Title
Transitioning the Disability Benefit to the General Employees’ Pension Plan (B)
This agenda item discusses the proposal to terminate the current City of Gainesville Employee's Disability Pension Plan and move administration of the same disability benefit to within the General City of Gainesville Employees’ Pension Plan.
Explanation
Prior to 1998 there was no separate General Employees’ Disability Plan Trust Fund. The plan was funded each year on a pay-as-you-go basis, with projected annual benefit expense included in the budget.
Beginning in 1998 the administrative structure of the Disability Plan was revised to model a traditional pension fund. A separate trust fund was established, periodic actuarial valuations were initiated, and contributions to the trust were based on the results of those valuations.
In the years since 1998 the funded status of the plan has grown steadily. There are several reasons for this growth in the funded status:
· The benefit provided in the Plan is fair and equitable, but not rich;
· Third party medical determination is required;
· The Disability Plan population has remained relatively level over the years; and
· The City has aggressively pursued the Social Security offsets provided for in the Plan.
The result is that as of October 1, 2014 the Disability Plan is 472% funded, with an actuarial value of assets of $8,442,616 and an actuarial liability of $1,788,069. These numbers are based on pre-audit financial statements and preliminary work by the City’s actuary. The final numbers will be based on an actuarial valuation as of September 30, 2014 and the market value of the assets in the plan at the time of the plan termination. This $6,654,547 in overfunding is all City monies; the Disability Plan does not now and has never required employee contributions. Given the financial history of the Disability Plan, it is improbable that the bulk of this overfunding will ever be required to meet Disability Plan obligations. How...
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