09-21-04 Item 7SO U, South Miami
o� �1
F All- America Ny
v �
CITY OF SOUTH MIAMI
• INCORPORATED • OFFICE OF THE CITY MANAGER
�.0 ate
INTER- OFFICE MEMORANDUM 2001
To: Honorable Mayor, Vice Mayor Date: September 7, 2004
and City Commission
P
From: Maria V. Davis Subject: Agenda Item 9
City Manager J 9/7/04 Commission Meeting
Offering An Optional Retirement
Plan to City Employees
REQUEST
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
SOUTH MIAMI, FLORIDA, AUTHORIZING THE CITY MANAGER TO OFFER
CITY EMPLOYEES THE OPPORTUNITY TO PARTICIPATE IN THE
INTERNATIONAL CITY MANAGERS' ASSOCIATION'S (ICMA) 401A MONEY
PURCHASE PLAN; PROVIDING AN EFFECTIVE DATE.
Background and Analysis
Currently, the City offers the City of South Miami General Pension Plan for its employees.
Any fulltime employee who commenced employment after October 1, 1995 is required to join
the Pension Plan. The employee is required to pay a specified amount each year as determined
by actuarial valuation. This has resulted is escalating contributions by employees and the City
each year. For the general employees (non police or union) alone, the 2000 -01 contribution of
$293,063 was up 12.3% over the previous year. The 2001 -02 contribution was up 13.5 % over
that and the 2002 -03 ,contribution again went up by 13.5 %. This represents a much greater (and
an uncontrollable) sum than would a straight 7% (maximum) match per year.
We are recommending that the employees who are currently in the City's Pension Plan be
allowed to "opt out" and transfer their monies into the 401 A Money Purchase Plan. This would
allow employees the flexibility of selecting an alternative retirement plan wherein they may
choose the amount they wish to contribute into the plan each year up to the federal limits
(currently $40,000 per year). We would, however, require participating employees to contribute
at least five percent (5 %) of their salary in order to make the plan worthwhile for them. The City
would match the amount the employee contributes, not to exceed seven percent (7 %) of the
employee's wages. New hires would be required to participate in the 401 A plan.
We currently have several employees who started prior to October 1, 1995, who are not required
to and haven't enrolled in the pension plan. If approved, the voluntary contribution
characteristics of the 401A Plan could act as an incentive to these employees to start saving for
their future. The City would match their subsequent contributions (not exceeding the seven
percent cap) and still save money over the existing Pension Plan.
RECOMMENDATON
Approval of the resolution is recommended.
RESOLUTION NO.
2
3 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
4 CITY OF SOUTH MIAMI, FLORIDA, AUTHORIZING THE CITY
5 MANAGER TO OFFER CITY EMPLOYEES THE OPPORTUNITY TO
6 PARTICIPATE IN THE INTERNATIONAL CITY MANAGERS'
7 ASSOCIATION'S (ICMA) 401A MONEY PURCHASE PLAN; PROVIDING
8 AN EFFECTIVE DATE.
9
10 WHEREAS, the City currently offers a General Pension Plan, which is a Defined
I1 Benefit Plan requiring participation by any fulltime employee commencing employment after
12 October 1, 1995; and
13
14 WHEREAS, participating employees are required to contribute a specific amount into
15 the plan every pay period as determined by the actuarial valuation as performed by Gabriel,
16 Roeder, Smith and Company; and
17
18 WHEREAS, the participant contribution has increased over the past year as a result of
19 the actuarial valuation; and
20
21 WHEREAS, it is the desire of the Mayor and Commission that the employees currently
22 enrolled in the City's General Pension Plan be allowed the choice to either stay in the current
23 plan or to convert their monies from that plan into the 401 A Money Purchase Plan, and that the
24 ' employees not currently participating in the City's General Pension Plan also be allowed the
25 opportunity to enroll in the 401 A Money Purchase Plan; and
26
27 WHEREAS, the employees would have the option to put any amount they desire into
28 the 401 A Money Purchase Plan providing their contribution is at least five percent (5 %) of their
29 salary, up to the federally imposed limits, without being required to put in a specific amount as
30 required under the current General Pension Plan; and
31
32 WHEREAS, should the employee choose to participate in the 401A Money Purchase
33 Plan, and not the City's General Pension Plan, the City would match the employee's
34 contribution, not to exceed seven percent (7 %) of the employee's salary; and
35
36 WHEREAS, the City would be required to match an employee's contribution to either
37 the 401 A Money Purchase Plan or the General Pension Plan, but not both; and
38
39 WHEREAS, all eligible employees hired after the effective date of this resolution would
40 be required to participate in the 401 A Money Purchase Plan; and
41
42 WHEREAS, the City desires that its 401 A Money Purchase plan be administered by the
43 ICMA Retirement Corporation and that the funds held in such plan be invested in the Vantage
44 Trust, a trust established by public employers for the collective investment of funds held under
45 their retirement and deferred compensation plans.
46
47 NOW, THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY
48 COMMISSION OF SOUTH MIAMI, FLORIDA, THAT:
49'
I Section 1. The City Manager be, and hereby is, authorized to offer eligible City employees
2 the opportunity to enroll in the ICMA 401 A Money Purchase Plan.
3
4 Section 2. The City is required to contribute into either the City's General Pension (amount
5 is undetermined and based on yearly actuarial valuation report) or the 401 A Money Purchase
6 Plan an amount not to exceed seven percent (7 %) of the employee's wages, but not both.
7
8
9
10
11
12 Section 3. This resolution shall take effect immediately upon approval.
13
14 PASSED AND ADOPTED this day of August, 2004.
15
16 ATTEST APPROVED:
17
18
19
20
21 CITY CLERK MARY SCOTT RUSSELL, MAYOR
22
23
24
25 READ AND APPROVED AS TO FORM: Commission Vote:
26 Mayor Mary Scott Russell:
27 Vice Mayor Velma Palmer:
28 Commissioner Randy G. Wiscombe:
29 Commissioner Craig Z. Sherar:
30 CITY ATTORNEY Commissioner Marie Birts - Cooper:
31
32
33
34
35