HomeMy WebLinkAboutResolutions - 1994.09.08 - 24305MISCELLANEOUS RESOLUTION # 94258 September 8, 1994
BY: PERSONNEL COMMITTEE , Marilynn Gosling, Chairperson
IN RE: Personnel/Employee Relations-One Time Deferred
Retirement Buyout
To the Oakland County Board of Commissioners
Chairperson, Ladies and Gentlemen:
WHEREAS, the County of Oakland continues to explore
opportunities to control personnel costs while maintaining a
competitive salary and benefit package, and
WHEREAS, the County of Oakland retains a number of vested,
deferred retirements to administer, including the provision of
future health care, for persons no longer in the service of the
County, and
WHEREAS, the Michigan Attorney General, (1991-92 Op. No 6697)
has recognized that entitlement to retirement benefits under the
County's pension plan is a contractual right, and that the benefits
structure may be modified as long as it provides alternative
benefits which are equal or greater than the benefits which would
have otherwise been received, and
WHEREAS, it is permissible to amend the plan to offer deferred
retirees the opportunity to receive a lump-sum payment actuarially
equivalent to the present value of their accrued benefit, and
WHEREAS, a buyout of deferred retirements will result in no
tax consequence to the individuals if rolled over to another tax-
qualified retirement plan or Individual Retirement Account (IRA),
and,
WHEREAS, there is nothing in law that would prohibit a
requirement to surrender other retirement benefits including future
health care as a condition of receiving the optional lump-sum
retirement benefit buyout or rollover, and
WHEREAS, there are no vesting requirements attached to
retirement welfare benefits such as future health care, and
WHEREAS, any offer to buy out deferred retirements would be
voluntary and optional to those eligible, and within a fixed
"Incentive Window of Opportunity", and
WHEREAS, the approval of changes in the 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,
NOW THEREFORE BE IT RESOLVED that the Oakland County Board of
Commissioners approves the Deferred Retirement Buy Out Plan
initiating an offer to buy out accrued, vested retirement benefits
to members of the retirement system who have left the service of
Oakland County, deferring their retirement benefits.
BE IT FURTHER RESOLVED that the Deferred Retirement Buyout
Plan be offered during a ninety-two (92) day "Incentive Window of
Opportunity" beginning November 1, 1994 and ending January 31,
1995.
BE IT FURTHER RESOLVED that buyouts be offered in lump-sum
payments of the actuarial value of the deferred benefit or a
rollover of same to another tax-qualified retirement plan or
Individual Retirement Account, effective November 1, 1994.
BE IT FURTHER RESOLVED that the buyout offer shall be
contingent on the deferred retiree's signed waiver of rights to any
and all other retirement welfare benefits, including the right to
future County funded health care.
BE IT FURTHER RESOLVED, that the Board of Commissioners amend
the Oakland County Employee's Retirement System Resolution to add
a one-time single sum payment to vested former members of the DB
part and to make certain changes required to implement the defined
contribution component as per the attached changes.
BE IT FURTHER RESOLVED, that the Secretary of the Retirement
Commission is authorized to have proper application made to the
Treasury Department of the United States to obtain formal approval
of the said Deferred Retirement Buyout Plan in accord with
applicable provisions of the Internal Revenue Code, and to employ
competent counsel in the prosecution of such application, and to do
such other acts as shall be necessary hereunder to put the said
Deferred Retirement Buyout Plan in operation.
BE IT FURTHER RESOLVED, that this adoption and authorization
of the Deferred Retirement Buyout Plan be and the same hereby is
made expressly contingent upon the approval of same by the Internal
Revenue Service in accord with applicable provisions of the
Internal Revenue Code, and that the Retirement Commission, through
its attorneys, promptly submit said Deferred Retirement Buyout Plan
for such approval.
Mr. Chairperson, on behalf of the Personnel Committee, I move
the adoption of the foregoing resolution.
sonnel Committe
%M.
A RESOLUTION AMENDING THE OAKLAND COUNTY EMPLOYEES' RETIREMENT
SYSTEM RESOLUTION TO ADD A ONE-TIME SINGLE SUM PAYMENT TO VESTED
FORMER MEMBERS OF THE DB PART AND TO MAKE CERTAIN CHANGES
REQUESTED BY THE THIRD PARTY CONTRACT ADMINISTRATOR OF THE
DEFINED CONTRIBUTION COMPONENT.
THE COUNTY OF OAKLAND RESOLVES:
That the Oakland County Employees' Retirement System resolution
is hereby amended in the following sections:
Section 8 is hereby amended as follows:
Section 8. Service rendered by a Member shall be credited to the
Member's individual credited service account in accordance with
rules the Retirement Commission shall prescribe. A Member OF THE
DB PART OF THE RETIREMENT SYSTEM in a position designated by the
County as a part-time position shall receive credit for a
fraction of a year. The fraction shall be equal to the number of
regular hours worked during the year divided by the number of
full-time hours for the year. In no case shall
- more than one year of credited service be credited on
account of all service rendered by a Member in any one calendar
year.
- less than ten days of service in a calendar month be
credited as a month of service.
- less than ten months of service in a calendar year be
credited as a year of service.
Section 24 is hereby amended as follows:
Section 24. The Retirement Commission may retire a Member OF THE
DB PART who is incapacitated from continued employment by the
County if each of the following conditions are met:
(a) Application for disability retirement is filed with the
Retirement Commission by either the Member or the Member's
Department Head;
(b) The Member has 10 or more years of credited service;
(c) The Member undergoes all medical examinations and tests
ordered by the Retirement Commission, and releases to the
Retirement Commission all medical reports and records requested
by the Retirement Commission;
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(d) The medical director certifies to the Retirement
Commission in that (i) the Member is mentally or physically
totally incapacitated for continued employment by the County,
(ii) the incapacity is likely to be permanent and (iii) the
Member should be retired. The effective date of a disability
retirement shall not predate (i) the date of disability, or (ii)
the date the Member ceases to be paid by the County for active
services;
(e) If the Member does not concur in the opinion of the
medical director, a medical committee shall be appointed. The
medical committee shall be composed of the medical director, one
physician named by the Member and one physician named by the
other 2 physicians. If the medical committee certifies to the
Retirement Commission in writing, by majority opinion, that (i)
the Member is mentally or physically totally incapacitated for
continued employment by the County and (ii) the incapacity is
likely to be permanent, the majority opinion of the medical
committee shall supersede the certification of the medical
director.
(F) A MEMBER OF THE DC PART WHO TERMINATES EMPLOYMENT WITH
THE COUNTY UNDER CIRCUMSTANCES THAT WOULD QUALIFY HIM FOR A
DISABILITY RETIREMENT IF HE WERE A MEMBER OF THE DB PART,
REGARDLESS OF HIS YEARS OF SERVICE, SHALL BE 100% VESTED IN HIS
PROVISIONAL ACCOUNT.
Section 29 is hereby amended as follows:
Section 29. A pension shall be paid for life to the surviving
spouse of a deceased Member of the DB part if the following
conditions are met:
(a) The Member was married to the surviving spouse at time
of death; and either
(b) The Member had 10 or more years of credited service and
died while an Employee of the County; or
(c) The Member was a vested former Member who had 20 or
more years of credited service.
abova--cond/t-Lans--anr-e—rast-
Section 30 is hereby amended as follows:
Section 30. The amount of the automatic survivor pension from
the DB part shall be computed as if the deceased Member had
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retired the day preceding death with a normal retirement benefit
(Sections 17-20) and nominated the spouse as the survivor
Beneficiary. If the deceased Member had 15 or more years of
service or had attained Age 60, the survivor pension will be
calculated as if form of payment A (Section 23) had been elected.
If the deceased Member had fewer than 15 years of service and was
under Age 60, the survivor pension will be calculated as if form
of payment B (Section 23) had been elected. The spouse pension
shall commence at the time stipulated in Section 39. Upon the
death of the spouse, the pension shall terminate. THE BENEFIT
FOR THE SURVIVING SPOUSE OF A DECEASED MEMBER OF THE DC PART
SHALL BE THE VALUE OF THE MEMBER'S FIXED ACCOUNT IF ALL OF THE
CONDITIONS OF SECTION 29 ARE MET EXCEPT FOR THE YEARS OF CREDITED
SERVICE REQUIREMENTS.
Section 35.2 is hereby added and shall read as follows:
1994 SPECIAL PAYMENT
SECTION 35.2, ONE-TIME SINGLE SUM PAYMENT
TO VESTED FORMER MEMBERS OF THE DB PART
The Retirement Commission shall undertake the following with
respect to vested former Members of the DB Part:
a. As of October 1, 1994, determine who the vested
former Members of the DB Part are;
b. Determine each such vested former Member's Pension
as defined in Section 19;
c. Determine the present value, as of October 1,
1994, of the lump-sum actuarially equivalent
benefit of each such vested former Member's
Pension using all of the Retirement Commission's
actuarial assumptions as in effect for funding
purposes for the December 31, 1993 annual
actuarial valuation;
d. Make the same determination in (c), except without
the use of a Disability factor; and
e. Notify each such vested former Member in writing
that they have an irrevocable, one-time election
continuing for no less than thirty (30) days nor
more than ninety (90) days in which to decide as
to whether they want to receive a single sum
payment of the value determined in (d) on or about
October 1, 1994 in lieu of any further Pension
from this System and specifically waiving any
rights to benefits from the Oakland County
Retirees' Health Care Trust.
Subparagraph (d)(1) of Section 51 shall be amended as follows:
(1) A County contribution TO THE DC PART for any plan
year shall be made only if same would be a Code Section 404
allowable deduction if the County were a taxable entity. The
conditions of tax deductibility shall conclusively be presumed to
be a condition of such contribution. No contribution shall be
made if it will cause the annual addition to exceed the lesser of
(a) twenty-five percent (25%) of a Member's 415 compensation for
a Limitation Year or (b) the greater of: (i) thirty thousand and
00/100 dollars ($30,000.00); Or (ii) one-fourth (1/4) of the Code
Section 415(b)(1) defined benefit dollar limitation for the
limitation year. The compensation limitation referred to in (a)
shall not apply to any contribution for Code Sections 401(h) or
419A(f)(2) medical benefits which are otherwise treated as annual
additions under Code Sections 415(1)(1) or 419(a)(d)(2).
Section 52(c) shall be amended as follows:
(c) Administration of Voluntary Employee Contributions.
Upon the Retirement Commission's receipt of such voluntary
contributions, the Retirement Commission shall establish a
Voluntary Contribution Account for such Member. Same shall have
periodic memorandum credits and debits made to it to reflect the
amounts of voluntary contributions and the allocation of net
earnings or losses from investments. This adjustment shall be
for earnings and re-evaluation of assets in the same manner as
County contributions. The adjusted Voluntary Contribution
Accounts shall at all times be fully vested and nonforfeitable,-
THE WITHDRAWAL OF PART OF
SUCH AMOUNTS FROM THE TRUST SHALL BE PERMITTED ONCE DURING THE
PLAN YEAR. ALL WITHDRAWALS OF SUCH AMOUNTS FROM THE TRUST MUST
CONSIST OF A PRO RATA PORTION OF VOLUNTARY CONTRIBUTIONS AND NET
EARNINGS. NOTWITHSTANDING THE FOREGOING, WHILE THE MEMBER IS
EMPLOYED BY THE COUNTY, WITHDRAWALS FROM THE VOLUNTARY
CONTRIBUTION ACCOUNT SHALL BE LIMITED TO AN AMOUNT EQUAL TO THE
AGGREGATE OF VOLUNTARY CONTRIBUTIONS MADE BY THE MEMBERS. NO
FORFEITURE SHALL BE DEEMED TO HAVE OCCURRED SOLELY AS A RESULT OF
SUCH WITHDRAWAL.
Subparagraph (b) of Section 70 shall be amended as follows:
ILIELCILLE CLO
(b) Establishment of Account Balances. Those Members of
the June, 1991 Restated Retirement System who elect to
participate in the DC part of the Retirement System shall have
separate accounts established for the transfer of assets to this
DC part of the Retirement System and be 100% vested in the
transferred account but subject to the vesting schedule of
Section 7 as to the County's post-Decambez-31,-19-94 Contribution
FOR THE PERIOD AFTER THEY BEGIN PARTICIPATION IN THE DC PART.
Section 71 shall be amended as follows:
Section 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, losses,
payments, withdrawals and expenses. Separate Provisional
Accounts shall be maintained in each of the following categories:
1. County Contributions NON-DIRECTED (Provisional
Account);
2. Member Rollovers;
3. Voluntary Employee Contributions; AND
4. Directed Investment.; and
5. Fixed Account2
The first paragraph of Section 79(b) shall be amended as follows:
(b) That part of tile A Member's Account that he is not
entitled TO under Subparagraph (a) shall be allocated as a
Forfeiture AS SOON AS ADMINISTRATIVELY FEASIBLE However,-such
zoallor-&tion-sbala-take-placia-until after the Distribution Date
except-tlat-sucla BUT reallxicatlon-shall-be as of the Valuation
Date immediately preceding the Distribution Date. The
September 8, 1994 FISCAL NOTE (Misc. #94258)
BY: Finance Committee, John P. McCulloch, Chairperson
RE: Personnel/Employee Relations: One Time Deferred Retirement
Buyout
TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS
Chairperson, Ladies and Gentlemen:
Pursuant to Rule XI-G of this Board, the Finance Committee
reviewed the above referenced resolution on September 1, 1994, and
reports that funding is available in the retirement system reserves
to cover the proposed buyout plan, no additional appropriation is
required.
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CE COMMITTEE Fl
Resolution #94258 September 8, 1994
Moved by Gosling supported by Kramer the resolution be adopted.
AYES: Huntoon, Jensen, Johnson, Kaczmar, Kingzett, Kramer, Law, McCulloch,
McPherson, Moffitt, Newby, Oaks, Obrecht, Palmer, Powers, Schmid, Taub, Wolf,
Crake, Dingeldey, Douglas, Garfield, Gosling. (23)
NAYS: Pernick. (1)
A sufficient majority having voted therefor, the resolution was adopted.
L. BrOOKS P
I HEREB
rson, County Executive
E FOREC7Or\.2 7 aOLUTION
Executive Date
7-/V7
Date
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 8, 1994 with the original
record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and af ixed the seal of the
County of Oakland at Pontiac, Michigan this 8th day of temtvg,c1294.
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D. Allen, County Clerk