door, as a matter of fact, they don’t even have a pension, is that correct? 3 Ms. Jackson: They have access to what they contributed, what the city contributed and the investment – Mr. Sias: -- at the time they depart. Ms. Jackson: At the time they depart, correct. Mr. Sias: And so basically when they walk out the door, they’re done and I’m not saying they didn’t make that choice. What I’m saying is the reality of that choice now has become crystal clear. And I’m asking us as a body, as a city who has contacts that can make things, can we find some way that we may be able to assist them? And if not, then it is what it is. But I think we should try. Mr. Mayor: Yeah, I think we can certainly look into that. Mr. Sias: Because it’s probably about what, 50 people, Ms. Williams? Ms. Williams: It’s about 90 that are still active. There were originally 280 that stayed on that plan and approximately 1700 that moved to the new GMEBS 2008 plan. Mr. Frantom: Can we get what Donna said in writing to those 90 people because I’m getting reached out to by those same people and I think that it might help us to explain kind of why, maybe once the options, maybe not right this second but if the options we might have because I think we need to explain that. I mean that was some years ago so – Mr. Mayor: Let’s take a collaborative effort to put that together and then check with us and then we’ll communicate that to the (inaudible). I think that’s appropriate. Along those same lines, this may be where you were going. I’ve been asked by a couple of folks, do our elected officials in particular the Coroner get an opportunity to participate in this? Ms. Williams: Yes. All the Commissioners are on this plan. The Clerk: Two retired ones. Ms. Williams: And they are automatically vested. There is no five-year vesting period for elected officials. Mr. Hasan: Does this change that? Ms. Williams: (inaudible) Mr. Hasan: I just checked recently and they told me something different. Somebody told me five years. Ms. Williams: In reality most commissioners do not contribute simply because even at four years of service based on the salary the check is very small. That’s just how the math works. 4 Mr. Sias: They told me I had to. Mr. D. Williams: They told me I had to too. The Clerk: Toward the pension? Mr. D. Williams: I got it from HR when I went to my orientation. I said, “Lady, I don’t want no retirement. I’ve already got that.” She made me take it anyway. Mr. Mayor: I’ll entertain a motion to adopt. Mr. Frantom: I make a motion to approve. Ms. Jackson: Second. Mr. Mayor: I’ve got a motion and a second. All those in favor? Motion carries 4-0. The Clerk: Can we ask you to waive the second reading on this so that recommendation can go forward? Mr. Mayor: Yes. Mr. Frantom: Motion to waive the second reading. The Clerk: To include it in here. Okay. Mr. Mayor: So when we get out on the floor we’ll need unanimous consent to add this to the agenda and upon adding it, we want to do exactly what we just did. Mr. Sias: We’ll need unanimous consent to skip the second reading. Mr. Mayor: We’ll include that. We have a motion prepared to do just that. ADJOURNMENT: There being no further business, the meeting was adjourned. Lena J. Bonner Clerk of Commission 5