AGENDA MEMORANDUM

 

 

Meeting Date:           May 14, 2007

 

From:                          Edward F. Smyth, Jr., Assistant City Manager

 

Subject:                      Ordinance Amending the “Retirement Plan for the General Employees for the City of Leesburg

 

 

Staff Recommendation:

Staff recommends adoption of the amendment to Section 26 (Re-employment After Retirement) of the plan and the addition of Section 27 (Deferred Retirement Option Plan) to the plan.

Analysis:

The General Employees Retirement Board, upon advice of their duly appointed legal and investment counselors, recommends the following amendments to the currently adopted Retirement Plan for General Employees for the City of Leesburg.

Section 26 is being amended to permit employees who retired at the normal retirement age (65) or older, to return to work for the City and select 1 of 2 options:  (1) discontinue receipt of retirement benefits and as a fully vested employee accrue additional credited service in the system; or (2) continue to receive retirement benefits and not accrue additional credited service in the system.

Section 27 is being added to create a Deferred Retirement Option Plan.  This option will allow current employees who reach the normal retirement age (65) or older, to continue to work and have the earned retirement payments be deposited into an interest bearing account with a guaranteed rate of return, or have the retirement payment deposited into an interest bearing account that will fluctuate at market rates. 

The Deferred Retirement Option Plan (DROP) is a program that allows the employee to retire without terminating employment while their retirement benefits accumulate and earn interest compounded quarterly at 6.5% APR, on the prior quarter’s ending balance, or the employee may choose to have these benefits earn interest at the same rate realized by the retirement system, based upon the average daily balance in the DROP account at the end of the quarter.  The employee is entitled to change this option one time during his/her participation in the DROP program.

The addition of the DROP to the General Employees Retirement Plan is identical to the program established in the Police Retirement Plan several years ago.  The only difference between the two plans is the definition of “Normal Retirement Age” which is 65 for General Employees and 55 for Police Employees.

These changes to the General Employees Pension Plan were unanimously endorsed by the Labor Management Committee at their May 1, 2007 meeting.

Options:

1.  Approve the amendments to the General Employees Retirement Plan; or,

2.  Such alternative action as the Commission may deem appropriate

Fiscal Impact

There is no fiscal impact.   There is no liability or obligation by the City of Leesburg or the General Employees Retirement Board for funds deposited in DROP accounts.

Submission Date and Time:    5/11/2007 1:48 PM5/9/2007 2:30 PM____

 

Department:  Administration  .

Prepared by:   E.F. Smyth, ACM                     

Attachments:         Yes  X     No ______

Advertised:   ____Not Required ______                      

Dates:   __________________________                     

Attorney Review :       Yes  X    No ____

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. __________________                                     

                              

Deputy C.M. ___________________                                                                         

 

Submitted by:

City Manager ___________________

 

Account No. _____N\A________

 

Project No. ________N\A_______

 

WF No. ________N\A___________

 

Budget  _________N\A__________

 

Available _________N\A_________

 


ORDINANCE NO.   07-    

 

 

AN ORDINANCE OF THE CITY OF LEESBURG, AMENDING THE RETIREMENT PLAN FOR THE GENERAL EMPLOYEES FOR THE CITY OF LEESBURG, ADOPTED PURSUANT TO ORDINANCE NO. 03-57, AS SUBSEQUENTLY AMENDED; AMENDING SECTION 26, REEMPLOYMENT AFTER RETIREMENT;  ADD SECTION 27, DEFERRED RETIREMENT OPTION PLAN; PROVIDING FOR CODIFICATION; PROVIDING FOR SEVERABILITY OF PROVISIONS; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH AND PROVIDING AN EFFECTIVE DATE.

 

            BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA;

            SECTION 1That Ordinance No. 03-57, adopting the amended and restated City of Leesburg Retirement Plan for General Employees, as subsequently amended, is further amended to amend Section 26, Reemployment, to read as follows:

SECTION 26.  REEMPLOYMENT AFTER RETIREMENT.

            1.         Any Member who is retired under this System, except for disability retirement as previously provided for, may be reemployed by any public or private employer, except the City of Leesburg, and may receive compensation from that employment without limiting or restricting in any way the retirement benefits payable under this System.  Reemployment by the City of Leesburg shall be subject to the limitations set forth in this Section.

                        2.         After Normal RetirementAny Retiree who is retired under normal retirement pursuant to this System and who is  reemployed as a General Employee after that Retirement and, by virtue of that reemployment, is eligible to participate in this System, shall upon being reemployed select one of the following options:

                        A.        The Retiree may elect to discontinue receipt of benefits.  Upon reemployment, the Retiree shall be deemed to be fully vested and the additional Credited Service accrued during the subsequent employment period shall be used in computing a second benefit amount attributable to the subsequent employment period, which benefit amount shall be added to the benefit determined upon the initial retirement to determine the total benefit payable upon final Retirement.  Calculations of benefits upon initial Retirement shall be based upon the benefit accrual rate, Average Final Compensation, and Credited Service as of that date and the retirement benefit amount for any subsequent employment period shall be based upon the benefit accrual rate, Average Final Compensation (based only on the subsequent employment period  and not including any period of DROP participation), and Credited Service as of the date of the subsequent retirement.  The amount of any death or disability benefit received as a result of a subsequent period of employment shall be reduced by the amount of accrued benefit eligible to be paid for a prior period of employment.  The optional form of benefit and any joint pensioner selected upon initial retirement shall not be subject to change upon subsequent retirement except as otherwise provided herein, but the Member may select a different optional form and joint pensioner applicable to the subsequent retirement benefit; or

                        B.         The Retiree may continue to receive retirement benefits previously earned and not be an active Member of the System.  If this option is selected, the subsequent employment period shall have no effect upon Average Final Compensation, years of Credited Service or retirement benefits.  Regardless of any other provision of this System, any retired and reemployed Retiree electing to continue to receive retirement benefits shall not be required to be an active Member of the System.

            3.         Any Retiree who is retired under normal retirement pursuant to this System and who is reemployed by the City after that Retirement and, by virtue of that reemployment is ineligible to participate in this System, shall, during the period of such reemployment, continue to receive retirement benefits previously earned. Former Drop participants shall begin receipt of benefits   under these circumstances.

            4.         After Early Retirement.   Any Retiree who is retired under early retirement pursuant to this System and who subsequently becomes an employee of the City in any capacity shall discontinue receipt of benefits from the System. If by virtue of that reemployment, the Retiree is eligible to participate in this System, the Retiree shall be deemed to be fully vested and the additional Credited Service accrued during the subsequent employment period shall be used in computing a second benefit amount attributable to the subsequent employment period, which benefit amount shall be added to the benefit determined upon the initial retirement to determine the total benefit payable upon final Retirement.  Calculations of benefits upon retirement shall be based upon the benefit accrual rate, Average Final Compensation, Credited Service and early retirement reduction factor as of that date and the retirement benefit amount for any subsequent employment period shall be based upon the benefit accrual rate, Average Final Compensation (based only on the subsequent employment period), and Credited Service as of the date of subsequent retirement  The amount of any death or disability benefit received as a result of a subsequent period of employment shall be reduced by the amount of accrued benefit eligible to be paid for a prior period of employment.  The optional form of benefit and any joint pensioner selected upon initial retirement shall not be subject to change upon subsequent retirement except as otherwise provided herein, but the member may select a different optional form and joint pensioner applicable to the subsequent retirement benefit.  Retirement pursuant to an early retirement incentive program shall be deemed early retirement for purposes of this Section if the Member was permitted to retire prior to the customary retirement date provided for in the System at the time of retirement.

            5.         Reemployment of Terminated Vested PersonsReemployed terminated vested persons shall not be subject to the provisions of this Section until such time as they begin to actually receive benefits.  Upon receipt of benefits, terminated vested persons shall be treated as normal or early Retirees for purposes of applying the provisions of this Section and their status as an early or normal Retiree shall be determined by the date they elect to begin to receive their benefit.

            6.         DROP participants. Members or Retirees who are or were in the Deferred   Retirement Option Plan shall have the options provided for in this Section for reemployment upon termination of his employment 

            SECTION 2:  That Ordinance No. 03-57, adopting the amended and restated City of Leesburg Retirement Plan for General Employees, as subsequently amended, is further amended to add Section 27, Deferred Retirement Option Plan, to read as follows:

            SECTION 27.  DEFERRED RETIREMENT OPTION PLAN.

            1.         Definitions.

                        As used in this Section 27, the following definitions apply:"

                                    A.        "DROP" -- The Retirement Plan for the General Employees' Deferred Retirement Option Plan.

                                    B.         "DROP Account" -- The account established for each DROP participant under subsection 3.

           


2.         Participation.

                        A.        Eligibility to Participate.

                                    In lieu of terminating his employment as a general employee, any Member who is eligible for normal retirement under the System may elect to defer receipt of such service retirement pension and to participate in the DROP.

                        B.         Election to Participate.

                                    A Member's election to participate in the DROP must be made in writing in a time and manner determined by the Board and shall be effective on the first day of the first calendar month which is at least fifteen (15) business days after it is received by the Board.

                        C.         Period of Participation.

                                    A Member who elects to participate in the DROP under subsection 2.B., shall participate in the DROP for a period not to exceed 60  months beginning at the time his election to participate in the DROP first becomes effective.  An election to participate in the DROP shall constitute an irrevocable election to resign from the service of the City not later than the date provided for in the previous sentence.  A Member may participate only once.

                        D.        Termination of Participation.

            (1)        A Member's participation in the DROP shall cease at the earlier of:

                                                            (a)        the end of his permissible period of participation in the DROP as determined under subsection 2.C.; or

                                                            (b)        termination of his employment as a general employee.

                                                (2)        Upon the Member's termination of participation in the DROP, pursuant to subsection (a) above, all amounts provided for in subsection 3.B., including monthly benefits and investment earnings and losses or interest, shall cease to be transferred from the System to his DROP Account.  Any amounts remaining in his DROP Account shall be paid to him in accordance with the provisions of subsection 4. when he terminates his employment as a general employee.

                                                (3)        A Member who terminates his participation in the DROP under this subsection 2.D. shall not be permitted to again become a participant in the DROP.

                        E.        Effect of DROP Participation on the System.

                                                (1)        A Member's Credited Service and his accrued benefit under the System shall be determined on the date his election to participate in the DROP first becomes effective.  The Member shall not accrue any additional Credited Service or any additional benefits under the System (except for any additional benefits provided under any cost-of-living adjustment for Retirees in the System) while he is a participant in the DROP.  After a Member commences participation, he shall not be permitted to again contribute to the System nor shall he be eligible for disability or pre-retirement death benefits, except as provide for in Section 26, Reemployment after Retirement.

                                                (2)        No amounts shall be paid to a Member from the System while the Member is a participant in the DROP.  Unless otherwise specified in the System, if a Member's participation in the DROP is terminated other than by terminating his employment as a general employee, no amounts shall be paid to him from the System until he terminates his employment as a General Employee.  Unless otherwise specified in the System, amounts transferred from the System to the Member's DROP Account shall be paid directly to the Member only on the termination of his employment as General Employee.

            3.         Funding.

                        A.        Establishment of DROP Account.

                                    A DROP Account shall be established for each Member participating in the DROP.  A Member's DROP Account shall consist of amounts transferred to the DROP under subsection 3.B., and earnings or interest on those amounts.

                        B.         Transfers From Retirement System.

                                                (1)        As of the first day of each month of a Member's period of participation in the DROP, the monthly retirement benefit he would have received under the System had he terminated his employment as a general employee and elected to receive monthly benefit payments thereunder shall be transferred to his DROP Account, except as otherwise provided for in subsection 2.D.(2).  A Member's period of participation in the DROP shall be determined in accordance with the provisions of subsections 2.C. and 2.D., but in no event shall it continue past the date he terminates his employment as a general employee.

                                                (2)        Except as otherwise provided in subsection 2.D.(2), a Member's DROP Account under this subsection 3.B. shall be debited or credited after each fiscal year quarter with either:

                                                            (a)        Interest at an effective rate of six and one-half percent (6 1/2%) per annum compounded quarterly on the prior quarter's ending balance; or

                                                            (b)        Earnings, determined as follows:

                                                            The average daily balance in a Member's DROP Account shall be credited or debited at a rate equal to the net investment return realized by the System for that quarter.  “Net investment return” for the purpose of this paragraph is the total return of the assets in which the Member's DROP Account is invested by the Board net of brokerage commissions, transaction costs and management fees.

                                                Upon electing participation in the DROP, the Member shall elect to receive either interest or earnings on his account to be determined as provided above.   The Member may, in writing, elect to change his election only once during his DROP participation.  An election to change must be made prior to the end of a quarter and shall be effective beginning the following quarter.

                                                (3)        A Member's DROP Account shall only be credited or debited with earnings or interest and monthly benefits while the Member is a participant in the DROP.  A Member's final DROP account value for distribution to the Member upon termination of participation in the DROP shall be the value of the account at the end of the quarter immediately preceding termination of participation plus any monthly periodic additions made to the DROP account subsequent to the end of the previous quarter and prior to distribution.  If a Member fails to terminate employment after participating in the DROP for the permissible period of DROP participation, then beginning with the Member's 1st month of employment following the last month of the permissible period  of DROP participation, the Member's DROP Account will no longer be credited or debited with earnings or interest, nor will monthly benefits be transferred to the DROP account.  All such non-transferred amounts shall be forfeited and continue to be forfeited while the Member is employed by the City. A Member employed by the  after the permissible period  of DROP participation will still not be eligible for pre-retirement death or disability benefits,  and  will  not accrue additional Credited Service except as provided for in Section 26, Reemployment After Retirement.

            4.         Distribution of DROP Accounts on Termination of Employment.

                        A.        Eligibility for Benefits.

                                    A Member shall receive the balance in his DROP Account in accordance with the provisions of this subsection 4. upon his termination of employment as a  General Employee.  Except as provided in subsection 4.E., no amounts shall be paid to a Member from the DROP prior to his termination of employment as a General Employee.

                        B.         Form of Distribution.

                                                (1)        Unless the Member elects otherwise, distribution of his DROP Account shall be made in a lump sum, subject to the direct rollover provisions set forth in subsection 4.F.  A Member may, however, elect, in such time and manner as the Board shall prescribe, that his DROP distribution be used to purchase a nonforfeitable fixed annuity payable in such form as the Member may elect.  Elections under this paragraph shall be in writing and shall be made in such time or manner as the Board shall determine.

                                                (2)        Notwithstanding the preceding, if a Member dies before his benefit is paid, his DROP Account shall be paid to his Beneficiary in such optional form as his Beneficiary may select.  If no Beneficiary designation is made, the DROP Account shall be distributed to the Member's estate.

                        C.         Date of Payment of Distribution.

Except as otherwise provided in this subsection 4., distribution of a Member's DROP Account shall be made as soon as administratively practicable following the Member's termination of employment.  Distribution of the amount in a Member's DROP account will not be made unless the Member completes a written request for distribution and a written election on forms designated by the Board to either receive a cash lump sum or a rollover of the lump sum amount.

                        D.        Proof of Death and Right of Beneficiary or Other Person.

                                    The Board may require and rely upon such proof of death and such evidence of the right of any Beneficiary or other person to receive the value of a deceased Member's DROP Account as the Board may deem proper and its determination of the right of that Beneficiary or other person to receive payment shall be conclusive.

                        E.        Distribution Limitation.

                                    Notwithstanding any other provision of subsection 4., all distributions from the DROP shall conform to the "Minimum Distribution of Benefits" provisions as provided for herein.

                        F.         Direct Rollover of Certain Distributions.

                                    This subsection applies to distributions made on or after January 1, 2002.  Notwithstanding any provision of the DROP to the contrary, a distributee may elect to have any portion of an eligible rollover distribution paid in a direct rollover as otherwise provided under the System in section .

            5.         Administration of DROP.

                        A.        Board Administers the DROP.

                                    The general administration of the DROP, the responsibility for carrying out the provisions of the DROP and the responsibility of overseeing the investment of the DROP's assets shall be placed in the Board.  The members of the Board may appoint from their number such subcommittees with such powers as they shall determine; may adopt such administrative procedures and regulations as they deem desirable for the conduct of their affairs; may authorize one or more of their number or any agent to execute or deliver any instrument or make any payment on their behalf; may retain counsel, employ agents and provide for such clerical, accounting, actuarial and consulting services as they may require in carrying out the provisions of the DROP; and may allocate among themselves or delegate to other persons all or such portion of their duties under the DROP, other than those granted to them as Trustee under any trust agreement adopted for use in implementing the DROP, as they, in their sole discretion, shall decide.  A Trustee shall not vote on any question relating exclusively to himself.

                        B.         Individual Accounts, Records and Reports.

                                    The Board shall maintain records showing the operation and condition of the DROP, including records showing the individual balances in each Member's DROP Account and the Board shall keep in convenient form such data as may be necessary for the valuation of the assets and liabilities of the DROP.  The Board shall prepare and distribute to Members participating in the DROP and other individuals or file with the appropriate governmental agencies, as the case may be, all necessary descriptions, reports, information returns, and data required to be distributed or filed for the DROP pursuant to the Code and any other applicable laws.

                        C.         Establishment of Rules.

                                    Subject to the limitations of the DROP, the Board from time to time shall establish rules for the administration of the DROP and the transaction of its business.  The Board shall have discretionary authority to construe and interpret the DROP (including but not limited to determination of an individual's eligibility for DROP participation, the right and amount of any benefit payable under the DROP and the date on which any individual ceases to be a participant in the DROP).  The determination of the Board as to the interpretation of the DROP or its determination of any disputed questions shall be conclusive and final to the extent permitted by applicable law.

                        D.        Limitation of Liability.

                                                (1)        The Trustees shall not incur any liability individually or on behalf of any other individuals for any act or failure to act, made in good faith in relation to the DROP or the funds of the DROP.

                                                (2)        Neither the Board nor any Trustee of the Board shall be responsible for any reports furnished by any expert retained or employed by the Board, but they shall be entitled to rely thereon as well as on certificates furnished by an accountant or an actuary, and on all opinions of counsel.  The Board shall be fully protected with respect to any action taken or suffered by it in good faith in reliance upon such expert, accountant, actuary or counsel, and all actions taken or suffered in such reliance shall be conclusive upon any person with any interest in the DROP.

            6.         General Provisions.

                        A.        Amendment of DROP.

                                    The DROP may be amended by an ordinance of the City at any time and from time to time, and retroactively if deemed necessary or appropriate, to amend in whole or in part any or all of the provisions of the DROP.  However, except as otherwise provided by law, no amendment shall make it possible for any part of the DROP's funds to be used for, or diverted to, purposes other than for the exclusive benefit of persons entitled to benefits under the DROP.  No amendment shall be made which has the effect of decreasing the balance of the DROP Account of any Member.

                        B.         Facility of Payment.

                                    If a Member or other person entitled to a benefit under the DROP is unable to care for his affairs because of illness or accident or is a minor, the Board shall direct that any benefit due him shall be made only to a duly appointed legal representative.  Any payment so made shall be a complete discharge of the liabilities of the DROP for that benefit.

                        C.         Information.

                                    Each Member, Beneficiary or other person entitled to a benefit, before any benefit shall be payable to him or on his account under the DROP, shall file with the Board the information that it shall require to establish his rights and benefits under the DROP.

                        D.        Prevention of Escheat.

                                    If the Board cannot ascertain the whereabouts of any person to whom a payment is due under the DROP, the Board may, no earlier than three (3) years from the date such payment is due, mail a notice of such due and owing payment to the last known address of such person, as shown on the records of the Board or the City.  If such person has not made written claim therefor within three (3) months of the date of the mailing, the Board may, if it so elects and upon receiving advice from counsel to the System, direct that such payment and all remaining payments otherwise due such person be canceled on the records of the System.  Upon such cancellation, the System shall have no further liability therefor except that, in the event such person or his Beneficiary later notifies the Board of his whereabouts and requests the payment or payments due to him under the DROP, the amount so applied shall be paid to him in accordance with the provisions of the DROP.

                        E.        Written Elections, Notification.

                                                (1)        Any elections, notifications or designations made by a Member pursuant to the provisions of the DROP shall be made in writing and filed with the Board in a time and manner determined by the Board under rules uniformly applicable to all employees similarly situated.  The Board reserves the right to change from time to time the manner for making notifications, elections or designations by Members under the DROP if it determines after due deliberation that such action is justified in that it improves the administration of the DROP.  In the event of a conflict between the provisions for making an election, notification or designation set forth in the DROP and such new administrative procedures, those new administrative procedures shall prevail.

                                                (2)        Each Member or Retiree who has a DROP Account shall be responsible for furnishing the Board with his current address and any subsequent changes in his address.  Any notice required to be given to a Member or Retiree hereunder shall be deemed given if directed to him at the last such address given to the Board and mailed by registered or certified United States mail.  If any check mailed by registered or certified United States mail to such address is returned, mailing of checks will be suspended until such time as the Member or Retiree notifies the Board of his address.

                        F.         Benefits Not Guaranteed.

                                    All benefits payable to a Member from the DROP shall be paid only from the assets of the Member's DROP Account and neither the City nor the Board shall have any duty or liability to furnish the DROP with any funds, securities or other assets except to the extent required by any applicable law.

                        G.        Construction.

                                                (1)        The DROP shall be construed, regulated and administered under the laws of Florida, except where other applicable law controls.

                                                (2)        The titles and headings of the subsections in this Section  are for convenience only.  In the case of ambiguity or inconsistency, the text rather than the titles or headings shall control.

                        H.        Forfeiture of Retirement Benefits.

                                    Nothing in this Section shall be construed to remove DROP participants from the application of any forfeiture provisions applicable to the System.  DROP participants shall be subject to forfeiture of all retirement benefits, including DROP benefits.

                                                I.          Effect of DROP Participation on Employment.

                                    Participation in the DROP is not a guarantee of employment and DROP participants shall be subject to the same employment standards and policies that are applicable to employees who are not DROP participants.

            SECTION 3:  Specific authority is hereby granted to codify and incorporate this Ordinance in the existing Code of Ordinances of the City of Leesburg.

            SECTION 4:  All Ordinances or parts of Ordinances in con­flict herewith be and the same are hereby repealed.

            SECTION 5:  If any section, subsection, sentence, clause, phrase of this ordinance, or the particular application thereof shall be held invalid by any court, administrative agency, or other body with appropriate jurisdiction, the remaining section, subsection, sentences, clauses, or phrases under application shall not be affected thereby.

            SECTION 6:  That this Ordinance shall become effective upon its adoption.

 

PASSED AND ADOPTED AT A REGULAR MEETING OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, HELD ON THE ___________ DAY OF __________________________, 2007.

 

 

 

                                                                                                                                                                                                   

                                                                                    MAYOR

ATTEST:

 

 

                                                           

CITY CLERK

 

Approved as to form:

 

 

                                                                                                      

CITY ATTORNEY

 

 

 

 

 

 

 

 

 

 

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