HomeMy WebLinkAbout18 PARS EARLY RETIREMENT INCENTIVE PROGRAMAgenda Item R
Reviewed.
AGENDA REPORT City Manager
Finance Director
MEETING DATE: JUNE 5, 2012
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: KRISTI RECCHIA, DIRECTOR OF HUMAN RESOURCES
SUBJECT: OFFERING THE PUBLIC AGENCY RETIREMENT SERVICES (PARS) EARLY
RETIREMENT INCENTIVE PROGRAM TO ELIGIBLE EMPLOYEES TO
ACHIEVE BUDGET SAVINGS AND ALLOW FOR ORGANIZATIONAL
RESTRUCTURING
SUMMARY
The City continues to face significant financial challenges despite making a number of
substantial changes over the last several fiscal years to reduce personnel costs. It is
projected that offering an early retirement incentive program administered by Public Agency
Retirement Services (PARS) will help the City directly reduce General Fund expenditures
while also making it easier for the City to restructure its staffing levels and operations in a
more economical and efficient manner. City Council authorization to offer the PARS early
retirement incentive plan to eligible employees does not bind the City to move forward with
the program. After the employee enrollment period closes and the City determines how
vacated positions will be filled, PARS will provide the City with detailed financial information
that will allow the City Council to assess whether the program will meet the City's fiscal and
operational objectives. At that time, the City Council will have the opportunity to make the
final decision to proceed with the early retirement incentive program or to withdraw the offer
in its entirety or to specific employees.
RECOMMENDATION
It is recommended that the City Council take the following actions to initiate the PARS early
retirement incentive process:
1. Adopt Resolution No. 12 -53 to contract with Public Agency Retirement Services
(PARS) to provide an early retirement incentive program; and
2. Appoint the City Manager as the PARS Plan Administrator and authorize the Plan
Administrator to execute the Agreement for Administrative Services; and
3. Approve the Plan Document for the PARS Supplementary Retirement Plan (SRP).
FISCAL IMPACT
Implementation of the PARS early retirement incentive program will result in a net cost
savings to the City if it is combined with a disciplined approach to filling positions left vacant
due to early retirement. In general, the more positions left unfilled, the greater the savings to
the City. However, savings may also be achieved when positions are replaced with new
City Council Agenda Report
June 5, 2012
Offering the PARS Early Retirement Incentive Program to Achieve Budget Savings and
Allow for Organizational Restructuring
Page 2
employees who are hired at a lower salary step and /or lower classification level and placed
in a second -tier retirement plan.
Since this is a voluntary program, the City cannot determine the true fiscal impact until the
City knows exactly which employees have elected to participate in the retirement incentive
program and the City decides how each position will be replaced (e.g. eliminate the
position, fill the position at a lower classification level, or fill the position with the same
classification). Once the employee enrollment period closes (tentatively set for July 27,
2012) and the City provides PARS with position replacement information (by August 3,
2012), PARS will provide the City with post analysis information (by August 10, 2012) that
will include the fiscal impact if the Council chooses to proceed with the incentive program.
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Like many other organizations, the City of Tustin has had to make a number of difficult
financial decisions during the economic downturn of the past several years. Though the
City's fiscal conservatism has placed the organization on relatively solid financial ground,
the City continues to face significant financial challenges, most notably due to the State's
recent actions regarding redevelopment agencies. The severe impact to the City's General
Fund due to the dissolution of the City's Redevelopment Agency cannot be overstated.
Since the City is essentially a service business, the majority of the City's operating
expenditures are spent on employing the people who provide those services. Currently,
personnel costs constitute approximately 65% of the City's General Fund expenditures.
Therefore, in order to achieve a significant level of savings, the City will need to reduce its
personnel - related expenditures.
Purpose of a Retirement Incentive Program
To help address the City's current financial situation, the City Council authorized staff to
pursue a retirement incentive program. A retirement incentive program is designed to
increase and accelerate the retirement rate over and above natural attrition in order to
facilitate cost savings and personnel restructuring. From the City's perspective, the benefits
of an early incentive program are immediate and long -term personnel cost savings as well
as an expedited opportunity to reorganize and streamline staffing levels.
The City will achieve the greatest amount of savings by not filling positions. However,
savings may still be achieved if some positions are filled, either by filling the position with an
employee at a lower classification level or by replacing the employee with another employee
in the same classification, but at a lower salary step.
City Council Agenda Report
June 5, 2012
Offering the PARS Early Retirement Incentive Program to Achieve Budget Savings and
Allow for Organizational Restructuring
Page 3
The City's retirement costs for any newly hired employees will be reduced as a result of the
second -tier retirement plans that are now in place. For any employees in the Safety plan
(i.e. sworn Police employees), even if a vacated position is replaced with a Police Officer,
the City will realize cost savings immediately since with the second -tier plan the employer
rate is 13.697% less than the first -tier plan and the employee pays the full 9% member
contribution instead of half of the member contribution (a total reduction of 18.197°/x). For
Miscellaneous employees, the second -tier retirement plan has the same employer rate as
the first -tier plan (since it is a non - pooled plan), but all new employees will immediately pay
the full member contribution, rather than the City paying a portion of the member
contribution. Further, removing the retiring employees from the first -tier plan and adding
new employees to the second -tier plan will accelerate the reduction in the employer rate for
all employees in the plan.
The PARS Supplemental Retirement Program (SRP)
PARS is a private company that provides a variety of financial services to public agencies,
including early retirement incentive plans, supplemental defined benefit and defined
contribution plans, alternative retirement plans for part-time employees for agencies not in
Social Security, and Other Post Employment Benefit (OPEB) trust services. PARS has been
providing retirement incentive programs since 1983.
The PARS Supplementary Retirement Plan (SRP) is an early retirement incentive program
that is designed to encourage employees to retire earlier than otherwise planned. For
eligible employees, PARS would provide employees who separate employment with the
City and retire from CalPERS with a benefit equivalent to 7% of the employee's base salary
(exclusive of any special pays). Employees may choose one of 14 options on how they will
receive the benefit, all with actuarially equivalent values: a fixed monthly cash payment for
the employee's lifetime, a reduced joint and survivor monthly payment paid for the
employee's lifetime and survivor's lifetime, a modified monthly payment paid for the greater
of 10 years or the employee's lifetime, or a higher fixed - period payment paid for a fixed
number of years (between 5 and 15 years).
Unlike other retirement incentive programs, the PARS SRP provides the City with a great
deal of flexibility. A key feature of the PARS SRP is the opportunity for the City Council to
withdraw the program if the City Council determines, after evaluating the enrollment and
replacement data, that the plan will not meet the City's fiscal and operational objectives.
After the employee enrollment period closes, the City will provide this data to PARS, along
with the plan for how these positions will be replaced. PARS will then provide the City with
projected cost savings based on these factors. At this point, the City Council has the
discretion to withdraw the incentive program by employee group, by classification, or in its
entirety. It is important to understand that by authorizing staff to offer the PARS SRP to
City Council Agenda Report
June 5. 2012
Offering the PARS Early Retirement Incentive Program to Achieve Budget Savings and
Allow for Organizational Restructuring
Page 4
employees at this time, the City Council is not committing the City to implementing the
program.
PARS also allows the City to craft the eligibility criteria to fit its current needs. The City
intends to exclude all executive management staff from participating in the early retirement
incentive program — City Manager, Director of Finance, Director of Community
Development, Director of Human Resources, Director of Parks & Recreation, Director of
Public Works and Police Chief. All other employees will be eligible for the SRP if they meet
all of the following criteria: a) are employed by the City in a full -time or part-time benefitted
position as of June 5, 2012; b) are fifty (50) years of age with five (5) years of City service
and five (5) years of CalPERS service as of October 31, 2012; c) resign from City
employment effective no later than October 31, 2012; and d) retire under CalPERS effective
no later than November 1, 2012.
PARS provides options for funding the plan, including the purchase of an annuity through
an insurance company and self- funding using the PARS Trust. The funding strategy need
not be decided until the City decides to implement the early retirement incentive program,
though staff recommends purchasing a 5 -year annuity through Pacific Life Insurance
Company. This approach transfers mortality and investment risk to the insurance company
and is consistent with the City Council's philosophy of paying off expenditures in the short
term. Using a 5 -year annuity, the cost of the program will be fully paid after five years.
If the City Council approves the offering of the PARS SRP at tonight's meeting, key
upcoming dates include:
• Enrollment window closes: July 27, 2012
• PARS provides Post Analysis: no later than August 10, 2012
• City Council announces whether plan goes forward: on or before August 22, 2012
• Employees resign from City employment: on or before October 31, 2012
• Employees Retire under CalPERS & PARS SRP: on or before November 1, 2012
The entire projected timeline is included in the attached Plan Document.
Based on the eligibility criteria, there are 86 employees who potentially could elect to
participate in the retirement incentive program. From their experience with other public
agencies, PARS estimates that 15 — 30 employees will choose to enroll in the program.
Following City Council approval, eligible employees will receive personalized enrollment
packets and a series of informational sessions will be held to assist employees in evaluating
whether it is in their best interests to participate in this voluntary program. We anticipate
bringing cost analysis data to the City Council in mid- August. At that time, the City Council
will decide whether or not it is in the City's best interest to proceed with the retirement
incentive program.
City Council Agenda Report
June 5, 2012
Offering the PARS Early Retirement Incentive Program to Achieve Budget Savings and
Allow for Organizational Restructuring
Page 5
Kristi Recchia
Director of Human Resources
Attachments:
City Council Resolution No. 12 -53
Agreement for Administrative Services
Plan Document for the PARS SRP
RESOLUTION NO. 12 -53
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA, OFFERING THE PUBLIC AGENCY
RETIREMENT SERVICES (PARS) EARLY RETIREMENT
INCENTIVE PROGRAM TO ELIGIBLE EMPLOYEES TO
ACHIEVE BUDGET SAVINGS AND ALLOW FOR
ORGANIZATIONAL RESTRUCTURING
WHEREAS, it is determined to be in the best interest of the City of Tustin (the
"City ") and its employees to provide a retirement incentive offer to eligible employees
who wish to voluntary exercise their option to separate from City service; and
WHEREAS, the City is eligible to be a member of the Public Agency Retirement
System (PARS) Trust, which has made available a Supplementary Retirement Plan
(SRP), supplementing the California Public Employees' Retirement System (CaIPERS)
plan and qualifying under the relevant sections of the Internal Revenue Code and the
California Government Code:
NOW, THEREFORE, BE IT RESOLVED:
The City Council hereby adopts the PARS Trust, including the PARS
Supplementary Retirement Plan, as part of the City's Retirement Program,
effective June 5. 2012.
II. In order for the City to reach stated fiscal and operational objectives, a minimum
savings must be achieved. If this minimum is not reached, the City may withdraw
the retirement incentive. If the City withdraws the retirement incentive,
resignations will be rescinded.
III. The City Council hereby appoints the City Manager, or his successor or
designee, as the City's Plan Administrator for the PARS Supplementary
Retirement Plan.
IV. The City's Plan Administrator is hereby authorized to execute the PARS legal
and administrative documents on behalf of the City and to take whatever
additional actions are necessary to maintain the City's participation in PARS and
to maintain PARS compliance of any relevant regulation issued or as may be
issued; therefore authorizing him to take whatever additional actions are required
to administer the City's PARS plan(s). In addition, if the City's Plan Administrator
finds that the PARS supplemental plan benefit must be limited under Section 415
of Internal Revenue Code, then the Plan Administrator will implement
replacement benefit programs at no additional cost to the City.
Resolution 12 -53
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PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Tustin held on the 51h day of June 2012.
JOHN NIELSEN
Mayor
ATTEST:
PAMELA STOKER
City Clerk
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Pamela Stoker, City Clerk and ex- officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council of
the City of Tustin is five; that the above and foregoing Resolution No. 12 -53 was duly
passed and adopted at a regular meeting of the Tustin City Council, held on the 5th day of
June 2012, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
PAMELA STOKER
City Clerk
Resolution 12 -53
Page 2 of 2
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AGREEMENT FOR ADMINISTRATIVE SERV ICES
This agreement ("Agreement") is made this day of , 2012, between
Phase II Systems, a corporation organized and existing under the laws of the State of
California, doing business as Public Agency Retirement Services (hereinafter "PARS") and
the City of Tustin ("Agency").
WHEREAS, Agency is desirous of retaining PARS, as Trust Administrator to the PARS
Trust, to provide administrative and consulting services with respect to the City of Tustin
PARS Supplementary Retirement Plan or any excess benefit plan (the "Plan").
NOW THEREFORE, the parties agree:
1. Services. PARS will provide the services pertaining to the Plan as described in the
exhibit attached hereto as "Exhibit IA" ("Services") in a timely manner, subject to the
further provisions of this Agreement.
2. Fees for Services. PARS will be compensated for performance of the Services as
described in the exhibit attached hereto as "Exhibit 1B".
3. Payment Terms. Payment for the Services will be remitted directly from Plan assets
unless otherwise stated in Exhibit 1B. In the event that the Agency chooses to make
payment directly to PARS, it shall be the responsibility of the Agency to remit payment
directly to PARS based upon an invoice prepared by PARS and delivered to the Agency.
If payment is not received by PARS within thirty (30) days of the invoice delivery date,
the balance due shall bear interest at the rate of 1.5% per month. If payment is not
received from the Agency within sixty (60) days of the invoice delivery date, payment
plus accrued interest will be remitted directly from Plan assets, unless PARS has
previously received written communication disputing the subject invoice that is signed by
a duly authorized representative of the Agency.
4. Fees for Services Beyond Scope. Fees for services beyond those specified in this
Agreement will be billed to the Agency at the rates indicated in the PARS standard fee
schedule in effect at the time the services are provided and shall be payable as described
in Section 3 of this Agreement. Before any such services are performed, PARS will
provide the Agency with written notice of the subject services, terms, and an estimate of
the fees therefore.
5. Information Furnished to PARS. PARS will provide the Services contingent upon the
Agency's providing PARS the information specified in the exhibit attached hereto as
"Exhibit IC"("Data"). It shall be the responsibility of the Agency to certify the accuracy,
content and completeness of the Data so that PARS may rely on such information without
further audit. It shall further be the responsibility of the Agency to deliver the Data to
PARS in such a manner that allows for a reasonable amount of time for the Services to be
performed. Unless specified in Exhibit 1A, PARS shall be under no duty to question
Data received from the Agency, to compute contributions made to the Plan, to determine
or inquire whether contributions are adequate to meet and discharge liabilities under the
Plan, or to determine or inquire whether contributions made to the Plan are in compliance
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with the Plan or applicable law. In addition, PARS shall not be liable for non-
performance of Services if such non-performance is caused by or results from erroneous
and/or late delivery of Data from the Agency. In the event that the Agency fails to
provide Data in a complete, accurate and timely manner and pursuant to the
specifications in Exhibit 1C, PARS reserves the right, notwithstanding the further
provisions of this Agreement, to terminate this Agreement upon no less than ninety (90)
days written notice to the Agency.
6. Suspension of Contributions. In the event contributions are suspended, either
temporarily or permanently, prior to the complete discharge of PARS' obligations under
this Agreement, PARS reserves the right to bill the Agency for Services under this
Agreement at the rates indicated in PARS' standard fee schedule in effect at the time the
services are provided, subject to the terms established in Section 3 of this Agreement.
Before any such services are performed, PARS will provide the Agency with written
notice of the subject services, terms, and an estimate of the fees therefore.
7. Records. During the term of this Agreement, and for a period of five (5) years after
termination of this Agreement, PARS shall provide duly authorized representatives of the
Agency access to all records and material relating to calculation of PARS' fees under this
Agreement. Such access shall include the right to inspect, audit and reproduce such
records and material and to verify reports furnished in compliance with the provisions of
this Agreement. All information so obtained shall be accorded confidential treatment as
provided under applicable law.
8. Confidentiality. Without the Agency's consent, PARS shall not disclose any
information relating to the Plan except to duly authorized officials of the Agency and to
parties retained by PARS to perform specific services within this Agreement. The
Agency shall not disclose any information relating to the Plan to individuals not
employed by the Agency without the prior written consent of PARS, except as such
disclosures may be required by applicable law.
9. Independent Contractor. PARS is and at all times hereunder shall be an independent
contractor. As such, neither the Agency nor any of its officers, employees or agents shall
have the power to control the conduct of PARS, its officers, employees or agents, except
as specifically set forth and provided for herein. PARS shall pay all wages, salaries and
other amounts due its employees in connection with this Agreement and shall be
responsible for all reports and obligations respecting them, such as social security,
income tax withholding, unemployment compensation, workers' compensation and
similar matters.
10. Indemnification. PARS and Agency hereby indemnify each other and hold the other
harmless, including their respective officers, directors, employees, agents and attorneys,
from any claim, loss, demand, liability, or expense, including reasonable attorneys' fees
and costs, incurred by the other as a consequence of PARS' or Agency's, as the case may
be, acts, errors, or omissions with respect to the performance of their respective duties
hereunder.
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11. Compliance with Applicable Law. The Agency shall observe and comply with federal,
state and local laws in effect when this Agreement is executed, or which may come into
effect during the term of this Agreement, regarding the administration of the Plan.
PARS shall observe and comply with federal, state and local laws in effect when this
Agreement is executed, or which may come into effect during the term of this
Agreement, regarding Plan administrative services provided under this Agreement.
12. Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California. In the event any party institutes legal
proceedings to enforce or interpret this Agreement, venue and jurisdiction shall be in any
state court of competent jurisdiction.
13. Force Majeure. When satisfactory evidence of a cause beyond a party's control is
presented to the other party, and nonperformance was unforeseeable, beyond the control
and not due to the fault of the party not performing, a party shall be excused from
performing its obligations under this Agreement during the time and to the extent that it
is prevented from performing by such cause, including but not limited to: any incidence
of fire, flood, acts of God, acts of terrorism or war, commandeering of material, products,
plants or facilities by the federal, state or local government, or a material act or omission
by the other party.
14. Ownership of Reports and Documents. The originals of all letters, documents, reports,
and data produced for the purposes of this Agreement shall be delivered to, and become
the property of the Agency. Copies may be made for PARS but shall not be furnished to
others without written authorization from Agency.
15. Designees. The Plan Administrator of the Agency, or their designee, shall have the
authority to act for and exercise any of the rights of the Agency as set forth in this
Agreement, subsequent to and in accordance with the written authority granted by the
Governing Body of the Agency, a copy of which writing shall be delivered to PARS.
Any officer of PARS, or his or her designees, shall have the authority to act for and
exercise any of the rights of PARS as set forth in this Agreement.
16. Notices. All notices hereunder and communications regarding the interpretation of the
terms of this Agreement, or changes thereto, shall be effected by delivery of the notices
in person or by depositing the notices in the U.S. mail, registered or certified mail, return
receipt requested, postage prepaid and addressed as follows:
(A) To PARS: PARS; 4350 Von Karman Avenue, Suite 100, Newport Beach, CA
92660; Attention: President
(B) To Agency: City of Tustin; 300 Centennial Way, Tustin, CA 92780; Attention:
[Plan Administrator]
Notices shall be deemed given on the date received by the addressee.
17. Term of Agreement. This Agreement shall remain in effect for the period beginning
, 2012 and ending , 2017 ("Term"). This Agreement
will continue unchanged for successive twelve-month periods following the Term unless
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either party gives written notice to the other party of the intent to terminate prior to ninety
(90) days before the end of the Term.
18. Amendment. This Agreement may not be amended orally, but only by a written
instrument executed by the parties hereto.
19. Entire Agreement. This Agreement, including exhibits, contains the entire
understanding of the parties with respect to the subject matter set forth in this Agreement.
In the event a conflict arises between the parties with respect to any term, condition or
provision of this Agreement, the remaining terms, conditions and provisions shall remain
in full force and legal effect. No waiver of any term or condition of this Agreement by
any party shall be construed by the other as a continuing waiver of such term or
condition.
20. Attorney's Fees. In the event any action is taken by a party hereto to enforce the terms
of this Agreement, the prevailing party therein shall be entitled to receive its reasonable
attorney's fees.
21. Counterparts. This Agreement may be executed in any number of counterparts, and in
that event, each counterpart shall be deemed a complete original and be enforceable
without reference to any other counterpart.
22. Headings. Headings in this Agreement are for convenience only and shall not be used to
interpret or construe its provisions.
23. Effective Date. This Agreement shall be effective on the date first above written, and
also shall be the date the Agreement is executed.
AGENCY:
BY:
TITLE: [Plan Administrator]
DATE:
PARS:
BY:
TITLE:
DATE:
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EXHIBIT IA
SERVICES
PARS will provide the following services for the City of Tustin:
1. Plan Consultation Services:
(A) Meeting with Agency personnel to discuss the impact to the Agency of implementing
a Plan;
(B) If appropriate, completing a fiscal analysis, based on data and assumptions provided
by Agency, to determine the fiscal feasibility of a Plan;
(C) Meeting with Agency personnel to discuss the fiscal analysis and receive feedback on
the analysis, data, and assumptions made;
(D) Making appropriate revisions to the fiscal analysis as directed by Agency.
2. Plan Installation Services:
(A) Meeting with appropriate Agency personnel to discuss plan provisions,
implementation timelines, benefit communication strategies, data reporting and
contribution submission requirements;
(B) Providing the necessary analysis and advisory services to finalize these elements of
the Plan;
(C) Providing the documentation needed to establish the Plan for review by Agency legal
counsel.
3. Plan Administration Services:
(A)Monitoring the receipt of Plan contributions made by the Agency to the trustee of the
PARS Trust Program ("Trustee"), based upon information received from the Agency
and the Trustee;
(B) Performing periodic accounting of Plan assets, including the allocation of employer
contributions, distributions, investment activity and expenses (if applicable), based
upon information received from the Agency and/or Trustee;
(C) Acting as ongoing liaison between the Participant and the Agency in regard to
distribution payments, which shall include use by the Participants of toll-free
telephone communication to PARS;
(D)Producing benefit illustrations and processing enrollments;
(E) Coordinating the processing of Participant distribution payments pursuant to
authorized written Agency certification of distribution eligibility, authorized direction
by the Agency, and the provisions of the Plan, and, to the extent possible, based upon
Agency-provided Data;
(F) Directing Trustee to liquidate Plan assets (if necessary) and make Participant
distribution payments, and producing required tax filings regarding said distribution
payments;
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(G)Notifying the Trustee of the amount of Plan assets available for further investment
and management, or, the amount of Plan assets necessary to be liquidated in order to
fund Participant distribution payments;
(H)Coordinating actions with the Trustee as directed by the Plan Administrator within
the scope this Agreement;
(I) Coordinating and selecting of a licensed actuary to perform actuarial valuation, if
required, on a periodic basis to comply with state and federal laws (the actuarial
certification fee for which shall be paid by the Agency);
(J) Preparing and submitting the Annual Report of Financial Transactions to the
California State Controller, as required by law, for the PARS Trust Program,
including the required certified audit of the PARS Trust.
4. Plan Compliance Services: Coordinating and preparing changes to the Trust, Plan and
other associated legal documents required by federal and state agencies to maintain the
Plan in compliance, for review by Agency legal counsel.
5. PARS is not licensed to provide and does not offer tax, accounting, legal, investment or
actuarial advice.
6. Any analysis provided by PARS is subject to the receipt of accurate information and
assumptions as may be provided by Agency. The Agency is responsible for integrating
the PARS analysis into any Agency budgetary analysis or decision-making processes.
The fiscal projections in the PARS analysis are dependent upon future experience
conforming to the assumptions used and the results will be altered to the extent that
future experience deviates from these assumptions. It is certain that actual experience
will not conform exactly to the assumptions used in the analysis.
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EXHIBIT 1B
FEES FOR SERVICES
PARS will be compensated for performance of Services, as described in Exhibit IA based
upon the following schedule:
I. Upon implementation of the Plan associated with this Agreement, the Agency agrees
to pay:
(A) An ongoing administration fee equal to five and one-half percent (5.50%) of
contributions and/or premiums made by the Agency on behalf of participants in
the subject Plan, subject to a $5,000.00 minimum per year for five years. Fees
will be billed to the Trustee as contributions are made by the Agency, and it will
be the responsibility of the Trustee to pay those fees from the assets of the Plan.
These fees are exclusive of Trustee and investment management fees, which are
based on the standard fees,charged by the Trustee.
(B) A fee equal to actuarial expenses, if any, charged to PARS by an outside
contractor for an actuarial valuation of the Agency's Plan ("Actuarial Valuation
Fee").
(C) A fee equal to the stated IRS application fees and legal fees related to any
ongoing federal and/or state required Plan compliance changes. Such fees will
not be charged to the Agency without prior authorization by the Plan
Administrator.
2. In the event that the Plan associated with this Agreement is not implemented, the
Agency agrees to pay a one-time fee equal to $5,000.00. The fee will be billed to the
Agency upon notice of cancellation of the Plan and it will be the responsibility of the
Agency to pay this fee.
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EXHIBIT IC
DATA REQUIREMENTS
PARS will provide the Services under this Agreement contingent upon receiving the
following information:
1. Participant Data (provided by Agency):
(A)Participant's Legal Name
(B)Participant's Position
(C)Participant's Address
(D)Participant's Birth Date
(E) Participant's Hire Date
(F) Participant's Contract Salary
(G)Years of Agency Service
(H)Retirement Date
2. Executed Legal Documents (provided by Agency):
(A) Certified Resolution
(B) Adoption Agreement
(C) Plan Document
(D) Trustee Investment Forms
3. Completed Funding Documents (provided by Agency):
(A) Authorization to Pay Benefits Form
(B) Funding of PARS Supplementary Retirement Plan Form
4. Completed Enrollment Forms (timely submitted by Participant):
(A) Correction Form
(B) Enrollment Form
(C) Beneficiary Designation Form
(D) Tax Withholding Request Form
(E) Letter of Resignation
(F) Waiver Form
5. Other information pertinent to the Services as reasonably requested by PARS.
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2012 PARS Supplementary Retirement Plan
City of Tustin
Miscellaneous and Safety Employees
May 25, 2012 — Version 4
With regard to the PARS Supplementary Retirement Plan for 2012, the City proposes the
following:
1.0 Eligibility
1.1 Those Miscellaneous and Safety employees who:
a) Are employed by the City in a full-time or part-time benefitted position as of June 5,
2012;
b) Are fifty (50) years of age with five (5) years of City service and five (5) years of
CaIPERS service as of October 31, 2012;
c) Resign from City employment effective no later than October 31, 2012; and
d) Retire under PERS effective no later than November 1, 2012.
1.2 The City Manager, Director of Finance, Director of Community Development, Director of
Human Resources, Director of Parks & Recreation, Director of Public Works and Police
Chief shall be excluded from the plan.
2.0 Participation Requirements
2.1 Participating employees shall submit all required PARS enrollment materials and City
Letter of Resignation to PARS on or before the deadline date of July 27, 2012.
Resignations of participants are irrevocable as of the enrollment deadline and may not be
rescinded unless the City withdraws the incentive pursuant to Paragraph 2.2 below.
2.2 If after the close of the enrollment window the City determines that the plan does not
meet the City's fiscal and operational objectives, the City may withdraw the incentive by
bargaining unit, by classification, or in its entirety. In the event the incentive is withdrawn,
the City must notify the affected employees of the withdrawal of the incentive on or before
August 22, 2012. If the City withdraws the incentive for a bargaining unit, a classification
or the program in its entirety, the Letters of Resignation of those individuals will be
automatically rescinded.
2.3 Participation in the retirement incentive requires:
a. Submission of required PARS enrollment materials and City Letter of
Resignation to PARS by July 27, 2012;
b. Resignation from City employment effective no earlier than June 6, 2012 and
no later than October 31, 2012; and
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2012 PARS Supplementary Retirement Plan
City of Tustin
Miscellaneous and Safety Employees
May 25, 2012 —Version 4
c. Retirement from PERS and the PARS Supplementary Retirement Plan no
earlier than June 7, 2012 and no later than November 1, 2012.
3.0 Incentive Payments
3.1 Regarding the basic incentive under this plan:
a) The basic, unmodified benefit shall be a monthly cash payment for the lifetime of
the participant.
b) The monthly cash payment amount shall equal one-twelfth of seven percent
(7.00%) of Final Pay.
c) For purposes of this plan, Final Pay shall be defined as follows:
i. Full-time employees: base hourly rate of pay as of October 31, 2012
or the highest based hourly rate of pay earned for 12 consecutive
months of employment with the City, whichever is higher, multiplied by
2,080 hours
H. Three-quarter time part-time benefitted employees: base hourly rate
of pay as of October 31, 2012 multiplied by 1,560 hours
iii. Half-time part-time benefited employees: base hourly rate of pay as
of October 31, 2012 multiplied by 1,040 hours
3.2 Alternative monthly forms of payment of equivalent present value to the basic benefit
shall be offered. They shall include:
a) Joint-and-survivor payments;
b) Payments made for the life of the participant, subject to a ten year minimum; and
c) Fixed term payments of from five (5) to fifteen (15) years. These payments are
guaranteed to the participant for the full term selected.
3.3 The amount of monthly payment shall be fixed as of July 27, 2012 and shall not be
subject to increase thereafter.
3.4 The choice of form of payment (and the choice of payment beneficiary if choosing a joint
and survivor form of payment) shall become final as of July 27, 2012 and shall not be
subject to change thereafter.
3.5 PARS benefits are to commence November 1, 2012.
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2012 PARS Supplementary Retirement Plan
City of Tustin
Miscellaneous and Safety Employees
May 25, 2012—Version 4
4.0 Contract Administrator
4.1 The Contract Administrator for the Retirement Incentive shall be PARS.
4.2 In the event the plan is cancelled due to insufficient participation, the Employer shall pay
PARS a one-time fee of$5,000.
4.3 The fee for PARS shall be 5.5% of plan contributions to the PARS Trust for services
related to the Supplementary Retirement Plan, subject to a $5,000 minimum per year for
5 years.
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2012 PARS Supplementary Retirement Plan
City of Tustin
Miscellaneous and Safety Employees
May 25, 2012 —Version 4
Projected Timeline:
1. City Council approval of PARS Incentive June 5, 2012
2. Enrollment Packets Mailed to Employees' Home Week of June 5, 2012
3. Employee Orientation Meeting(s) Mid-June 2012
4. Employee Enrollment Workshop Mid-July 2012
5. Enrollment Window Closes July 27, 2012
6. City provides PARS with non-replace info no later than August 3, 2012
7. PARS Provides Post Analysis no later than August 10, 2012
8. City announces whether Plan goes forward on or before August 22, 2012
9. City selects Funding Option August 23, 2012
10. City funds SRP no later than October 10, 2012
11. Employees Resign from City employment on or before October 31, 2012
12. Employees Retire under PERS & PARS SRP on or before November 1, 2012
13. Benefits Commence November 1, 2012
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