40-97 MEMORANDUM
TO: Susan Ao Ruby, City Attorney
FROM: Alison MacGregor Harty, City Clerk~l~
SUBJECT: Ordinance No. 40-97 (General Employees Pension Plan
Amendment)
DATE: October 6, 1997
Attached for your use and information is an executed copy of
Ordinance No. 40-97 which amends the General Employees Pension
Plan at Chapter 35 of the Code of Ordinances.
This ordinance was passed and adopted on second and final reading
by the City Commission on September 23, 1997.
If you have any questions, please call me.
AMH/m
Attachment
cc: Ned Gusty, Human Resources Director
Joe Safford, Finance Director
ORDINANCE NO. 40- 97
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF DELRAY
BEACH, FLORIDA, AMENDING CHAPTER 35, "EMPLOYEE POLICIES
AND BENEFITS" , "RETIREMENT PLAN" , OF THE CODE OF
ORDINANCES OF THE CITY OF DELRAY BEACH, FLORIDA, BY
AMENDING SECTION 35. 097, "RETIREMENT INCOME; BASIS,
AMOUNT AND PAYMENT"; AMENDING SUBSECTION (A) OF SAID
SECTION, "NORMAL RETIREMENT INCOME", TO PROVIDE THAT THE
NORMAL FORM OF BENEFIT FOR PARTICIPANTS WHO ARE NOT
MARRIED AT THE TIME OF RETIREMENT IS A SINGLE LIFE
ANNUITY; AMENDING SUBSECTION (C) OF SAID SECTION,
"DISABILITY RETIREMENT AND RETIREMENT INCOME", TO REMOVE
AGE-BASED LIMITATIONS ON DISABILITY BENEFITS; AMENDING
SUBSECTION (J) OF SAID SECTION, "MAXIMUM PENSION", TO
CONFORM TO RECENT CHANGES IN FEDERAL LAW; AMENDING
SECTION 35. 098, "SUPPLEMENTAL RETIREMENT INCOME AND
MINIMUM BENEFITS", TO CLARIFY THE MINIMUM BENEFIT PAYABLE
TO MULTIPLE BENEFICIARIES OF A PARTICIPANT; PROVIDING A
SAVINGS CLAUSE; PROVIDING AN EFFECTIVE DATE.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE
CITY OF DELP~AY BEACH, FLORIDA, AS FOLLOWS:
Section 1. That Section 35.097, "Retirement Income;
Basis, Amount., and Payment", Subsections (A) (C) and (J), "Normal
Retirement Income", "Disability Retirement and Retirement Income",
and "Maximum Pension" are amended to read as follows:
(A) Normal retirement income.
(1) Amount of normal retirement income. The amount of
retirement income payable to a participant who retires on or after
his no~,-mal retirement date shall be an amount equal to two and one-
half percent (2.5%) of final monthly compensation multiplied by
credited service, expressed in years and tenths of a year, up to
a maximum of thirty (30) years. A participant who has attained the
age of sixty and retires with five (5) or more years of credited
service, but less than ten (10) years of credited service, shall be
entitled to monthly retirement income in an amount equal to two and
one-half percent (2.5%) of final monthly compensation multiplied by
credited service expressed in years and tenths of a year,
multiplied by the participant's vested percentage as set forth in
Sec 35 091 '"~ ..... ~ =~-- ~ ~- =: ~ ~' -~' ~ ~ ~ i=~
(2) Payment of normal retirement income. The monthly
retirement income payable in the event of normal retirement will be
payable on the first day of each month. The first payment will be
made effective on the participant's normal retirement date (or on
the first day of the month following actual retirement, if later),
and shall be continued thereafter during the participant's
lifetime. Upon the participant's death the same monthly benefit
shall be continued to his or her spouse for one year, and sixty
percent (60%) of that amount shall be continued to the spouse
thereafter until the earlier of the spouse's death or remarriage.
The normal form of benefit for a participant who is not married at
the time of retirement is a sinqle life annuity. If a participant
who is not married at the time of retirement later marries, the
spousal benefit provided in this paraqraph shall not apply unless
the participant reouests an actuariall¥ adjusted benefit.
(C) Disability retirement and retirement income.
(1) A participant may retire from the service of the
city under the plan if he or she becomes totally and permanently
disabled, as defined in division (C) (2) of this section, on or
after the effective date of this section but prior tc tka normal
rc ircm~n~ ~
t ~ ' ..... This type of retirement shall be referred to as
disability retirement.
(2) Total and permanent disability. A participant will
be considered totally disabled if, in the opinion of the Retirement
Committee, the participant is wholly prevented from engaging in any
occupation for wage or profit; and a participant will be considered
permanently disabled if, in the opinion of the Committee, the
participant is likely to remain so disabled continuously and
permanently from a cause other than those specified in division
(C) (3) of this section.
(3) Disqualifying causes of disability. A participant
will not be entitled to receive any disability retirement income
if, in the opinion of the Committee, the disability is a result of:
(a) The participant's excessive or habitual use of
drugs, intoxicants, or narcotics;
(b) Injury or disease sustained by the participant
while willfully and illegally participating in fights, riots, civil
insurrections, or while committing a felony;
(c) Injury or disease sustained by the participant
while serving in any armed forces;
(d) Injury or disease sustained by the participant
diagnosed or discovered after the termination of city
employment; (e) Injury or disease sustained by the
participant while working for anyone other than the city, and
2
Ord. No. 40-97
arising out of such employment; or
(f) Injury or disease sustained by the participant
as a result of an act of war, whether or not the act arises from a
formally declared state of war.
(4) Proof of disability. The Committee, before
approving the payment of any disability retirement income, shall
require satisfactory proof, in the form of a certificate from a
duly licensed physician selected or approved by the Committee, that
the participant has become disabled as provided herein. The
Committee may require similar proof of the continued disability of
a participant after the commencement of disability retirement
income.
(5) Disability retirement income.
(a) Monthly income payable pricr to normal
retirement
1. Service-connected disability. The benefit
payable to a participant who retires from the service of the city
due to total and permanent disability arising out of and in the
course of city employment shall be a monthly retirement income
equal to seventy-five percent (75%) of the participant's final
monthly compensation at the date of disability, subject to offsets
for social security and workers' compensation benefits in
accordance with division (C) (5) (a)4. of this section.
2. Nonservice-connected disability. The
benefit payable to a participant who retires from the ser~zice of
the city due to total and permanent disability not arising out of
and in the course of city employment, after the completion of ten
(10) years of credited service, shall be an amount equal to two
percent (2%) of final monthly compensation at the date of
disability, multiplied by the years and tenths of years of credited
service, subject to a maximum monthly retirement income of fifty
percent (50%) of final monthly compensation, and subject to offsets
for social security and workers' compensation benefits in
accordance with division (C) (5) (a)4. of this section.
3. If a participant with greater than ten
(10) years of credited service is eligible to receive a nonservice
disability benefit of less than $50 per month under division
(C) (5) (a) 2. of this section, the participant may elect to receive
an optional benefit payable commencing according to the provisions
of division (D)(6) of this section and subject to division (E) of
this section. This optional benefit will be.equal to the product
of "a" and "b", where "a" is the number of and tenths of years of
credited service at the date of disability, multiplied by two'and
one-half percent (2.5%) of final monthly compensation, and "b" is
the applicable actuarial reduction factor to take into account the
3
Ord. No. 40-97
participant's younger age and the earlier commencement of
retirement income payments. If this option is elected, the benefit
payable will not be subject to the provisions of division (C) (5) (b)
of this section, but will be payable as a normal retirement benefit
would be paid pursuant to division (A) (2) of this section), unless
an optional form of payment is elected under division (E) of this
section, in which case such election will define the period of
payment.
4. The disability retirement income described
above shall be reduced by social security and workers' compensation
wage-loss benefits received by the participant, as follows. The
reduction for social security benefits shall be in the amount of
the primary insuranc~ amount only, not including any family
benefit. Any cost of living adjustments in the participant's
social security benefits shall not serve to reduce further the
disability retirement income payable from the plan. The reduction
for social security disability benefits shall terminate upon the
retiree's attainment of age 65. Disability retirement income
payable from the plan shall be reduced by workers' compensation
wage-loss benefits received by the participant to the extent that
such benefits, when added to the participant's disability
retirement income from the plan (adjusted for social security
benefits received, if applicable), exceed the participant's final
monthly compensation at the date of disability. Any cost of living
adjustments in the participant's workers' compensation benefits
shall not serve to reduce further the disability retirement income
payable from the plan. In the case of a lump sum workers'
compensation settlement, the disability retirement income payable
from the plan shall be adjusted as follows:
a. The amount of the lump sum settlement
shall be divided by the participant's remaining life expectancy (in
months), as determined using standard actuarial tables approved by
the plan actuary;
b. If the number obtained in
subparagraph a., above, when added to the participant's monthly
disability retirement income from the plan, exceeds the
participant's final monthly compensation on the date of disability,
the amount of the excess shall be deducted from the participant's
monthly disability retirement income from the plan, for the
duration of the participant's remaining life expectancy as
determined in subparagraph a., above.
c. If the number obtained in
subparagraph a., above, when added to the participant'.s monthly
disability retirement income from the plan does not exceed the
participant's final monthly compensation on the date of disability,
there shall be no reduction of the participant's disability
retirement income from the plan.
4 Ord. No. 40-97
(b) Normal retirement,-~.~..-~~'~-~" income commencing on
the cessation of disability retirement income .... ~ -~-~
~ .......... ~~ If a participant'., s ~ ..... _.~ "~. ~= monthly di sa bil i ty
retirement income from the plan ceases ~ursuant to division
6 c of this section~ ..... ~ ............. ~ .............. ~. ~ _ ~
shall bc disccntinuad and no~al retirement income shall co~ence
in accordance with this paragraph. For the pu~ose of this
paragraph, a participant's credited se~ice for t~c ~_.~
' ' ~* ~ ~t date
dctc~n=n~ thc nc~al ra-~r~m~., shall include all periods of
credited se~ice as defined in Sec. 35.089 and 35.093 of this
s~chapter, and all years and tenths of years during which the
particip~t received disability retirement income from the plan.
't3 ~ ~ paid ~o a participant ~asa
~tivc upcn the participant reaching thc ncrma! ~ir-m-n~ date.
~ sc c~_ac.i~'c cn .... participant s normal rc =roman ...... Upon
the cessation of disability retirement income pursuant to division
(C) (6)(c) of this section, the participant shall begin receiving
monthly retirement income computed in the same ma~er as for no~al
retirement in accordance with division (A) (1) of this section,
based upon the participant's credited se~ice as defined in this
paragraph, and projected rate of final monthly compensation at the
..~,,.__~ .-~__~ ...... ~..~..~ ~"~_~ (as defined in this paragraph, below) . The
participant's projected rate of final monthly compensation at thc
.... ~ -"~ ...... ~-~ shall be dete~ined in accordance with Sec
35.089(E) of this subchapter, but based on the assumption that the
participant's rate of monthly basic compensation at the date of
te~ination of City emplo~ent due to disability would have
t ~
continued without change to the ncrmal rs ir-mcn~ date disability
retirement income ceased.
(6) Pa~ent of disability retirement income. The
monthly retirement income payable upon disability retirement will
be pay~le on the first day of each month. The first pa~ent will
be made effective on the first day of the month following the date
on which the participant's disability has existed for five months,
or the date on which the participant s~mits a written application
for dis~ility retirement income, whichever is later. Dis~ility
retirement income will continue to be paid in lieu of any other
retirement income ~der the Dlan, until the earliest of the
0 W ~q occurrences ~-'-~-- ~ .... ~-~ '
(a) If the participant recovers from disability
--~ ..... ~ ..... ~ --~ ...... =-"~ the last dis~ility retirement
income pa~ent will be the pa~ent due next preceding the date of
recover.
(b) If the participant dies prior to thc
rctirumcnt date without recovering from disability, the last
pa~ent will be the pa~ent due next preceding the date of death.
5 Ord. No. 40-97
(c) For participants who become disabled at age 60
or less, disability retirement income shall cease upon the date the
participant attains ace 65. For participants who become disabled
after age 60, disability retirement income shall cease five years
after the commencement of benefits. Upon the cessation of
disability retirement income under this paragraph (c), payment of
normal retirement income shall commence in accordance with division
(C) ( ) (b} ......... normal
5 of this section ~ ~ .... +~ ~ ~ ~ ~ t~c
r~i~cmcn~ da ..... ~ ~- disabili~'' rc~ir~, .... income,
(7) Recovery from disability. If the Committee finds
that a participant who is receiving disability retirement income
is, at any time prior tc ~..~ normal retlremcnt ~'~, no longer
disabled, as provided herein, the Committee shall direct that the
retirement income be discontinued. Recovery from disability as
used herein shall mean the ability of the participant to engage in
any occupation for wage or profit. However, any participant who
recovers from disability and whose disability retirement income is
discontinued by the Committee and who, as of the date of
termination of city employment due to disability, had completed
twenty'(20) years of credited service or who had both attained the
age of 55 years and completed at least fifteen (15) years of
credited service shall, if not re-employed by the city, be entitled
to early retirement income as provided in division (B) of this
section, based on the participant's final monthly compensation and
credited service as of the date of termination of city employment
due to disability and upon the participant's age as of the date of
recovery from disability. The amount of early retirement income
payable in this circumstance shall be actuarially reduced to take
into account the participant's younger age and the earlier
commencement of retirement income payments as provided in division
(B) of this section. Any participant who recovers from disability
and whose disability retirement income is discontinued by the
Committee and who, as of the date of termination of city employment
due to disability had completed at least five (5) years of credited
service shall, if not re-employed by the city, be entitled to
vested deferred retirement income as provided in division (D) of
this section.
(8) Reemployment by the city. If a participant recovers
from disability and is re-employed by the city, the participant's
city employment will be deemed to have been continuous and credited
service under the plan will be granted for the period of
disability.
(J) Maximum Pension.
6 Ord. No. 40-97
(1) Basic Limitation.
Subject to the adjustments hereinafter set forth, the
maximum amount of annual retirement income payable with respect to
a member under this Plan shall not exceed thc Icsscr of:
(a). $90,000, adjusted for increases in the cost-of-
living pursuant to Section 415 (d) of the Internal Revenue Code or
(b) cna k-~drad patient (I~°~)v~ ~~-= ~..~ .... ..~.._~'_ . ...... ~.~.a~=~
rar;ancr~tien paid or aecruad fcr parscnal sc~;iccs randarad tc the
For purposes of apptyin~ the above limitation, Benefits
payable in any form other than a straight life annuity with no
ancillary benefits shall be adjusted, as provided by Treasury
Regulations, so that such benefits are the Actuarial Equivalent of
a straight life annuity. For purposes of this Section, the
following shall not be taken into account:
1. any ancillary benefit which is not directly
related to retirement income benefits;
2. any other benefit not required under
§415(B) (2) of the Internal Revenue Code 'and
Regulations thereunder to be taken into
account for purposes of the limitation of
§415 (b)(1) of the Internal Revenue Code.
(2) Participation in Other Defined Benefit Plan.
The limitation of this Section with respect to any member
who at any time has been a member in any other defined benefit Plan
(as defined in §414 (j) of the Internal Revenue Code) maintained by
the City shall apply as if the total benefits payable under all
defined benefit Plans in which the member has been a member were
payable from one Plan.
(3) Adjustments in Limitations.
(a) In the event the member's retirement benefits become
payable before a~e sixty-two (62), the $90,000 limitation
prescribed by this Section shall be reduced in accordance with
Regulations issued by the Secretary of the Treasury pursuant to the
provisions of §415(b) of the Internal Revenue Code, but not less
than $75,000 if the benefit begins at or after a~e fifty-five (55) . '
(b) In the event the member's retirement benefit becomes
payable before age fifty-five (55), the $75,000 limitation shall be
reduced from age fifty-five (55) in accordance with Regulations
7 Ord. No. 40-97
issue~ by the Secretary of the Treasury pursuant uo the provisions
of §&lS(b) of the Internal Revenue Code ~ u__~__ ~.~ ~
(c) The rsduc~ons provided in the precedin~ two
s~D~aDhs shall not be aDD~q,~le tO ~is~ility benefits Paid
uurs~t to Sec=ion aS. 09V (C) or pre-retirement death b~efiU~Daid
(d) If the meter's retirement benefit becomes
after age si~y-five (65) , for p~oses of ~ete~ning whether this
benefit ~ecs the libra=ion set forth ~ s~section I herein, such
benefit s~ll be adjusted so UhaC iC is actuarially ~de using an
assu~ ~Cerest rate of five percent (5%) ~d shall be ~de in
acco~e wi~h Che re~latio~ pro~lga=ed by the Secreua~ of the
(4) Less =~ Tan Ye~s of Semite
The ~~ re=ire~nt benefits pay~le ~er this
Sec=i~ to ~y ~er who has coals=ed less =~ ten (10) years of
Credi=e~ Sea=ce with the City shall be the amour de=e~ned ~der
p~a~ A of this Secuion ~ltiplied by a fraction, the numerator
of w~ is nhe n~er of the ~er's ~s of Credited Semite
~ ~ ~eno~tor of which is ten (10) . This reduction shall_no=
be a~licable =o ~is~illtv benefits paid uursuanU to ~ction
~S. 097 (C) or Dre-r~%rem~= death he--fits paid D~suant to SecUion
35.09T rD).
{S) $10,000 Li~t
No=wlthst~ng =he forego~g, the retirem~= benefit
pay~le with respect =o a m~er s~ll be deeme~ not =o excee~
limi~tio~ se= fo~h in =~8 Section of the benefits pay~le with ..
respect to such me. er ~er t~s Pi~ ~d ~der all other
~alifi~ de fine~ benefit pension Pla~ to w~ch =he City
contr~tes ~o no= excee~ $10,000 for the applic~le PI~ Year
for ~ prior Pi~ Ye~ ~d the City ~s ~= a= any time ~in=ained
a ~i~ie~ ~ef~ =ontr~u=ton PI~ in w~ch =he me,er
pa~ici~t e~.
(~) Me~er in Define~ Contribution Pi~.
In ~y case where a ~er ~der =his pl~ is also a
me, er ~ a "Defined ConUributi~ PI~" as ~efine~ in ~414
=he I~e~l Revenue Code, ~tained by ~e City, the s~ of the
"Defi~ B~nefiu PI~ Fraction" ~ the ~Define~ Contri~uion Pi~
Fracti~" (both as defined in ~41~ (e) of the Inte~al Rev~ue Code)
shall ~=, s~jec= ~o t~ restrictions ~ exceptions contained
~2004 of the ~loyee Retirement In=omc Sexily Act of 1974, as
amen~, exceed 1.0. This li~t~tion is reDeale~ e~fe~tive Janua~
8
Ord. No. 40-97
1, 2,000.
(7) Reduction of Benefits.
Reduction of benefits and/or contributions to all Plans,
where required, shall be accomplished by first reducing the
member's benefit under any defined benefit Plans in which he
participated, such reduction to be made first with respect to the
Plan in which he most recently accrued benefits and thereafter in
such priority as shall be determined by the Trustees of such other
Plans, and next, by reducing or allocating excess forfeitures for
defined contribution Plans in which the member participated, such
reduction to be made first with respect to the Plan in which he
most recently accrued benefits and thereafter in such priority as
shall be established by the Trustees for such other provided,
however, that necessary reductions may be made in a different
manner and priority pursuant to the agreement of the Trustees of
all other Plans covering such member.
(8) Cost-of- Living Adjustments
The limitations as stated in subsections 1, 2, 3, and 6
herein shall be adjusted to the time payment of a benefit begins in
accordance with any cost-of-living adjustments prescribed by the
Secretary of the Treasury pursuant to §415(d) of the Internal
Revenue Code.
(9) Additional Limitation on Pension Benefits.
Notwithstanding anything herein to the contrary:
(a) The normal retirement benefit or pension payable to
a retiree who becomes a member of the Plan and who
has not previously participated in such Plan, on or
after January 1, 1980, shall not exceed 100 percent
of his average final compensation. However, nothing
contained in this Section shall apply to
supplemental retirement benefits or to pension
increases attributable to cost-of-living increases
or adjustments.
(b) No member of the Plan who is not now a member of
such Plan shall be allowed to receive a retirement
benefit or pension which is in part or in whole
based upon any service with respect to which the
member is already receiving, or will receive in the
future, a retirement benefit or pension from
another retirement plan or system. This
restriction does not apply to social security
benefits or federal benefits under Chapter 67,
Title 10, U.S. Code.
9
Ord. No. 40-97
Section 2. That Section 35.098, "Supplemental Retirement
Income and Minimum Benefits," is amended to read as follows:
Section 35.098 SUPPLEMENTAL RETIREMENTINCOMEANDMINIMUMBENEFITS.
Effective as of January 1, 1993, all participants or
beneficiaries of participants who were receiving benefits under the
plan prior to January 1, 1991, shall have the monthly amount of
retirement income increased by five percent (5%) over the gross
amount they were receiving in December of 1990. Provided, however,
that all .participants with ten (.10) or more years of credited
service, and the designated beneficiary bcncficlarlcu of such
p ti ip h i pl b fit ......
ar c ants w o rece ye an she s ~-~ ~ ~ ~- ~~
~ ........ ~-~ .......~ ... .~ ~.-~..~..~ ...... ~ ..... ...~ regardless of the
participant's retirement date, shall receive ~-~=~- ~-~-~ ~-
minimum monthly nc~-nnal retirement income amount of at least $400.
If more than one beneficiary receives Dlan benefits based on or
derived from a particiDant's . retirement income, all such
beneficiaries shall receive a minimum benefit ecrual to each
beneficia~z's Pro rata share of the minimum monthly normal
retirement income specified in this section.
Section 3. That should any section or provision of this
ordinance or any portion thereof, any paragraph, sentence or word
be declared by a court of competent jurisdiction to be invalid such
decision shall not affect the validity of the remainder hereof as
a whole part thereof other than the part declared to be invalid.
Section 4. That this ordinance shall take effect ten
(10) days after second and final reading.
PASSED AND ADOPTED in regular session on second and final
reading on this the 23rd day of September , 1997
City C%erk - [ ~
First R.eading:.. September 9, 1997
Second Reading: September 23, 1997
dj046 pen. ord
10 Ord. No. 40-97
MEMORANDUM
TO: MAYOR AND CITY COMMISSIONERS
FROM: ~ITY MJ~AGER
SUBJECT: AGENDA ITEM #/0/~ - REGULAR MEETING OF SEPTEMBER 23, 1997
ORDINANCE NO. 40-97 (GENERAL EMPLOYEES PENSION PLAN
AMENDMENT)
DATE: SEPTEMBER 17, 1997
This is second reading and a public hearing for Ordinance No.
40-97 which amends Chapter 35 of the City Code pertaining to the
General Employees Pension Plan. The changes are outlined in the
attached summary. They are being made to comply with federal law
in the area of age discrimination, federal limits on pension
benefits, to clarify the normal benefit form for married and
non-married participants, and to clarify that the minimum benefit
of $400 is prorated equally if there are multiple beneficiaries.
The City's actuary has determined that the changes will not have
an actuarial impact.
At first reading on September 9, 1997, the Commission passed the
ordinance by unanimous vote.
Recommend approval of Ordinance No. 40-97 on second and final
reading.
ref:agmemol0
£1T¥ OF DELRI:IV gEl:ICH
CITY ATTORNEY'S OFFICE ~00 ~w,~, ^v~,~. ~,~,~,^,~ ~^~., ~,o~,.,^ ~..
TELEPHONE 561/243-7090 ', FACSIMILE 561/278-4755
Writer's Direct Line: 561/243-7091
DELRAY BEACH
Ali.America City MEMORANDUM
'tll August29, 1997
1993
TO: City Commission
FROM: Susan A. Ruby, City Attorney
SUBJECT: General Employees Pension Plan Amendment
The attached summary outlines the changes in the General Employees Pension Plan.
The changes are made to comply with Federal law in the area of age discrimination,
federal limits on pension benefits, to clarify the normal benefit form for married and
non-married participants and to clarify that the minimum benefit of $400 is prorated
equally if there are multiple beneficiaries.
The City's actuary has determined that the changes will not have an actuarial impact. If
you have any questions, please call.
By copy to David Harden, City Manager, our office requests that this ordinance be
placed on an appropriate City Commission agenda.
Attachments
cc: David Harden, City Manager lO~~'0
Alison Harty, City Clerk q lq,qll
Joe Safford, Finance Director
Ned Gusty, Human Resources Director
GABRIEL, ROEDER, SMITH & COMPANY
Consultants & Actuaries
West Broward Professional Bldg. · 7320 Griffin Rd. · Suite 200 · Ft. Lauderdale, FL 33314 · 954-791-5888 · FAX 954-791-8208
May 20, 1997
Mr. Joseph M. Safford
Director of Finance
City of Delray Beach
100 Northwest 1st Avenue
Delray Beach, Florida 33444
Re: General Employees Pension Plan
Dear Joe:
We have reviewed the proposed ordinance attached to your letter of April 21, 1997. The changes set
forth in the ordinance will have no effect on the way we value the Plan's benefits. Such changes will,
therefore, have no actuarial impact on the Plan.
We note that one item removes the 100% of pay limitation previously imposed by Section 415 of the
Internal Revenue Code. As a matter of information, Section 112.65(1), Florida Statutes contains a
similar 100% limitation for those who become participants of the Plan after 1979.
Please contact us if there are any questions.
Sincerely yours,
J. Stephen Palmquis~
JSP/or
SUMMARY OF PROPOSED AMENDMENT TO
GENERAL EMPLOYEES' RETIREMENT PLAN
(7/30/97)
Section 1
Normal Retirement Income: Clarifies Section 35.097(A) to
provide that the normal benefit form for a participant who is not
married at the time of retirement is a single life annuity. The
normal benefit for married participants is a monthly benefit paid
to the participant for life, with the same monthly amount paid to
the participant's spouse for one year after the participant's
death, and 60% of that amount until the spouse's death or
remarriage. If a participant is not married at the time of
retirement and later marries, the spousal benefit will not apply
unless the participant requests an actuarially adjusted benefit.
Disability Retirement: Removes age-based limitations on
disability benefits, and provides that participants who become
disabled at age 60 or less shall receive disability benefits until
age 65, and those who become disabled after age 60 shall receive
disability benefits for 5 years, at which time normal retirement
benefits will commence. Section 35.097(C) currently provides that
a participant can not have reached normal retirement age (age 60
with 10 years of service) to be eligible for disability benefits,
and also provides for the termination of disability benefits once
a disabled member reaches normal retirement age. These changes are
necessary to comply with changes in the federal Age Discrimination
in Employment Act (ADEA) and EEOC regulations.
Maximum Pension: Section 35.097(J)(1) reflects federal limits
on pension benefits under qualified pension plans. Under prior
law, maximum benefits could not exceed the lesser of $90,000
(indexed for inflation) or 100% of a member's average compensation
for the 3 highest paid consecutive years of employment. Public Law
104-188, enacted by Congress in August 1996, eliminated the 100% of
average compensation maximum benefit option, and made several other
technical changes which are reflected in the ordinance amendment.
Note: Section 35.097(J) (9), which is not changed by this
ordinance, continues to reflect the maximum benefit limitations
contained in state law, which may result in a lower maximum benefit
than required by federal law.
Section 2
MinimLun Benefit: Clarifies Section 35.098 to conform to the
intent of the minimum benefit provision and the way it has been
applied by the Pension Board, such that all participants and
beneficiaries receive a minimum monthly benefit of at least $400.
Also adds language providing that if a participant designates more
than one beneficiary, all such beneficiaries will receive a minimum
benefit equal to each beneficiary's pro rata share of the $400
minimum monthly benefit.