Title
SUMMARY: Adopt a Resolution Establishing the International Association of Fire Fighters (IAFF) Supplemental Retirement and Health Plan (Plan) and Trust Agreement for IAFF Employees Hired After June 7, 2011 as Provided in the Memorandum of Understanding (MOU) between the City and IAFF, including the "Pick Up" by the City of Employee Contributions, Appoint Positions of Trustee and Plan Administrator, and Delegate Authority to the Plan Administrator to Execute Plan Documents.
Adoption of Resolution Establishing the City of Alameda International Association of Fire Fighters (IAFF) Supplemental Retirement Plan and Trust Agreement for IAFF Employees Hired After June 7, 2011 as Provided in the Memorandum of Understanding between the City and IAFF as follows:
Authorize the City Manager to Appoint the Finance Director and Administrative Services Director to the City Retirement Committee;
Authorize the City Manager to Designate the Retirement Committee as Plan Administrator;
Authorize the City Manager to Appoint the Finance Director, Administrative Services Director and President of IAFF as Trustees;
Authorize the Retirement Committee, as the Plan Administrator, to Enter into an Agreement between the Plan and Peery & Associates, Inc. in Substantially the Same Form as Presented to the City Council;
Authorize the City Manager to Submit the Plan and Trust to the Internal Revenue Service for a Determination Letter regarding the Qualified Status of the Plan and Trust under Code Sections 401(a) and 501(a);
Approve the "Pick-Up" by the City of Employee Contributions to the Plan as Permitted by Internal Revenue Service Code section 414(h)(2),
Authorize the City Manager to Execute such Other Documents and to Perform such Other Acts as are Necessary or Appropriate to Effectuate the Plan. (Human Resources 2510)
Body
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
Re: Adoption a Resolution Establishing the City of Alameda International Association of Fire Fighters (IAFF) Supplemental Retirement Plan and Trust Agreement for IAFF Employees Hired After June 7, 2011 as Provided in the Memorandum of Understanding (MOU) between the City and IAFF as follows;
Authorize the City Manager to Appoint the Finance Director and Administrative Services Director to the City Retirement Committee;
Authorize the City Manager to Designate the Retirement Committee as Plan Administrator;
Authorize the City Manager to appoint Finance Director, Administrative Services Director and President of IAFF as Trustees;
Authorize the Retirement Committee, as the Plan Administrator, to enter into an agreement between the Plan and Peery & Associates, Inc. in substantially the same form as presented to the City Council;
Authorize the City Manager to submit the Plan and Trust to the IRS for a determination letter regarding the qualified status of the Plan and Trust under Code sections 401(a) and 501(a);
Approve the "pick-up" by the City of employee contributions to the Plan as permitted by Internal Revenue Service Code section 414(h)(2),
Authorize the City Manager to execute such other documents and to perform such other acts as are necessary or appropriate to effectuate the Plan.
BACKGROUND
In 2012, the City entered into a Memorandum of Understanding (MOU) with the International Association of Fire Fighters (IAFF) which will expire in June 2017. Section 14.4 (b) of the MOU Retiree Health and Dental Benefit - Employees Hired After June 7, 2011 states that employees hired after June 7, 2011 shall receive City paid employee-only health care in retirement. This was a change from previous MOUs that offered City paid coverage to both the employee and his/her spouse. In consideration for this change, the City agreed to create a supplemental retirement plan (Plan) (Exhibit 1) paid for by Plan participants.
The purpose of the Plan is to outline which employees are eligible, how contributions are made, any limitations to those contributions, how the Plan is administered on a day to day basis and by whom, how benefits and earnings will be disbursed, and a process for resolving disputes. Generally, the Plan requires any IAFF employee hired after June 7, 2011 to contribute 3% of their base salary to the Plan, 75% of which would go to a supplemental retirement account and 25% to a retiree health account. All funds deposited into the account would be paid by the employee and disbursed upon separation from employment with the City according to the Plan provisions.
DISCUSSION
In order to implement the Section 14.4 (b) of the MOU, the City must create a tax-exempt retirement Trust (Exhibit 2) into which all contributions are deposited and held. The City must then appoint Trustees, who will have the responsibility for the investment of any contributed assets, in consultation with an IAFF Pension Investment Committee (Committee). The Committee will be comprised of 3 IAFF members who will have the benefit of a professional financial advisor paid for by the plan participants. It is proposed that the Trustees be comprised of the City of Alameda Finance Director, the Administrative Services Director, and the President of IAFF.
The City must also appoint a Plan Administrator (Administrator), also referred to as a Retirement Committee. The Administrator is responsible for overseeing the general operation of the Plan, including determining eligibility, ensuring appropriate deductions to pay are made, resolving disputes and conflicts, and interpreting the Plan as necessary. It is proposed the City of Alameda Finance Director and Administrative Services Director serve as the Plan Administrator. In order to assist with day to day activities regarding the Plan, the Plan will engage the services of a third party administrator, Catherine Peery and Associates, as explicitly negotiated by IAFF and paid for by its participating members. Peery and Associates contract, which will be executed by the Administrator, is attached as Exhibit 3.
Once these documents are approved by the City Council, the Plan will be sent to the IRS for a determination letter regarding the qualified status of the Plan and Trust under Code sections 401 (a) and 501 (a). Mandatory employee contributions will be made beginning the first full pay period after July 1, 2014, for those employees hired after June 7, 2011.
FINANCIAL IMPACT
There is no financial impact from adopting the Trust and Plan with the exception of staff time to implement the Plan. All other costs are paid for by the Plan participants.
ENVIRONMENTAL REVIEW
Adopting this resolution to establish a supplemental retirement and health plan and trust agreement is not a project under CEQA as it is a continuing administrative activity, such as general policy and procedure making.
RECOMMENDATION
Adoption a Resolution Establishing the City of Alameda International Association of Fire Fighters (IAFF) Supplemental Retirement Plan and Trust Agreement for IAFF Employees Hired After June 7, 2011 as Provided in the Memorandum of Understanding (MOU) between the City and IAFF as follows;
Authorize the City Manager to Appoint the Finance Director and Administrative Services Director to the City Retirement Committee;
Authorize the City Manager to Designate the Retirement Committee as Plan Administrator;
Authorize the City Manager to appoint Finance Director, Administrative Services Director and President of IAFF as Trustees;
Authorize the Retirement Committee, as the Plan Administrator, to enter into an agreement between the Plan and Peery & Associates, Inc. in substantially the same form as presented to the City Council;
Authorize the City Manager to submit the Plan and Trust to the IRS for a determination letter regarding the qualified status of the Plan and Trust under Code sections 401(a) and 501(a);
Approve the "pick-up" by the City of employee contributions to the Plan as permitted by Internal Revenue Service Code section 414(h)(2),
Authorize the City Manager to execute such other documents and to perform such other acts as are necessary or appropriate to effectuate the Plan.
Respectfully submitted,
Elizabeth D. Warmerdam
Assistant City Manager
Financial Impact section reviewed,
Fred Marsh, Finance Director
Exhibits:
1 IAFF Supplemental Retirement Plan
2. IAFF Supplemental Retirement Plan - Trust Agreement
3. Third Party Administrator Contract with Peery & Associates
4. IAFF Supplemental Retirement Plan - Plan Profile