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HomeMy WebLinkAboutResolutions - 1998.07.16 - 25366July 16, 1998 MISCELLANEOUS RESOLUTION #98158 BY: Personnel Committee, Thomas Law, Chairperson RE: DEFERRED RETIREMENTS BUY-OUT PLAN - RECOMMENDATION FOR ADOPTION 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 has 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, in 1991 opinion Number 6697, page 116, confirms that the County may, without violating the State Constitutional protection of contractual obligations, modify retirement benefits to current retirees and members if it provides alternative benefits in their place that are equal to or greater than pension benefits that would be limited or withdrawn, and WHEREAS, it is permissible to amend the plan to offer deferred retirees the opportunity to receive a "Lump-Sum" payment actuarially equivalent to the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, offering a buy-out of the deferred retirements will result in no tax consequence to the individuals, and WHEREAS, deferred retirees will incur no tax consequence if a deferred retiree elects to roll the Lump-Sum to another tax-qualified retirement plan or Individual Retirement Account (IRA), and WHEREAS, there is nothing in law that would prohibit the County from requiring the deferred retirees surrender other retirement benefits including future health care as a condition of receiving the optional Lump-Sum buy-out, and WHEREAS, any offer to buy-out deferred retirements would be voluntary and optional to those eligible, and Personnel Committee Vote: Motion carried on unanimous roll call vote with Holbert absent WHEREAS, the approval of changes to the retirement plan requires the approval of the State of Michigan State County Pension Plan Committee, in addition to authorization by the County Board of Commissioners, and WHEREAS, it has been the practice of the Oakland County Retirement Commission to obtain the approval of the U.S. Internal Revenue Service and to condition any Plan Amendment on obtaining a determination letter that the proposed Amendment does not adversely affect the tax-qualified status of the Retirement Plan. 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, and BE IT FURTHER RESOLVED that buy-outs be offered in a Lump-Sum, thereby allowing a rollover of same to another tax-qualified retirement plan or Individual Retirement Account, effective August 3, 1998, and BE IT FURTHER RESOLVED that the buy-out of each particular deferred retiree 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, and BE IT FURTHER RESOLVED, that the Board of Commissioners amend the Oakland County Employee's Retirement System Resolution by adding: SECTION 34.4, Single Sum Payment to Vested Former Members of the DB part. The Retirement Commission shall undertake the following with respect to vested former Members: a. As of June 30, 1998 determine who the vested former Members are; b. Determine each such vested former Member's Pension as defined in Section 18 of the Defined Benefit Part of the Retirement System; c. Determine the present value, as of July 31, 1998 of the lump-sum actuarial equivalent accrued 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 September 30, 1997 annual actuarial valuation; d. Make the same determination in (c), except without the use of a Disability factor used for funding purposes; and e. Notify each such vested former Member in writing that they have an irrevocable, one-time election continuing for no less than seven (7) 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 August 3, 1998 in lieu of any further Pension from this System and specifically waiving any rights to benefits from the Oakland County Retirees' Health Care Trust. 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 Buy-Out 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 Buy-Out Plan in operation, and BE IT FURTHER RESOLVED, that this adoption and authorization of the Deferred Retirement Buy-Out 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 Buy-Out Plan for such approval, and Mr. Chairperson, on behalf of the Personnel Committee, I move the adoption of the foregoing resolution, subject to the approval of the State County Pension Plan Committee and the U. S. Internal Revenue Service. Personnel Committee July 16, 1998 FISCAL NOTE (Misc. #98158) BY: FINANCE COMMITTEE, SUE ANN DOUGLAS, CHAIRPERSON RE: DEFERRED RETIREMENT BUY-OUT PLAN - RECOMMENDATION FOR ADOPTION TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS Chairperson, Ladies and Gentlemen: Pursuant to Rule XII-F of the Board, the Finance Committee has reviewed the above referenced resolution and finds that funding is available in current retirement system reserves to cover the proposed Deferred Retirement Buy-Out Plan. No additional appropriation is required. FINANCE COMMITTEE Finance Committee Vote: Motion carried on unanimous roll call vote. Dear Deferred Retiree: Oakland County is offering you an opportunity to take a single sum distribution of your pension. For some people, this may be the right decision, for others, it may not be the proper decision. In offering this option to you, you must give up your rights to health care coverage from Oakland County. If you do not have health care secured from another source, you must consider this offer very carefully. I would advise you to seek outside counsel for both your pension benefit and giving up of the health care benefit. If you wish to speak to Dean Shackelford (858-5212) or me (858-0497) personally, please call one of us. Douglas J. Williams Deputy County Executive LynOrte. Allen, County Clerk Resolution #98158 July 16, 1998 Moved by Law supported by Hoffman the resolution be adopted. AYES: Huntoon, Jacobs, Jensen, Johnson, Kaczmar, Kingzett, Law, McCulloch, McPherson, Millard, Moffitt, Obrecht, Palmer, Schmid, Taub, Wolf, Amos, Coleman, Devine, Dingeldey, Douglas, Garfield, Gregory, Hoffman, Holbert. (25) NAYS: None. (0) A sufficient majority having voted therefor, the resolution was adopted. STATE OF MICHIGAN) COUNTY OF OAKLAND) /, 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 July 16, 1998 with the original record thereof now remaining in my office. In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at Pontiac, Michigan this 16th day of July 1998.