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HomeMy WebLinkAbout1970-09-14 284-X ORDERA .. Introduced by Councilov Mooney, Sept. 19, 1110 _ryrypp CITY OF BANGOR (TITLE.) (Orb [f....T ansferring 23_ city Employees from the City Pension Plan to. _.. the Maine State Retirement System By the City Coyndd of the City ofBaagsa. ORDERED, THAT the twenty-three (23) City Employees under the City Pension Plan be transferred to the Maine State Retirement System at an estimated annual costof $73,298.00, and BE IT FURTHER ORDERED that, as a condition of this coverage, all employees affected by this order will make a contribution of 10% of then weekly earnings. TN CITY COUNCIL sept. 14, 1970 Amended by deleting -23" and su]oSti- tuting "22". AS anended, PASSED. 25t—x ORDER Title, 22 4ensferring N loyeea frmn City ..¢waian.¢lan.fa state .aetivement ..... Introduced and filed by .. ...colt..mamrtn a Bangor, the tearer of Maine—rhe Gutemar w Maine's North Woodr and Searhere Rxoru OOPF McRL9 r �,,.....a.. GIliq OI Paugag Paine TO: City Manager FRGM: Thom Willard, Administrative Assistant DATR: August 21, 1970 SUPJSCT: Convexsion of City Retirement System There are presently 23 active employees who are under the Old City Retirement System. The 23 employees form two distinct groups for retirement purposes. i.e., the first group consists Of eleven Fire Department and four Police Department employees, and the second group consists of seven Public Service employees and one School Department employee. GROUP I After recent labon contract negotiations, the City agreed to establish a 20 -year Retirement System for Police and Firemen now under the City Plan that would have similar benefits to the Maine State 20 -year System. The question then is not whether or not the City extends 20 -year Retirement to this first group, but what is the best method to accomplish this goal. 2. the Base Annual Salary of this group is currently $117,136 and since all of the men in this group are eligible to retire under a 20 -year -half -pay system, the City has a potential annual liability, right now, of $58,568. Using the 70 -year average life expectancy of the Maine State Retirement System, and assuming no wage or cost of living increases, the City has a liability of $796,838 over the next 17 years. While the 70 -year average life expectancy may be valuable to the Maine State Retirement System with thousands of members, it has little meaning for our purposes. Surely part of the group of 15 men will live past age 70, and depending on the number that do, the City?s $58,000 liability could be distorted considerably. The Maine State Retirement System will assume our liability for the 15 men on their 20 -year -half -pay system for an annual premium of $60,889 over a 17 -year period. On the surface the State System is more costly, and for good reason, the benefits are greater. The major benefit to the City is that of stabilizing the existing liability, of getting an unknown quantity to a known cost. The benefits to the employees and reasons for the difference in cost are as follows: 1. Survivors benefit under the State Plan - none �� under the City Plan. 3. 2. Four retirement options available under M. S. R. S. - none under City. These options include various methods for the employees to have retirement income continue to be available to their bene- ficiaries in the event of their death. With the City System, when an employee dies his retirement benefits cease. It is primarily in this area that the additional cost is found, by virtue of the fact that we are no longer talking about average 70 -year life expectancy. For comparisons sake, assume all 15 men do die at age 70. Under the City System, the liability ends; however, under the M. S. R. S. there is still a retirement benefit that accrues to the spouse for as long as she may live. Again, this is the major area or reason for the cost differential. RECOPMMNDATION: Accept the Maine State Retirement System 17 -year amortization of the liability for the following reasons: We are presently self insured by having our own retirement system; this means we are saying to ourselves that we are ready and able, right now, to accept the consequences of all 15 men retiring tomorrow. That is, we are ready and able to appropriate $58,568 right now and to continue to make this amount available for we don't know how many years, until these men die. 4. It would seem logical that we accept and provide for this liability with a known cost factor over a known period of time; and in addition, make survivors benefits and continued retirement benefits available to the spouses of our employees at an additional annual cost of less than $2000. The 15 employees would contribute at the )grate while they remain active in the departments. )DID GROUP II This group consists of 8 City Employees and one School Department employee who would be eligible for the new provisions of Chapter 415, i.e., a 1/60 computation for membership service, 3 year average highest computation and an $80 minimum monthly Nbenefit. As a group, these men have sufficient number of years of service (average for the group 30.2 years) to be eligible to receive one-half their current salary. The base annual salary for this group is $53,713, representing a retirement liability of $26,856 annually. The Maine State Retirement System will include these men under our district at an annual cost of $12,409 over a period of 24 years plus a $349 charge for membership service. RECOMMENDATION: Include these people under the Who State Retirement System for the same reasoning given for Fire and Police 5. Department Personnel. This group varies somewhat from the Fire and Police in that the amortization is 24 years instead of 17 years and the reason for this is that there are mainly more employees throughout the state contributing to this particular program than to the 20 -year program. #tete mf maw MAINE STATE RETIREMENT SYSTEM AUGUSTA, ~Na I'll, July 6, 1970 Mr. Tem Willard personnel Officer City of Bangor Bangor, Mine 04401 If the City of Bangor should extend a 20 year half -pay retirement to the firemen and the policeman who appeared on year listing dated June 22, 1970 the total outstanding liability would be $)20,)90.00 and which could be amortized over a 17 year period at a level premMm pay- ment of $60,889.00. For eight other employees of the public service and school deparc- wants as on that ease listing if the City of Bangor were to grant them credit under the provisions of Chapter 415, PL 1969, which extends a 1160 computation for membership a rvice, three year average highest computation, $00.00 encloses menchly benefit if ten years o Gore and these persons would contribute at the rate of 6.14% from a point onward to this retirement system the annual coat for the prior service would be $12,409.00 and for the membership service $349.00 and is would be assummed that the prior service would be amortized ever a period of 24.years. V trul rs, i E. L. Waiter Executive Secretary ELW:des W......... n.eso.... in Yn:Y Y s All #tete mf maw MAINE STATE RETIREMENT SYSTEM AUGUSTA, ~Na I'll, July 6, 1970 Mr. Tem Willard personnel Officer City of Bangor Bangor, Mine 04401 If the City of Bangor should extend a 20 year half -pay retirement to the firemen and the policeman who appeared on year listing dated June 22, 1970 the total outstanding liability would be $)20,)90.00 and which could be amortized over a 17 year period at a level premMm pay- ment of $60,889.00. For eight other employees of the public service and school deparc- wants as on that ease listing if the City of Bangor were to grant them credit under the provisions of Chapter 415, PL 1969, which extends a 1160 computation for membership a rvice, three year average highest computation, $00.00 encloses menchly benefit if ten years o Gore and these persons would contribute at the rate of 6.14% from a point onward to this retirement system the annual coat for the prior service would be $12,409.00 and for the membership service $349.00 and is would be assummed that the prior service would be amortized ever a period of 24.years. V trul rs, i E. L. Waiter Executive Secretary ELW:des Lite Ecoectonc Fire Department John E. Burr 12.6358 12.6358 Maurice A. England 15.8701 14.9391 Norman L. Catchall 13.7894 12.6358 Eugene F. Hmmrd 122524 16.4485 Theodore A. Jellison 6.81ol Cornelius B. Kelleher 1).6358 James F. McDonald 16.8195 Thomas E. McGlew 14.9391 Richard M. O'Brien 13.4048 Donald A. Scripture 16.0749 William E. Welch 11.8701 Police Department Leon D. Hatch 12.6358 James R. McCarthy 14.9391 John N. McDonnell 12.6358 John W. Welch 16.4485 811 /A ... � 6/17/7n - Date of Date of Name PnSl Liao Birth Enplovment Salary Fire Denarbmnt John E. Burr Fire Lfeutemmr. 5/2/12 12/10/60 $137 Maurice A. England Beat. Fire Chief 9/30/15 6/14/38 167 Woman L. Getchell Fire FiFhtet 2/9/14 1/5/42 124 Eugene F. Howard Fire Fq;hter 7/9/10 I/11/43 124 Theodore A. Jellison Fire Chief 10/13/15 6/11/40 230 Cornelius B. Kelleher Fire Fighter 1/14/11 5/1941 124 James F. McDonald Fire Flj,hter 4/22/22 4/20/47 124 Thomas E. McClev Asst. Fire Chief 9/25/17 9/8/42 162 Richard M. 093rlen Fire Captain 4/8/13 6/30/41 144 Donald A. Scripture Fire Lieutenant 6/18/20 9/12/45 132 William E. Belch Fire Captain 2/22/09 6/14/38 144 Police Deportment Leon B. Hatch Police Captain 3/30/12 9/14/42 162 Janes R. McCarthy Police Captain 6/26/17 4/29/46 167 Jahn N. McDonnell Police sergeant 6/8/11 1/16/41 144 NJohn W. Welch Police Nergeant 1/1/21 5/21/46 144 Public Services John W. Bryce Heavy Eouip. Oper. II 6/19/16 3/1939 132.20 Herbert E. Bums Highway Supervisor 1/31/14 8/20/46 175 James E. Collins Bldg. MnInt. Fnreman 12/12/06 3/1934 144 Berry E. Hill Heavy Ecuip. Came. EI 8/2/05 1/1930 124 names E. La+bert Heed Cuitodinn 9/16/15 12/30/46 124 George F. Trask Mason 2/23/11 4/1941 112 J. Donald Baker Chief Station aper. 9/24/08 11/7/32 112 School Department John Dugan Custodian 8/20/02 3/27/45 loo All emp toyeea listed above are male.