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HomeMy WebLinkAboutResolutions - 1994.09.22 - 24293MISCELLANEOUS RESOLUTION 194275 September 22, 1994 BY: PERSONNEL COMMITTEE, Marilynn Gosling, Chairperson IN RE: TRANSFER PLAN - FROM DEFINED BENEFIT TO DEFINED CONTRIBUTION RETIREMENT PLAN To the Oakland County Board of Commissioners Chairperson, Ladies and Gentlemen, WHEREAS Miscellaneous Resolution #94185 established a Defined Contribution Retirement Plan for new employees hired on or after July 1, 1994, and WHEREAS Miscellaneous Resolution # 94185 further provided that Administration would return to the Board within 12 months with a plan to offer current employees the option to switch from their current Defined Benefit Retirement Plan to the new Defined Contribution Plan, and WHEREAS Administration is prepared to meet this charge and has identified changes in the current Retirement Plan necessary to facilitate transfer of current employees from the Defined Benefit Retirement Plan to the Defined Contribution Retirement Plan, and WHEREAS transfer from the Defined Benefit Retirement Plan to the Defined Contribution Retirement Plan will be offered as an option to employees currently in the Defined Benefit Retirement Plan, and WHEREAS provision to allow employees the option of transferring from the Defined Benefit Retirement Plan to the Defined Contribution Retirement Plan will enhance the County's opportunities for further cost containment while offering employees a more equitable stake in retirement security, control of their retirement assets, and asset portability, and WHEREAS the provisions for optional transfer of employees currently in the Defined Benefit Retirement Plan to the Defined Contribution Retirement Plan has been reviewed and recommended for adoption by the County Executive, and WHEREAS the approval of an alternate retirement plan requires the approval of the State of Michigan State County Pension Plan Committee and the U.S. Internal Revenue Service, in addition to authorization by the County Board of Commissioners, and WHEREAS the Attorney General, on behalf of the State County Pension Plan Committee, has recommended certain amendatory language to the Restated Retirement Resolution approved by the Board of Commissioners in Miscellaneous Resolution 94185, NOW THEREFORE BE IT RESOLVED that the Board of Commissioners approves the Retirement Calculation for transfer to the Defined Contribution Retirement Plan as a one-time opportunity for employees currently in the Defined Benefit Retirement Plan, as contained in the attached report. BE IT FURTHER RESOLVED that the Board of Commissioners approves the provisions incorporating changes required to allow employees to transfer from the Defined Benefit Retirement Plan to the Defined Contribution Retirement Plan and amendatory language recommended by the Attorney General, as contained in the attached sections of the Restated Resolution. Chairperson, on behalf of the Personnel Committee, I move adoption of the foregoing resolution, subject to the approval of the State County Pension Plan Committee and the U.S. Internal Revenue Service. ersonneI-COmmit RETIRENTENT CALCULATION FOR 'TRANSFER TO DEFINED CONTRIBUTION 1. Final Average Compensation (FAC) to be calculated as though the employee were leaving. Best five years out of last ten years of service to be used in calculation. 2. Maximum transfer shall be 75% of FAC for employees share. 3. Present day value of assets to be transferred shall be calculated as of the first day the employee would have been eligible for retirement. Example: 40 years old with 12 years will be eligible on their 55th birthday. This calculation will not give any credit for future raises or interest rate changes. 4. Retirement Eligible Employees (60 + 8 years of service or 55 +25 years of service): a. Sick days may be cashed in down to zero at 1/2 pay. b. Annual leave above the maximum accumulation may be paid. c. Other items, such as compensation time may be paid. Upon payment, the above will be used in the calculation of FAC. 5. Employees hired prior to December 31, 1977: a. Sick days may be cashed in for any amount greater than 75 days. b. Annual leave above the maximum accumulation may be paid c. Other items, such as compensation time may be paid. Upon payment, the above will be used in the calculation of FAC. 6. Payment to those who transfer from Defined Benefit to Defined Contribution will be as follows: Program 0: Employee contributes .0 percent of compensation; employer contributes 6.0 percent. Program 1: Employee contributes 1.0 percent of compensation; employer contributes 7.0 percent. Program 2: Employee contributes 2.0 percent of compensation; employer contributes 8.0 percent. Program 3: Employee contributes 3.0 percent of compensation; employer contributes 9.0 percent. minik.Swpdociktransfer g/ I 3/94 5 00 p m A RESOLUTION AMENDING THE OAKLAND COUNTY EMPLOYEES' RETIREMENT SYSTEM RESOLUTION TO PROVIDE OR THE TRANSFER BY MEMBERS OP THE D5 PART OF THE SYSTEM TO THE DC PART. THE COUNTY OF OAKLAND RESOLVES; T4t the Oakland County Employees' Retirement SyBtem resolution its hereby amended in the following sections: Otion 3(e) is hereby amended as follows: (0) Allocation means allocation of the County's cotribution to the DC part. The allocation to the Provisivnal Ac ount of each non-represented Member who either was hired or to eived an offer of employment with the County after the U ective Date of the DC part of this Retirement System shall be S% of such Member's Compensation for the Plan Year. The Al °cation to the Provisional Account of each represented Member oh 11 be as determined by their respective collective bargaining ag! Gement. The Allocation to the Provisional Account of each non- represented Member who elected to participate in the DC part of the Retirement System in accordance with Section 70 shall be determined by the amount cOntributed by each such non-represented MeMber as follows; Member Contribution as Percentage of Compensation County Contribution Ot 6% At least 11 7% More than 1% but not more than 2% 8% More than 21 but not more than 3% 9% Such election may be changed on a quarterly basis, effective as bf the next Entry Date following notice to the Plan Administrator of the change in election BUT WITHOUT LIMITATION AS TO trHE 12 MONTH ELECTION PERIOD PROVIDED IN SECTION 70. Section 3(g) is hereby amended as follows; (q) Entry Date for the DC part means the date six monthe aft. r a Member incurs his first hour of compensated employment forthe County. ENTRY DATE FOR MEMBERS TRANSFERRING FROM THE DE PART TO THE pc PART MEANS JANUARY 1 1 APRIL 1, JULY 1, OR OCTOBER 1 OF THE TWELVE (12) MONTH ELECTION PERIOD PROVIDED IN SECTION 70.1 9/12/94 CIT1_1_17 2 Sections 10(d) and 30(e) are hereby added and shall read as (D) A NON-VESTED MEMBER WHO IS RE-EMPLOYED IN A COUNTY POSITION INVOLVING MEMBERSHIP IN THE RETIREMENT SYSTEM MORE THAN 3 lEARS AFTER THE MEMBER'S LAST TERMINATION OF EMPLOYMENT SHALL NOT RECEIVE CREDIT FOR ANY SERVICE PRIOR TO THE CURRENT PERIOD OF EMPLOYMENT. (E) A VESTED MEMBER WHO IS RE-EMPLOYED IN A COUNTY POSITION I N OLVING MEMBERSHIP IN THE RETIREMENT SYSTEM MORE THAN 3 YEARS AF ER THE MEMBER'S LAST TERMINATION or EMPLOYMENT SHALL RECEIVE CR DIT FOR PRIOR SERVICE (BUT NOT RESTORATION OF HIS FORFEITED AM C UNT) ONLY IF HE REPAYS THE SYSTEM THE AMOUNT HE RECEIVED AS A DI STRIBUTION. Setion 52(a) is hereby amended as follows: Se tion 52. (a) Voluntary Employee Contributions. AT THE DI CRETTON OF THE RETIREMENT COMMISSION AS TO WHEN SAME SHALL BE AV i MOLE, each Member la OF the DC part may make voluntary co tributions to the DC part of Lhe Retirement System. The sum of such contributions for all years of service are subject to the Co e Section 415 limits. vilniit ary _uested—Aaccuat. INVESTMENT or THE co tributions made by a Member shall, in all events be the • VOLUNTARY CONTRIBUTIONS SHALL BE DIRECTED BY THE MEMBER. Any inc;pendent voluntary act of such Member and shall not be dendent upon or alter or affect the obligations of or contributions by the County EXCEPT AS OTHERWISE PROVIDED IN SECTION 3(E). Section 61(c) is hereby amended as follows' (c) The prohibition of sUbparagraph (a) shall not apply to the creation, assignment, or recognition of a right to any ben fit payable to a Member pursuant to a domestic relations ord r, if such order is determined by the Retirement Commission to e in accordance with the eligible domestic relations order act; =LA MCL 38.1701, June 27, 1991 ("EDRO ACT"). Notirithstanding the foregoing, if the Retirement Commission determines such order is an "eligible domestic relations order" ("EDRO") and if the Retirement Commission determines that the EDR9 app1ires to a Member in the DC part of the Retirement System andrrequires payment before the member would have otherwise beon entitled to payment, the Retirement Commission shall make dieribution to the "alternate payee" identified in the EDRO from the DC part only ul.t..141:1—aJwsptir-4444—daya—a4taz_rKe. nit,n4_,01—the 9/12/94 - 4444.2_fiatimt.....4,4tet—than—eiqb.teen—(41:14—mont4s—aUfer—zervelpb—ar-e. rrfy of sch. ordei EFFECTIVE AS OF THE FIRST DAY OF THE MONTH FOLLOWING THE MONTH THAT THE DOMESTIC RELATIONS ORDER WAS DETERmINED TO BE AN EDRO, OR THE FIRST DAY OF THE MONTH FOLLOWING THE MONTH THAT A BENEFIT IS PAYABLE UNDER THE LATER OF THE DATE SET OUT IN THE EDRO OR THE EDRO ACT. Sertion 63(b) is hereby amended as follows; (b) The County reserves the right to amend this resolution. Ph County specifically reserves the right to amend the Re i irement System retroactively in order to comply with Code Se tion 401(a). No reason is necessary for the amendment, re srdless of whethert (1) for reasons of business necessity; Or (2 for the purpose of causing the Retirement System and trust to qu lify, and continue to qualify, under the Cede as set forth in th recita l s. No such amendment, except upon written consent, sh 11 increase the duties or liabilities of the Retirement Co ission or diminish its compensation, or deprive any Member or Be eficiary of any then veeted equitable interest in the Re iremenL System. A decision Of the Retirement Commission sh 11, except in the absence of good faith, be binding upon the 1 Me ere, beneficiaries, and all other persons interested, as to wh her or not any amendment does deprive a Member or any other po eon of any vested interest already existing or does adversely aff ct such interest. In no event shall any amendment have the eff ct of vesting in the County any right, title or interest to an11 assets held as part of the trust. Any amendment shall be eff ctive when signed by the duly authorised officer or officers ! of the Board of Commissioners, APPROVED BY THE COUNTY PENSION PLA COMMITTEE UNDER M.C.L. 46.12A, and filed with the Retirement C ornission. If the County amends or has amended the vesting achedule, the percentage then nonforfeitable or vested shall not be reduced as a result of such amendment. Any Member with three i (3) years of service determined at the end of the election period ehal.1 have an irrevocable election to have the nonforfeitable per entage of his accrued benefit derived from County cun ributions and forfeitures determined under the vesting sch dule as amended or a prior vesting Schedule. Such election ohm 1 commence on the date the amendment was adopted and shall ter i inate no later than sixty (60) days after the later of (i) the effective date of the amendment; (ii) the date of adoption of thelamendment to the vesting schedule; or (iii) the date each Me er who is eligible to make such election receives written I not c:oot firi :hhest ::::::d t:ees::::e::::d:::a:::::in: operational. provisional account may be reduced to the extent permitted under Code Section 412(c)(8). For purposes of this paragraph, a plan amondment which has the effect of decreasing a Member's prc4isional account or eliminating an optional form of benefit, 1 3 9/12/94 „ 4-14—Acar-uad-Lick-days-444--40f-iggea-La-trho-lia 4.4.44.4___Cithes—t.tams.14-as-ccopeesa-tIcia-tiabe.,--as IL-haue--the with respect to benefits attributable to service before the amendment shall be treated as reducing an accrued benefit. Fu ther, no amendment to the Retirement System shall have the ef ont of decreasing a Member's vested interest determined wi hout regard to such amendment as of the later of the date such 1 am4ndment is adopted or the date lt becomes effective. Se tion 70(a) is hereby amended as follows: Be tion 70. (a) Plan Adjustment to Account Balances. The pr sent value of the Lump Sum ActuariaI.Bquivalent of each Me ber's Accrued Benefit with IN the DB part shall be determined as of the date established by the Merit System or applicable Co lective Bargaining Agreement ("TRANSFERRED ACCOUNT"). In de ermining the present value of the Lump Sum Actuarial Bq ivalent of each Member's Accrued Benefit in the DR part, no withstanding anything contained herein to the contrary, the fo lowing shall control: th (2) The maximum transfer shall be based on a Normal ROirement Benefit of 75% of Final Average Compensation; (3) The present value of a Member's Accrued Benefit shall be c alculated as of the first day the Member would satisfy the No .al Retirement age and service requirements of Section 18; (4) No redetermination shall be made to give credit for any future raises or interest rate changes in the definition of Acplarial Equivalence; thai%_as days; (1) Final Average Compensation "PAC" shall be calculated as Ugh the Member were leaving the County's employ; 4 9/12/94 (-.1-41-)--Ot1 er—Ltemtg.,--sucla-as-eamP041441""-time7--sai P4144-- (5) THE RETIREMENT COMMISSION SHALL INCLUDE IN FINAL RAGE COMPENSATION SUCH ADDITIONAL ITEMS OF EARNED OR ACCRUED LOYMENT RELATED COMPENSATION AS IT DETERMINES TO BE REASONABLE NON-D1SCRIMINATORY TO INCLUDE. 1 Each such Member shall be provided with written notice of sa d amount and given 12 months in which to elect to either pa ticipate in the DC part or continue as a Member of the DB part of the Retirement System. A Member who elects to participate in th DC part shall have the ability to enter same on any Entry Da during the twelve (12) month period following receipt of no ice of the present value of the Lump Sum Actuarial Equivalent of such Member's Accrued Ranefit. Such participation shall co once as of the Entry Date that the Member has elected to pa ticipate in the DC part. Such Member may elect to have his paLtieipation in the ee part effective retroactively to the first da of the Plan Year that occurs during the twelve (12) month 1E Iection period by contributing to the Plan for the period from the eginning of the Plan Year to the appropriate Entry Date. ei The Lump Sum Actuarial Equivalence of the Accrued Benefit for any M er whose Entry Data is other than the first day of the Plan Yea shall be increased from the date used to determine its pre ent value to the date of transfer to the DC part at the int rest used in determining Actuarial Equivalence. A Member who doe not make a contribution to the Plan for the period from the first day of the Plan Year to the applicable Entry Date shall reCiSive a County contribution of 6% of Compensation from the first day of the Plan Year but no additional credited service for t*DE part for such Plan Year. Secion 70(b) is hereby amended as follows: 1 (b) Establishment of Account Balances. Those Members of the June, 1091 Restated Retirement System who elect to par icipate in the DC part of the Retirement System shall have sep i rate accounts established for the transfer of assets to this DC part of the Retiroment System and be 100% vested in the Transferred Account but subject to the vesting schedule of SeOion 7 as to the County's eoe.t-Decembar.-.1.1.9.9.3. Contribution AFTER THE APPLICABLE ENTRY DATE. I AV EM AN 5 9/12/94 Secition 70(d) is hereby amended as follows' (d) (1) Amounts in a Member's Rolleuez—Acc03.144 TRANSFERRED ACCpUNT may not be withdrawn by, or distributed to the Member, in whale or in part, except as provided in Subparagraph (2). (2) At the Member's Normal Retirement Date, or such othpr date when the Member is receiving a distribution from the DC part of the Retirement System shall be entitled to receive benefits, the fair market value of the Member'. Rellemaz—Acceaa4 TRAN SFERRED ACCOUNT shall be added to the amounts otherwise available. (3) The Member's Deo ,. le,,,.• li"c^,,rk* TRANSFERRED ACCOUNT shail share in income earned, investment gain. and losses att ibutable thereto, less any expenses in the same manner as any oth r account. Set ion 71 is hereby amended as follows' Sec ion 71. The Retirement Commission shall require that its third party plan administrator maintain separate Provisional Accounts for each Member of the DC part. Each Provisional AccOunt shall reflect Allocations, Forfeitures, earnings, looses, payments, withdrawals and expenses. Separate Provisional Acceunts shall be maintained in each of the following categories' 1. County Contributions (Provisional Account); 2. Membox—Ecaloulara: TRANSFERRED ACCOUNT; 3. Voluntary Employee Contributions; AND _ 4-.--Dixeczeci—teasetsaser4—alig 4. MATCHED EMPLOym CONTRIBUTIONS. sec ion 73 is hereby amended as follows' Seoion 73. The Retirement Commission shall maintain a ; 'Po faiturp Account" for the DC part of the Retirement System. The,-10orreiture Accvunt" means the amount held by the Retirement Commission of amounts in excess of the Member's Nonforfeitable amount where employment has terminated and Years of Service do not entitle him to the full benefit of his Provisional Account. The "Forfeiture Account" shall FIRST BE USED TO PAY EXPENSES INC MUD BY THE RETIREMENT COMMISSION FOR THE DC PART OF THE RET REMENT SYSTEM AND THEN used to reduce the County's Contribution. 6 9/12/94 after the Distribution Date BUT reenooetton--shall_ba as of the Valuation Date immediately preceding the Distribution Date. Who gattsraunear.— 9/12/94 7 The first paragraph of Section 79(b) shall be amended as follows; (b) That part of the A Member's Account that he is not entitled TO under Subparagraph (a) shall be allocated as a Forfeiture AS SOON AS ADMINISTRATIVELY FUSIBLE Howelmr, =tab • • • • - S - • • • - Secton 81 is hereby amended as follows, Section Sl. UNTIL A MEMBER OF ::1 HE DC PART IS AT LEAST CA VESTED, THE RETIREMENT COMMTSSION S L CONTROL THE INVESTMENT or THE PARTICIPANT'S COUNTY CON RIBUTION ACCOUNT. ONCE A MEMBER IS AT LEAST 40% VESTED, HE SHALL HAVE THE FLEXIBILITY TO DESIGNATE HOW HIS COUNTY CON R/BUTION ACCOUNT SHALL BE INVESTED. The Retirement Cominission shall determine which investment funds shall be available. xed-4ncome-seauritias4. capita,1.--gzowth—primarrily—thr-augh---ctpital—agpraciation y. ' • wIth--.1.4come--a-44coadary - equiticmtype—aockagisA444. Ccatazaztassa—cht—t*-agazacies or instruvertAlitiA• ELF GIII11:717.11 &pi:tzar—tat-WA- 6--An_Agg.rassive_Crourth_ fund des igned---to--achieva-growth-af incomer-4,f.-_sAy,_14.41,A_Lncidsata,L_cosuaderatiosht maximum current-income-consistant-with-saicty-of p4iazi 4 s'faeo.4y4mg • , • 1 a 1 XSSQciat-ton--(-Lrp raizar.Lii mrmtinri THE RETIREMENT COMMISSION SHALL SELECT AT LEAST FOUR sudm INVESTMENT FUNDS. Ea b Member who is at least 40% vested shall advise the Re irement, Commission how he wants the-meated,pa44-o4 his COUNTY CO TR/BUTION Account Ralanoe invested. If a Member who is at le at 40% vested fails to notify the Retirement Commission, it sh 11 be presumed that he has elected that his *•stood COUNTY CO TRIBUTION Account be invested in AT the balanced-tund DI CTION OF THE RETIREmENT COMMISSION. If a Member wishes to Co ut lite more than one fund / he shall notify the Retirement ission of the percentage of his vested COUNTY COUNTRIRUTION Ac ount Balance to be invested in each fund, and, except as pr vided in the last paragraph of this Section, such percentage mult either be in exact multiples of loc or whole dollar amounts or such other multiples determined by the third parLy inistrator maintaining the records of each Member's Accounts. A Member of the DC part who is at least 40% vested may ch*nge his election of investment funds, provided that all Menibers who are at least 40% vested are treated uniformly. 8 9/12/94 TH DC IN AV FR Pr th in ab di ME AC z A MEMBER Or THE DB PART WHO TRANSFERRED THE PRESENT VALUE 01 LUMP SUM ACTUARIAL EQUIVALENT OF HIS ACCRUED BENEFIT TO THE PART PURSUANT TO SECTION 70 SHALL CONTROL THE CHOICE OF ESTMENTS rOR HIS TRANSFERRED ACCOUNT WITHIN THE CHOICES MADE /LADLE BY THE RETIREMENT COMMISSION REGARDLESS OF HIS VESTED CRNTACE IN THE COUNTY CONTRIBUTIONS TO THE DC PART. The Retirement Commission Shall adopt such rules and cedures as it deems advisable as to all matters relating to selection and use of the investment funds. If there is any onsistency between such rules and any provisions above, the vs provisions shall be disregarded. If a Member who is at least 40% vested dnsires, tle may pet that County Contributions be invested in one :und and his EER contributions nnd Rollzuex—Contributioaa TRANSFERRED OUNT be invested in another fund or funds. 9 9/12/94 _September 22, 1994 FISCAL NOTE (Misc. #94275) BY: FINANCE COMMITTEE, JOHN P. McCULLOCH, CHAIRPERSON IN RE: TRANSFER PLAN - FROM DEFINED BENEFIT TO DEFINED CONTRIBUTION RETIREMENT PLAN - MISCELLANEOUS RESOLUTION #94XXX TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS Chairperson, Ladies and Gentlemen: Pursuant to Rule XI-G of this Board, the Finance Committee has reviewed Miscellaneous Resolution #94275 and finds: 1. The County should realize a savings per employee for each employee opting for the Defined Contribution plan. 2. The total level of savings will be dependent upon the number of current employees opting to transfer to the Defined Contribution. 3. No budget amendments are required with the passage of this resolution. FINANCE, COMMITTEE yvy In Testimony Whereof, I have hereunto set my hand and f)ixed the seal ofolthe County of Oakland at Pontiac, Michigan this 22nd day prgepte D. Allen, County Clerk Resolution #94275 September 22, 1994 Moved by Gosling supported by Kramer the resolution be adopted. AYES: Kramer, Law, McCulloch, Newby, Oaks, Obrecht, Palmer, Pernick, Powers, Schmid, Taub, Wolf, Crake, Dingeldey, Douglas, Garfield, Gosling, Huntoon, Jensen, Johnson, Kaczmar, Kingzett. (22) NAYS: McPherson. (1) A sufficient majority having voted therefor, the resolution was adopted. STATE OF MICHIGAN) COUNTY OF OAKLAND) I, Lynn D. Allen, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on September 22, 1994 with the original record thereof now remaining in my office.