Title
Amendments to the City's Pension Plan(s) to Provide for a Voluntary Early Separation Incentive Program, Temporary Service Purchase Program and Technical Updates (NB)
This item requests authorization to draft an amendment the City's Pension Plan(s) to authorize a Voluntary Early Separation Incentive Program, Temporary Service Purchase Program and technical updates to ensure the Plan(s) is consistent with current Federal and State laws as they may apply.
Explanation
A voluntary early separation program provides additional flexibility to proactively address economic and fiscal conditions facing the organization. The intent of this program is to create vacancies that will provide the opportunity to eliminate budgeted positions. A successful program should reduce the need to consider layoffs at this time. In order to generate recurring budgetary savings it should be understood that a certain number of positions vacated will be eliminated from the budget.
Employees eligible for the separation incentive would generally be those in operational areas where reduction in forces are likely needed to address the projected budget deficits. Eligibility may be restricted as to specific employee classifications, organizational functions, departments, or particular skill sets. The determination of final eligibility criteria will be set after consultation with all Charter Officers.
Generally, the plan would provide three (3) years of pension credited service for those eligible individuals who would otherwise have in excess of 17 years of credited service as of August 1, 2010. This would generally make such employees eligible for retirement and retiree health. For eligible "ICMA", 457 or Defined Contribution Plan only employees, three (3) years of service credit would be given for the purpose of calculating eligibility for, and subsidy amount of, Retiree Health Insurance benefit. A separate early separation incentive would be made available to employees who qualify for early retirement as defined in the appropriate plan. For example, a member of the General Employee's Pension Plan may retiree if they have 15 years of service and are at least age 55. However, this individual is subject to a reduction of their benefit of 5% per year for every year they are under age 65. This reduction could be as much as 50% of the earned benefit. This incentive would reduce or eliminate the penalties associated with the early retirement provision.
Eligible employees desiring to accept the separation incentive must do so by early June 2010. This will entail, among other things, submitting a letter of resignation effective no later than September 1, 2010.
The City will bear the costs to the Plan(s) of the additional actuarial impact, if any, of the voluntary early separation program's implementation and thus this additional potential benefit to employees will not require a current or potential increase in employee contributions to the Plan(s).
Additional information about the program will be communicated to employee organizations representing eligible employees.
In addition to the above program, the General Employee's Pension Plan will be amended to include a Temporary Service Purchase Program. In general, a member of the Plan may purchase prior service as a temporary employee with the City of Gainesville provided that the individual provided at least six months continuous service in a temporary status. The program will require the member to pay the full actuarial value of the service as determined by the Plan's actuary. The plan will generally follow the same criteria previously approved for the purchase of military service.
Finally, the amendments will include any additional technical update to ensure the Plan(s) remain consistent with current Federal and State regulations that govern public employee pension plans.
Fiscal Note
The Voluntary Early Separation Incentive Program will result in a net savings to the City and will be determined based on the number of employees who chose to participate in the program and the resulting number of positions eliminated from the budget. The Temporary Service Purchase Program would have no fiscal impact to the City.
Recommendation
The City Commission authorize the City Attorney to draft and the Clerk to advertise the ordinance necessary to effectuate the proposed amendment(s).