Item 09 Second Reading of Ordinance Amending the City of Ocoee Municipal General Employees’ Retirement Trust Fund Reflecting Changes for Compliance with the Internal Revenue Code ocoe
florida
AGENDA ITEM COVER SHEET
Meeting Date: December 4, 2018
Item #
Reviewed By:
Contact Name: Melanie Sibbitt Department Director:
Contact Number: Ext. 1026 City Manager:
Subject: Second Reading of Ordinance Amending the City of Ocoee Municipal General
Employees' Retirement Trust Fund Reflecting Changes for Compliance with the Internal
Revenue Code
Background Summary:
At their meeting held on September 11, 2018, the General Employees' Retirement Board reviewed and
approved the proposed ordinance which deals primarily with definition changes for compliance with the Internal
Revenue Code. Additionally, the definition of Actuarial Equivalent is being amended to match the current
valuation assumptions for interest. Because the changes do not result in a change in the valuation results, it is
the opinion of the Plan Attorney that a formal Actuarial Impact Statement is not required in support of its
adoption. The first reading of this ordinance was read at the November 20, 2018 City Commission meeting.
Issue:
Should the Honorable Mayor and City Commissioners adopt an Ordinance amending Section 1, definitions of
"Actuarial Equivalent", "Credited Service" and "Spouse"; amending Section 4, Finances and Fund
Management; amending Section 6, Benefit Amounts and Eligibility; amending Section 9, Optional Forms of
Benefits; amending Section 14, Maximum Pension; amending Section 24, Reemployment after
Retirement; and amending Section 25, Deferred Retirement Option Plan.
Recommendations
In order to be compliant with changes to the Internal Revenue Code (IRC) and its associated regulations, the
General Employees' Retirement Board formally requests that the attached Ordinance be adopted by the City
Commission. Adoption of the proposed changes will have no impact on the assumptions used in determining
the funding requirements of the pension program.
Attachments:
• Ordinance Amending Ordinance No. 2009-020
• Foster& Foster No Impact Letter dated July 31, 2018
• Christiansen & Dehner, P.A. Letter dated May 4, 2018
Financial Impact:
None, as pointed out in the attached letter from Douglas Lozen of Foster & Foster, the change will have no
measurable impact on the Plan's funding requirement.
Type of Item: (please mark with an "x")
Public Hearing For Cleric's Dept Use:
Ordinance First Reading Consent Agenda
X Ordinance Second Reading X Public Hearing
Resolution Regular Agenda
Commission Approval
Discussion&Direction
Original Document/Contract Attached for Execution by City Clerk
Original Document/Contract Held by Department for Execution
Reviewed by City Attorney Pension Attorney Lee Dehner N/A
Reviewed by Finance Dept. N/A
Reviewed by 0 N/A
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ORDINANCE NO.
AN ORDINANCE OF THE CITY OF OCOEE, FLORIDA,
RELATING TO THE CITY OF OCOEE MUNICIPAL
GENERAL EMPLOYEES' RETIREMENT TRUST FUND,
ADOPTED BY ORDINANCE NUMBER 2009-020; AS
SUBSEQUENTLY AMENDED; AMENDING SECTION 1,
DEFINITIONS BY AMENDING THE DEFINITIONS OF
"ACTUARIAL EQUIVALENT","CREDITED SERVICE"AND
"SPOUSE";AMENDING SECTION 4,FINANCES AND FUND
MANAGEMENT; AMENDING SECTION 6, BENEFIT
AMOUNTS AND ELIGIBILITY; AMENDING SECTION 9,
OPTIONAL FORMS OF BENEFITS; AMENDING SECTION
14, MAXIMUM PENSION; AMENDING SECTION 24,
REEMPLOYMENT AFTER RETIREMENT; AMENDING
SECTION 25, DEFERRED RETIREMENT OPTION PLAN;
PROVIDING FOR SEVERABILITY OF PROVISIONS;
REPEALING ALL ORDINANCES IN CONFLICT HEREWITH
AND PROVIDING AN EFFECTIVE DATE.
SECTION 1: Authority. The City Commission of the City of Ocoee has the authority to
adopt this ordinance pursuant to Article VIII of the Constitution of the State of Florida and Chapter
166,Florida Statutes.
SECTION 2: That the City of Ocoee Municipal General Employees'Retirement Trust Fund
adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by
amending Section 1,Definitions,by amending the definitions of"Actuarial Equivalent","Credited
Service"and"Spouse",to read as follows:
* * *
Actuarial Equivalent means a benefit or amount of equal value, based upon the RP 2000
Combined Healthy Unisex Mortality Table and an interest rate of s varaud-threc,-qt►attu��,c meat
equal to the investment return assumption set forth in the last actuarial valuation
report approved by the Board. This definition may only be amended by the City pursuant to the
recommendation of the Board using assumptions adopted by the Board with the advice of the plan's
actuary, such that actuarial assumptions are not subject to City discretion.
* * *
Credited Service means the total number of years and fractional parts of years of service as
a General Employee with Member contributions,when required,or effective October 1, 2006 as a
Mayor or a Commissioner,omitting intervening years or fractional parts of years when such Member
was not employed by the City as a General Employee or an elected official. A Member may
voluntarily leave his or her contribution in the Fund for a period of five(5)years after leaving the
employ of the City pending the possibility of being rehired without losing credit for the time that he
or she was a Member of the System. If the Member is not reemployed within five(5)years,then the
Accumulated Contributions will be returned upon written request of the Member. If a Member who
is not vested is not reemployed as a General Employee with the City of Ocoee within five(5)years,
his or her Accumulated Contributions,if one-thousand dollars($1,000.00)or less,shall be returned.
If a Member who is not vested is not reemployed within five (5) years, his or her Accumulated
Contributions,if more than one-thousand dollars($1,000.00),will be returned only upon the written
request of the Member and upon completion of a written election to receive a cash lump sum or to
rollover the lump sum amount on forms designated by the Board. Upon return of his or her
Accumulated Contributions, all of his or her rights and benefits under the System are forfeited and
terminated. Those Members who terminated employment with the City of Ocoee prior to October
1, 1991 and who became or will become reemployed on or after October 1, 1991 shall be granted
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Credited Service for the total number of years and fractional parts of years of service as a General
Employee with the City of Ocoee prior to October 1, 1991.
The years or parts of a year that a member performs"Qualified Military Service"consisting
of voluntary or involuntary"service in the uniformed services"as defined in the Uniformed Services
Employment and Reemployment Rights Act (USERRA) (P.L.103-353), after separation from
employment as a General Employee to perform training or service,shall be added to his or her years
of Credited Service for all purposes, including vesting,provided that:
A. The Member is entitled to reemployment under the provisions of USERRA.
B. The Member returns to his or her employment as a General Employee within one(1)
year following the earlier of the date of his or her military discharge or his or her
release from service,unless otherwise required by USERRA.
C. The Member deposits into the Fund the same sum that the Member would have
contributed, if any, if he or she had remained a General Employee during his or her
absence. The maximum credit for military service pursuant to this subdivision shall
be five(5)years. The Member must deposit all missed contributions within a period
equal to three times the period of military service,but not more than five(5) years,
following re-employment or he or she will forfeit the right to receive credited service
for his or her military service pursuant to this paragraph.
D. This paragraph is intended to satisfy the minimum requirements of USERRA. To the
extent that this paragraph does not meet the minimum standards of USERRA, as it
may be amended from time to time, the minimum standards shall apply.
In the event a Member dies on or after January 1,2007,while performing USERRA Qualified
Military Service, the beneficiaries of the Member are entitled to any benefits (other than benefit
accruals relating to the period of qualified military service) as if the Member had resumed
employment and then died while employed.
Beginning January 1, 2009, to the extent required by Section 414(u)(12) of the Code, an
individual receiving differential wage payments(as defined under Section 3401(h)(2)of the Code)
from an employer shall be treated as employed by that employer,and the differential wage payment
shall be treated as compensation for purposes of applying the limits on annual additions under
Section 415(c).of the Code. This provision shall be applied to all similarly situated individuals in
a reasonably equivalent manner.
Leave conversions of unused accrued paid time off shall not be permitted to be applied
toward the accrual of Credited Service either during each Plan Year of a Member's employment with
the City or in the Plan Year in which the Member terminates employment.
In the event that a Member(except a Mayor or Commissioner Member)of this System has
also accumulated credited service in another pension system maintained by the City,or has a period
or periods of previous employment as a General Employee,but is not eligible to receive Credited
Service for this period or periods of previous employment for benefit calculation purposes,then such
other credited service shall be used in determining vesting as provided for in Section 8, and for
determining eligibility for early or normal retirement. Such other credited service will not be
considered in determining benefits under this System. Unless otherwise provided herein, only his
or her Credited Service and Salary under this System on or after his or her latest date of membership
in this System will be considered for benefit calculation. In addition, any benefit calculation for a
Member of this System who is or becomes eligible for a benefit from this System after he or she has
become a member of another pension system maintained by the City, shall be based upon the
Member's Average Final Compensation,Credited Service and benefit accrual rate as of the date the
Member ceases to be a General Employee.
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* * *
Spouse means the lawful wife or husband of a Member or Retiree at the time benefits become
payable.
* * *
SECTION 3: That the City of Ocoee Municipal General Employees'Retirement Trust Fund
adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by
amending Section 4,Finance and Fund Management, subsection 6.B.,to read as follows:
* * *
B. All monies paid into or held in the Fund shall be invested and reinvested by
the Board and the investment of all or any part of such funds shall be subject
to the following:
(1) Notwithstanding any limitation provided for in the Florida Statutcs
prior City ordinances to the contrary(unless such limitation may not
be amended by local ordinance) or any limitation in prior city
ordinances to the contrary, all monies paid into or held in the Fund
maybe invested and reinvested in such securities,investment vehicles
or property wherever situated and of whatever kind, as shall be
approved by the Board, including but not limited to common or
preferred stocks, bonds, and other evidences of indebtedness or
ownership. . . . - , , .. . , -
- -
restriction.
(2) The Board shall develop and adopt a written investment policy
statement setting forth permissible types of investments, goals and
objectives of investments and setting quality and quantity limitations
on investments in accordance with the recommendations of its
investment consultants. The investment policy statement shall be
reviewed by the Board at least annually, and shall be followed by the
Board in making its investment decisions.
(3) In addition, the Board may, upon recommendation by the Board's
investment consultant,make investments in group trusts meeting the
requirements of Internal Revenue Service Revenue Ruling 81-100,
and Revenue Ruling 2011-1,IRS Notice 2012-6 and Revenue Ruling
2014-24 or successor rulings or guidance of similar import, and
operated or maintained exclusively for the commingling and
collective investment of monies,provided that the funds in the group
trust consist exclusively of trust assets held under plans qualified
under Section 401(a)of the Code,individual retirement accounts that
are exempt under Section 408(e)of the Code,eligible governmental
plans that meet the requirements of Section 457(b)of the Code, and
governmental plans under 401(a)(24)of the Code. For this purpose,
a trust includes a custodial account or separate tax favored account
maintained by an insurance company that is treated as a trust under
Section 401(f) or under Section 457(g)(3) of the Code. While any
portion of the assets of the Fund are invested in such a group trust,
such group trust is itself adopted as a part of the System or Plan.
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(a) Any collective or common group trust to which assets of the
fund are transferred pursuant to subsection (3) shall be
adopted by the board as part of the plan by executing
appropriate participation, adoption agreements, and/or trust
agreements with the group trust's trustee.
(b) The separate account maintained by the group trust for the
plan pursuant to subsection (3) shall not be used for, or
diverted to, any purpose other than for the exclusive benefit
of the members and beneficiaries of the plan.
For purposes of valuation, the value of the separate account
maintained by the group trust for the plan shall be the fair
market value of the portion of the group trust held for the
plan, determined in accordance with generally recognized
valuation procedures.
* * *
SECTION 4: That the City of Ocoee Municipal General Employees'Retirement Trust Fund
adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by
amending Section 6., Benefit Amounts and Eligibility, subsection 1, Normal Retirement Date, to
read as follows:
1. Normal Retirement Age and Date.
A Mei-fiber(except a Mayor or Commissioner Membcr)who became a Member prior
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September 18,2012 shall have a normal r:tirement date,of the first day of the month coincident w
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A Member's (except a Mayor or Commissioner Member) who became a Member
prior to September 18,2012 his normal retirement age is the attainment of age sixty(60)regardless
of the years of Credited Service. A Member (except a Mayor or Commissioner Member) who
became a Member on or after September 18,2012 his normal retirement age is the attainment of age
sixty-two(62)and the completion of seven(7)years of Credited Service. A Mayor or Commissioner
Member's normal retirement age is the attainment of age sixty(60) and the completion of nine(9)
years of Credited Service. Each Member shall become one hundred percent(100%)vested in his
accrued benefit at normal retirement age. A Member's normal retirement date shall be the first day
of the month coincident with or next following the date the Member retires from the City after
attaining normal retirement age.
* * *
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SECTION 5: That the City of Ocoee Municipal General Employees'Retirement Trust Fund
adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by
amending Section 9, Optional Forms of Benefits,subsections 1.D. and 2.,to read as follows:
* * *
D. A member may elect a percentage of benefit in a lump sum as follows:
(1) Five(5)percent of the total actuarial equivalent value of the benefit
paid as a lump sum-benefit with ninety-five(95)percent paid under
the normal form or as per A., B. or C. above.
(2) Ten(10)percent of the total actuarial equivalent value of the benefit
paid as a lump sum-benefit with ninety(90)percent paid under the
normal form or as per A.,B. or C. above.
(3) Fifteen (15) percent of the total actuarial equivalent value of the
benefit paid as a lump sum benefit with eighty-five(85)percent paid
under the normal form or as per A., B. or C. above.
(4) Twenty (20) percent of the total actuarial equivalent value of the
benefit paid as a lump sum-benefit with eighty (80) percent paid
under the normal form or as per A., B. or C. above.
2. The Member, upon electing any option of this Section, will designate the joint
pensioner (subsection 1.B., above) or Beneficiary(or Beneficiaries) to receive the benefit, if any,
payable under the System in the event of Member's death, and will have the power to change such
designation from time to time. Such designation will name a joint pensioner or one or more primary
Beneficiaries where applicable. If a Member has elected an option with a joint pensioner or
Beneficiary and Member's retirement income benefits have commenced, Member may thereafter
change his or her designated Beneficiary at any time,but may only change his or her joint pensioner
if the designated joint pensioner and the Member were married at the time of Member's Retirement
and are divorced subsequent thereto and the joint pensioner is alive at the time of the change. In the
absence of proof of good health of the joint pensioner being replaced,the actuary will assume that
the joint pensioner has deceased for purposes of calculating the new payment.
* * *
SECTION 6: That the City of Ocoee Municipal General Employees'Retirement Trust Fund
adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by
amending Section 14,Maximum Pension,subsections 6.,Less than Ten(10)Years of Participation
or Service and 12.B. and adding subsection 13, Effect of Direct Rollover on 415(b) Limit, to read
as follows:
* * *
6. Less than Ten(10)Years of Participation or Scrvicc.
The maximum retirement benefits payable under this Section to any Member who has
completed less than ten(10)years of Crcdited Scrvicc participation with the City shall be the amount
determined under subsection 1 of this Section multiplied by a fraction,the numerator of which is the
number of the Member's years of Crcdited Scrvicc participation and the denominator of which is ten
(10). The reduction provided by this subsection cannot reduce the maximum benefit below 10%of
the limit determined without regard to this subsection. The reduction provided for in this subsection
shall not be applicable to pre-retirement death benefits paid pursuant to Section 7.
Page 5
* * *
12. B. No Member of the System 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 a different employer's retirement system
or plan. This restriction does not apply to social security benefits or federal
benefits under Chapter 67 1223,Title 10,U.S. Code.
13. Effect of Direct Rollover on 415(b) Limit.
If the plan accepts a direct rollover of an employee's or former employee's benefit
from a defined contribution plan qualified under Code Section 401(a)which is maintained by the
employer,any annuity resulting from the rollover amount that is determined using a more favorable
actuarial basis than required under Code Section 417(e) shall be included in the annual benefit for
purposes of the limit under Code Section 415(b).
SECTION 7: That the City of Ocoee Municipal General Employees'Retirement Trust Fund
adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by
amending Section 24, Reemployment After Retirement,to read as follows:
SECTION 24. REEMPLOYMENT AFTER RETIREMENT.
1. Any Retiree who is retired under this System, except for disability retirement as
previously provided for,may be reemployed by any public or private employer,except the City,and
may receive compensation from that employment without limiting or restricting in any way the
retirement benefits payable under this system. Reemployment by the City shall be subject to the
limitations set forth in this Section.
2. After normal retirement. Any retiree who is retired under normal retirement pursuant
to this system and who is reemployed by the city in any capacity, shall upon being reemployed,
continue receipt of retirement benefits during any such employment period if he is at least age sixty-
two (62), otherwise the System shall discontinue receipt of benefits until he reaches age sixty-two
(62). A retiree who returns to work under the provisions of this section shall not be eligible for
membership in this system, and, therefore, shall not accumulate additional credited service for
subsequent periods of employment described in this section, shall not be required to make
contributions to the system,nor shall he or she be eligible for any other benefit other than the retiree's
normal retirement benefit.
3. Any Retiree who is retired under normal retirement pursuant to this System and who
is reemployed by the City after that retirement and,by virtue of that reemployment is ineligible to
participate in this System, shall, during the period of such reemployment, continue to receive
retirement benefits previously earned if he is at least age sixty-two(62),otherwise the System shall
discontinue receipt of benefits until he reaches age sixty-two(62). Former DROP participants shall
begin receipt of benefits under these circumstances.
4. After early retirement. Any Retiree who is retired under early retirement pursuant
to this System and who subsequently becomes an employee of the City in any capacity, shall
discontinue receipt of benefits from the System until the earlier of termination of employment or
such time as the reemployed Retiree reaches the date that he or she would have been eligible for
normal retirement under thib to he L,onti,im.d enip+oyinent and not elected early
. . • age sixty-two (62). A Retiree who returns to work under the
provisions of this Section shall not be eligible for membership in the System, and, therefore, shall
not accumulate additional Credited Service for subsequent periods of employment described in this
Page 6
section,shall not be required to make contributions to the system,nor shall he or she be eligible for
any other benefit other than the Retiree's early retirement benefit when he or she again becomes
eligible as provided herein. Retirement pursuant to an early retirement incentive program shall be
deemed early retirement for purposes of this Section if the Member was permitted to retire prior to
the customary retirement date provided for in the System at the time of retirement.
5. Reemployment of terminated vested persons. Reemployed terminated vested persons
shall not be subject to the provisions of this section until such time as they begin to actually receive
benefits. Upon receipt of benefits, terminated vested persons shall be treated as normal or early
Retirees for purposes of applying the provisions of this section and their status as an early or normal
retiree shall be determined by the date they elect to begin to receive their benefit.
6. DROP Participants. Members-or-r Retirees who are or were in the Deferred
Retirement Option Plan shall,following termination of employment after DROP participation,have
the options provided for in this section for reemployment.
SECTION 8: That the City of Ocoee Municipal General Employees'Retirement Trust Fund
adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by
amending Section 25, Deferred Retirement Option Plan, to read as follows:
SECTION 25. DEFERRED RETIREMENT OPTION PLAN.
1. Definitions.
As used in this Section 25,the following definitions apply:"
A. "DROP"--The Ocoee General Employees'Deferred Retirement Option Plan.
B. "DROP Account" -- The account established for each DROP participant
under subsection 3.
C. "Total Return of the Assets" -- For purposes of calculating earnings on a
Member's DROP Account pursuant to subsection 3.B.(2)(b).,for each fiscal
year quarter, the percentage increase (or decrease) in the interest and
dividends earned on investments,including realized and unrealized gains(or
losses), of the total Plan assets.
2. Participation.
A. Eligibility to Participate.
In lieu of terminating his or her employment as a General Employee, any
Member who became a Member prior to September 18, 2012 and who is
eligible for normal retirement under the System may elect to defer receipt of
such service retirement pension and to participate in the DROP. Any
Member who became a Member on or after September 18,2012 must have
a minimum of ten (10) years Credited Service and be eligible for normal
retirement.
B. Election to Participate.
A Member's election to participate in the DROP must be made in writing in
a time and manner determined by the Board and shall be effective on the first
day of the first calendar month which is at least fifteen (15) business days
after it is received by the Board.
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C. Period of participation.
A Member who became a Member prior to September 18, 2012 who elects
to participate in the DROP under subsection 2.B., shall participate in the
DROP for a period not to exceed eighty-four(84)months beginning on the
date which the Member first becomes eligible for normal retirement. A
Member who became a Member on and after September 18,2012 who elects
to participate in the DROP under section 2.B.,shall participate in the DROP
for a period not to exceed sixty(60)months beginning on the date which the
Member first becomes eligible for normal retirement. An election to
participate in the DROP shall constitute an irrevocable election to resign from
the service of the City at the time of election into the DROP. A Member may
participate only once.
D. Termination of Participation.
(1) A Member's participation in the DROP shall cease at the earlier of:
(a) the end of his or her permissible period of participation in the
DROP as determined under subsection 2.C.; or
(b) termination of his or her employment as a General Employee.
(2) Upon the Member's termination of participation in the DROP,
pursuant to subsection(a) above, all amounts provided for in
subsection 3.B.,including monthly benefits and investment earnings
and losses or interest,shall cease to be transferred from the System to
his or her DROP Account. Any amounts remaining in his or her
DROP Account shall be paid to him or her in accordance with the
provisions of subsection 4. when he or she terminates his or her
employment as a General Employee.
(3) A Member who terminates his or her participation in the DROP under
this subsection 2.D. shall not be permitted to again become a
participant in the DROP.
E. Effect of DROP Participation on the System.
(1) A Member's Credited Service and his or her accrued benefit under the
System shall be determined on the date his or her election to
participate in the DROP first becomes effective. For purposes of
determining the accrued benefit,the Member's Salary for the purposes
of calculating his or her Average Final Compensation shall include an
amount equal to any lump sum payments which would have been paid
to the Member and included as Salary as defined herein, had the
Member retired under normal retirement and not elected DROP
participation. Member contributions attributable to any lump sums
used in the benefit calculation and not actually received by the
Member shall be deducted from the first payments to the Member's
DROP Account. The Member shall not accrue any additional
Credited Service or any additional benefits under the System(except
for any additional benefits provided under any cost-of-living
adjustment for Retirees in the System)while he or she is a participant
in the DROP. After a Member commences participation,he or she
shall not be permitted to again contribute to the System nor shall he
or she be eligible for disability or pre-retirement death benefits,
Page 8
except as provided for in Section 24, Reemployment After
Retirement.
(2) No amounts shall be paid to a Member from the System while the
Member is a participant in the DROP. Unless otherwise specified in
the System, if a Member's participation in the DROP is terminated
other than by terminating his or her employment as a General
Employee, no amounts shall be paid to him or her from the System
until he or she terminates his or her employment as a General
Employee. Unless otherwise specified in the System, amounts
transferred from the System to the Member's DROP Account shall be
paid directly to the Member only on the termination of his or her
employment as a General Employee.
3. Funding.
A. Establishment of DROP Account.
A DROP Account shall be established for each Member participating in the
DROP. A Member's whose DROP participation began prior to September
18,2012 shall have a DROP Account consisting of amounts transferred to the
DROP under subsection 3.B., and earnings or interest on those amounts.
A Member whose DROP participation began on or after September 18,2012
shall have a DROP Account consisting of amounts transferred to the DROP
under subsection 3.C. and interest on those amounts.
B. Transfers From Retirement System.
(1) As of the first day of each month of a Member's period of
participation in the DROP, the monthly retirement benefit he or she
would have received under the System had he or she terminated his
or her employment as a General Employee and elected to receive
monthly benefit payments thereunder shall be transferred to his or her
DROP Account, except as otherwise provided for in subsection
2.D.(2). A Member's period of participation in the DROP shall be
determined in accordance with the provisions of subsections 2.C.and
2.D., but in no event shall it continue past the date he or she
terminates his or her employment as a General Employee.
(2) Except as otherwise provided in subsection 2.D.(2), a Member's
DROP Account under this subsection 3.B.shall be debited or credited
with either:
(a) Interest at an effective rate of six and one-half percent(6.5%)
per annum compounded monthly determined on the last
business day of the prior month's ending balance and credited
to the Member's DROP Account as of such date (to be
applicable to all current and future DROP participants); or
(b) Earnings, to be credited or debited to the Member's DROP
Account,determined as of the last business day of each fiscal
year quarter and debited or credited as of such dates
determined as follows:
The average daily balance in a Member's DROP
Account shall be credited or debited at a rate equal to the
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actual net rate of investment return realized by the System for
that quarter. "Net investment return"for the purpose of this
paragraph is the total return of the assets in which the
Member's DROP Account is invested by the Board net of
brokerage commissions, transaction costs and management
fees.
For purposes of calculating earnings on a Member's
DROP Account pursuant to this subsection 3.B.(2)(b).,
brokerage commissions, transaction costs, and management
fees shall be determined for each quarter by the investment
consultant pursuant to contracts with fund managers as
reported in the custodial statement. The investment
consultant shall report these quarterly contractual fees to the
Board. The investment consultant shall also report the net
investment return for each manager and the net investment
return for the total Plan assets.
Upon electing participation in the DROP, the Member shall elect to
receive either interest or earnings on his or her account to be
determined as provided above. The Member may,in writing,elect to
change his or her election only once during his or her DROP
participation. An election to change must be made prior to the end of
a quarter and shall be effective beginning the following quarter.
(3) A Member's DROP Account shall only be credited or debited with
earnings or interest and monthly benefits while the Member is a
participant in the DROP. A Member's final DROP account value for
distribution to the Member upon termination of participation in the
DROP shall be the value of the account at the end of the quarter
immediately preceding termination of participation for participants
electing the net plan return and at the end of the month immediately
preceding termination of participation for participants electing the flat
interest rate return plus any monthly periodic additions made to the
DROP account subsequent to the end of the previous quarter or
month, as applicable,and prior to distribution. If a Member fails to
terminate employment after participating in the DROP the
permissible period of DROP participation, then beginning with the
Member's 1st month of employment following the last month of the
permissible period of DROP participation, the Member's DROP
Account will no longer be credited or debited with earnings or
interest, nor will monthly benefits be transferred to the DROP
account. All such non-transferred amounts shall be forfeited and
continue to be forfeited while the Member is employed by the City,
and not cost-of-living adjustments shall be applied to the Member's
credit during such period of continued employment. A Member
employed by the City after the permissible period of DROP
participation will still not be eligible for pre-retirement death or
disability benefits, nor will he or she accrue additional Credited
Service, except as provided for Section 24, Reemployment After
Retirement.
C. Transfers From Retirement System.
(1) As of the first day of each month of a Member's period of
participation in the DROP,the monthly retirement benefit he or she
would have received under the System had he or she terminated his
Page 10
or her employment as a General Employee and elected to receive
monthly benefit payments thereunder shall be transferred to his or her
DROP Account, except as otherwise provided for in subsection
2.D.(2). A Member's period of participation in the DROP shall be
determined in accordance with the provisions of subsections 2.C.and
2.D., but in no event shall it continue past the date he or she
terminates his or her employment as a General Employee.
(2) Except as otherwise provided in subsection 2.D.(2), a Member's
DROP Account under this subsection 3.C. shall be credited with
interest at an effective rate of three percent (3%) per annum
compounded monthly on the prior month's ending balance.
(3) A Member's DROP Account shall only be credited with interest and
monthly benefits while the Member is a participant in the DROP. A
Member's final DROP account value for distribution to the Member
upon termination of participation in the DROP shall be the value of
the account at the end of the quarter immediately preceding
termination of participation plus any monthly periodic additions made
to the DROP account subsequent to the end of the previous quarter
and prior to distribution. If a Member fails to terminate employment
after participating in the DROP the permissible period of DROP
participation, then beginning with the Member's 1st month of
employment following the last month of the permissible period of
DROP participation,the Member's DROP Account will no longer be
credited with interest,nor will monthly benefits be transferred to the
DROP account. All such non-transferred amounts shall be forfeited
and continue to be forfeited while the Member is employed by the
City, and no cost-of-living adjustments shall be applied to the
Member's credit during such period of continued employment. A
Member employed by the City after the permissible period of DROP
participation will still not be eligible for pre-retirement death or
disability benefits, nor will he or she accrue additional Credited
Service, except as provided for Section 24, Reemployment After
Retirement.
4. Distribution of DROP Accounts on Termination of Employment.
A. Eligibility for Benefits.
A Member shall receive the balance in his or her DROP Account in
accordance with the provisions of this subsection 4. upon his or her
termination of employment as a General Employee. Except as provided in
subsection 4.E.,no amounts shall be paid to a Member from the DROP prior
to his or her termination of employment as a General Employee.
B. Form of Distribution.
(1) Unless the Member elects otherwise,distribution of his or her DROP
Account shall be made in a cash lump sum, subject to the direct
rollover provisions set forth in subsection 4.F. Elections under this
paragraph shall be in writing and shall be made in such time or
manner as the Board shall determine.
(2) If a Member dies before his or her benefit is paid,his DROP Account
shall be paid to his Beneficiary in such optional form as his or her
Page 11
Beneficiary may select. If no Beneficiary designation is made, the
DROP Account shall be distributed to the Member's estate.
C. Date of Payment of Distribution.
Except as otherwise provided in this subsection 4.,distribution of a Member's
DROP Account shall be made as soon as administratively practicable
following the Member's termination of employment. Distribution of the
amount in a Member's DROP account will not be made unless the Member
completes a written request for distribution and a written election,on forms
designated by the Board, to either receive a cash lump sum or a rollover of
the lump sum amount.
D. Proof of Death and Right of Beneficiary or Other Person.
The Board may require and rely upon such proof of death and such evidence
of the right of any Beneficiary or other person to receive the value of a
deceased Member's DROP Account as the Board may deem proper and its
determination of the right of that Beneficiary or other person to receive
payment shall be conclusive.
E. Distribution Limitation.
Notwithstanding any other provision of this subsection 4., all distributions
from the DROP shall conform to the "Minimum Distribution of Benefits"
provisions as provided for herein.
F. Direct Rollover of Certain Distributions.
This subsection applies to distributions made on or after January 1, 2002.
Notwithstanding any provision of the DROP to the contrary, a distributee
may elect to have any portion of an eligible rollover distribution paid in a
direct rollover as otherwise provided under the System in Section 23.
5. Administration of DROP.
A. Board Administers the DROP.
The general administration of the DROP,the responsibility for carrying out
the provisions of the DROP and the responsibility of overseeing the
investment of the DROP's assets shall be placed in the Board. The members
of the Board may appoint from their number such subcommittees with such
powers as they shall determine; may adopt such administrative procedures
and regulations as they deem desirable for the conduct of their affairs; may
authorize one or more of their number or any agent to execute or deliver any
instrument or make any payment on their behalf;may retain counsel,employ
agents and provide for such clerical, accounting, actuarial and consulting
services as they may require in carrying out the provisions of the DROP;and
may allocate among themselves or delegate to other persons all or such
portion of their duties under the DROP,other than those granted to them as
Trustee under any trust agreement adopted for use in implementing the
DROP,as they,in their sole discretion,shall decide. A Trustee shall not vote
on any question relating exclusively to himself.
Page 12
B. Individual Accounts, Records and Reports.
The Board shall maintain,records showing the operation and condition of the
DROP,including records showing the individual balances in each Member's
DROP Account, and the Board shall keep, in convenient form such data as
maybe necessary for the valuation of the assets and liabilities of the DROP.
The Board shall prepare and distribute to Members participating in the DROP
and other individuals or filed with the appropriate governmental agencies, as
the case may be, all necessary descriptions,reports,information returns,and
data required to be distributed or filed for the DROP pursuant to the Code,
the applicable portions of the Act and any other applicable laws.
C. Establishment of Rules.
Subject to the limitations of the DROP, the Board from time to time shall
establish rules for the administration of the DROP and the transaction of its
business. The Board shall have discretionary authority to construe and
interpret the DROP (including but not limited to determination of an
individual's eligibility for DROP participation, the right and amount of any
benefit payable under the DROP and the date on which any individual ceases
to be a participant in the DROP). The determination of the Board as to the
interpretation of the DROP or its determination of any disputed questions
shall be conclusive and final to the extent permitted by applicable law.
D. Limitation of Liability.
(1) The Trustees shall not incur any liability individually or on behalf of
any other individuals for any act or failure to act,made in good faith
in relation to the DROP or the funds of the DROP.
(2) Neither the Board nor any Trustee of the Board shall be responsible
for any reports furnished by any expert retained or employed by the
Board, but they shall be entitled to rely thereon as well as on
certificates furnished by an accountant or an actuary, and on all
opinions of counsel. The Board shall be fully protected with respect
to any action taken or suffered by it in good faith in reliance upon
such expert, accountant, actuary or counsel, and all actions taken or
suffered in such reliance shall be conclusive upon any person with
any interest in the DROP.
6. General Provisions.
A. The DROP Is Not a Separate Retirement Plan.
Instead, it is a program under which a Member who is eligible for normal
retirement under the System may elect to accrue future retirement benefits in
the manner provided in this section 25 for the remainder of his employment,
rather than in the normal manner provided under the plan. Upon termination
of employment,a Member is entitled to a lump sum distribution of his or her
DROP Account balance or may elect a rollover. The DROP Account
distribution is in addition to the Member's monthly benefit.
B. Notional Account.
The DROP Account established for such a Member is a notional account,
used only for the purpose of calculation of the DROP distribution amount.
It is not a separate account in the System. There is no change in the System's
Page 13
assets, and there is no distribution available to the Member until the
Member's termination from the DROP. The Member has no control over the
investment of the DROP Account.
C. No Employer Discretion.
The DROP benefit is determined pursuant to a specific formula which does
not involve employer discretion.
D. IRC Limit.
The DROP Account distribution,along with other benefits payable from the
System,is subject to limitation under Internal Revenue Code Section 415(b).
74r E. Amendment of DROP.
The DROP may be amended by an ordinance of the City at any time and from
time to time, and retroactively if deemed necessary or appropriate,to amend
in whole or in part any or all of the provisions of the DROP. However,
except as otherwise provided by law, no amendment shall make it possible
for any part of the DROP's funds to be used for,or diverted to,purposes other
than for the exclusive benefit of persons entitled to benefits under the DROP.
No amendment shall be made which has the effect of decreasing the balance
of the DROP Account of any Member.
B F. Facility of Payment.
If a Member or other person entitled to a benefit under the DROP is unable
to care for his or her affairs because of illness or accident or is a minor, the
Board shall direct that any benefit due him or her shall be made. Any
payment so made shall be a complete discharge of the liabilities of the DROP
for that benefit.
e G. Information.
Each Member, Beneficiary or other person entitled to a benefit, before any
benefit shall be payable to him or her or on his or her account under the
DROP, shall file with the Board the information that it shall require to
establish his or her rights and benefits under the DROP.
B H. Prevention of Escheat.
If the Board cannot ascertain the whereabouts of any person to whom a
payment is due under the DROP, the Board may, no earlier than three (3)
years from the date such payment is due,mail a notice of such due and owing
payment to the last known address of such person, as shown on the records
of the Board or the City. If such person has not made written claim therefor
within three (3) months of the date of the mailing, the Board may, if it so
elects and upon receiving advice from counsel to the System,direct that such
payment and all remaining payments otherwise due such person be canceled
on the records of the System. Upon such cancellation,the System shall have
no further liability therefor except that,in the event such person or his or her
Beneficiary later notifies the Board of his or her whereabouts and requests the
payment or payments due to him or her under the DROP, the amount so
applied shall be paid to him or her in accordance with the provisions of the
DROP.
Page 14
E I. Written Elections,Notification.
(1) Any elections, notifications or designations made by a Member
pursuant to the provisions of the DROP shall be made in writing and
filed with the Board in a time and manner determined by the Board
under rules uniformly applicable to all employees similarly situated.
The Board reserves the right to change from the time and manner for
making notifications,elections or designations by Members under the
DROP if it determines after due deliberation that such action is
justified in that it improves the administration of the DROP. In the
event of a conflict between the provisions for making an election,
notification or designation set forth in the DROP and such new
administrative procedures,those new administrative procedures shall
prevail.
(2) Each Member or Retiree who has a DROP Account shall be
responsible for furnishing the Board with his or her current address
and any subsequent changes in his or her address. Any notice
required to be given to a Member or Retiree hereunder shall be
deemed given if directed to him or her at the last such address given
to the Board and mailed by registered or certified United States mail.
If any check mailed by registered or certified United States mail to
such address is returned, mailing of checks will be suspended until
such time as the Member or Retiree notifies the Board of his or her
address.
F J. Benefits Not Guaranteed.
All benefits payable to a Member from the DROP shall be paid only from the
assets of the Member's DROP Account and neither the City nor the Board
shall have any duty or liability to furnish the DROP with any funds,securities
or other assets except to the extent required by any applicable law.
6 K. Construction.
(1) The DROP shall be construed,regulated and administered under the
laws of Florida, except where other applicable law controls.
(2) The titles and headings of the subsections in this Section 25 are for
convenience only. In the case of ambiguity or inconsistency,the text
rather than the titles or headings shall control.
PI L. Forfeiture of Retirement Benefits.
Nothing in this Section shall be construed to remove DROP participants from
the application of any forfeiture provisions applicable to the System. DROP
participants shall be subject to forfeiture of all retirement benefits,including
DROP benefits.
I M. Effect of DROP Participation on Employment.
Participation in the DROP is not a guarantee of employment and DROP
participants shall be subject to the same employment standards and policies
that are applicable to employees who are not DROP participants.
Page 15
SECTION 9. Severability. In the event any section,subsection,paragraph,sentence,clause,
phrase or word of this ordinance shall be held invalid by a court of competent jurisdiction,then such
invalidity shall not affect the remaining portions hereof.
SECTION 10. Repeal of Ordinances. All ordinances or parts of ordinances in conflict
herewith are hereby repealed.
SECTION 5. Effective Date. This ordinance shall be effective on the date of adoption.
PASSED AND ADOPTED this day of , 2018.
APPROVED:
ATTEST: CITY OF OCOEE, FLORIDA
By:
Melanie Sibbitt, City Clerk Rusty Johnson,Mayor
(SEAL)
ADVERTISED , 2018
READ FIRST TIME , 2018
READ SECOND TIME AND ADOPTED
, 2018
FOR USE AND RELIANCE ONLY BY
THE CITY OF OCOEE, FLORIDA
APPROVED AS TO FORM AND LEGALITY
THIS day of , 2018
CHRISTIANSEN &DEHNER, P.A.
Special Counsel
By:
APPROVED BY THE OCOEE CITY
COMMISSION AT A MEETING HELD ON
, 2018 UNDER AGENDA
ITEM NO.
ksh\ocaee\gen\05-04-18.ord
Page 16
- FOSTER & FOSTER
• AC.I UAIt!ES AND CONSUL.TAN S
July 31,2018
VIA EMAIL
Kim Kilgore,Plan Administrator
City of Ocoee
Municipal General Employees' Trust Fund
2503 Del Prado Blvd. S.Suite 502
Cape Coral,FL 33904
Re: City of Ocoee
Municipal General Employees' Retirement Trust Fund
Kim:
In response to the letter from Lee Delmer dated May 4,2018,we have reviewed the proposed Ordinance
(identified on page 16 as ksh\ocoee\gen\05-04-18.ord).The amendments deal primarily with definition
changes for compliance with the Internal Revenue Code. We have determined that the adoption of the
proposed changes will have no impact on the assumptions used in determining the funding requirements of the
program.
Additionally,the definition of Actuarial Equivalent is being amended to match the current valuation
assumptions for interest. While adoption of these assumptions may result in a de minimis impact(either
positive or negative)over the life of the Plan, it is not currently measureable,and therefore does not result in
an immediate change to the Plan's funding requirements.
Because the changes do not result in a change in the valuation results,it is our opinion that a formal Actuarial
Impact Statement is not required in support of its adoption.However, since the Division of Retirement must be
aware of the current provisions of all public pension programs,it is recommended that you send a copy of this
letter and a copy of the fully executed Ordinance to the following office:
Mr. Keith Brinkman
Bureau of Local Retirement Systems
Division of Retirement
P.O. Box 9000
Tallahassee,FL 32315-9000
The undersigned is familiar with the immediate and long-term aspects of pension valuations,and meets the
Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions
contained herein.
If you have any questions,please let me know.
Sincerely,
Q \A)44(2)1h
Douglas H.Lozen,EA,MAAA
cc via emal: Lee Dehner,Plan Attorney
13420 Parker Commons Blvd.,Suite 104 Fort Myers,FL 33912•(239)433-5500• Fax(239)481-0634•www.foster-foster.com
Law Offices
Christiansen & '4 ehner, P.A.
63 Sarasota Center Blvd.Suite 107 Sarasota,Florida 34240 • 941-377-2200 • Fax 941-377-4848
May 4, 2018
Ms. Kim Kilgore
Ocoee Municipal General Employees' Retirement Trust Fund
do Foster& Foster, Inc.
2503 Del Prado Blvd S, Suite 502
Cape Coral, FL 33904
Re: City of Ocoee General Employees'Pension Plan-Proposed Ordinance
Dear Kim:
Enclosed please find a proposed ordinance amending the City of Ocoee General Employees'
Pension Plan. With changes to the Internal Revenue Code(IRC)and its associated Regulations,as
well as guidance from the Internal Revenue Service(IRS),the following amendments to the pension
plan are proposed:
1. Section 1, Definitions, is being amended for IRC changes and requirements, to
amend the definitions of:
a. Actuarial Equivalent -to amend the definition to incorporate the Mortality
Table and interest rate currently being used by the plan's actuary
b. Credited Service-to clarify IRC regulations on leave conversions
c. Spouse - To clarify the definition in accordance with a recent US Supreme
Court ruling
2. Section 4,Finances and Fund Management,is being amended to further incorporate
recent IRC requirements with regard to investments in commingled funds.
3. Section 6, Benefit amounts and eligibility, is being amended to change the Normal
Retirement Date to include IRC required language regarding Normal Retirement Age
and Normal Retirement Date.
4. Section 9, Optional Forms of Benefits,has been amended to:
a. Amend the optional form of benefit known as a partial lump sum option
(PLOP),to clarify that the percentage chosen is calculated as a percent of the
total actuarial equivalent value of the member's benefit.
Ms. Kim Kilgore
May 4, 2018
Page 2
b. Amend subsection 2. to clarify that if proof of good health of a joint
pensioner who is being replaced is not provided,the actuary will assume that
the joint pensioner is deceased for purposes of calculating the revised benefit
amount.
5. Section 14,Maximum Pension,has had several subsections amended to comply with
IRC changes.
6. Section 24, Reemployment After Retirement, is being amended to clearly reflect
recent IRC guidance on the ability to continue to receive retirement benefits from the
system upon reemployment after normal or early retirement.
7. Section 25,Deferred Retirement Option Plan, is being amended in accordance with
recent direction from the IRS in connection with the issuance of several recent
Favorable Determination Letters to clarify investment returns on DROP accounts and
add several sections clarifying the DROP provisions as required by the IRS.
We have also amended the provisions regarding when interest is calculated and paid,
which will avoid a participant's forfeiture of interest accrued during the first or
second month of the quarter should the member terminate DROP participation at the
end of the first or second month of the quarter.
By copy of this letter to the Board's actuary,Foster&Foster,Inc.,I am requesting that they
provide you with a letter indicating the cost,if any, associated with the adoption of this ordinance.
Please provide a copy of the document to the members of the Board for review at the next meeting.
If you have any questions with regard to this ordinance,please feel free to give me a call.
Yours very truly,
H. Lee Dehner
HLD/ksh
enclosure
cc: Doug Lozen,with enclosure
COPY OF ADVERTISEMENT
Date Published and Media Name
r4B The West Orange Times Thursday November 22.2018
Advertisement or Article
FIRST INSERTION
CITY OF OCOEE
PUBLIC HEARING
A Public Hearing before the Ocoee City Commission will be held Tuesday,De-
cember 4,2018 at 6:15 p.m.or as soon thereafter as may be heard,in the Com-
mission Chambers of City Hall at 150 North Lakeshore Drive,Ocoee,Florida,to
consider the following:
AN ORDINANCE OF THE CITY OF OCOEE,FLORIDA,RELATING TO
THE CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES' RETIRE-
MENT TRUST FUND,ADOPTED BY ORDINANCE NUMBER 2009-020;
AS SUBSEQUENTLY AMENDED; AMENDING SECTION 1, DEFINI-
TIONS BY AMENDING THE DEFINITIONS OF"ACTUARIAL EQUIVA-
LENT","CREDITED SERVICE"AND"SPOUSE";AMENDING SECTION 4,
FINANCES AND FUND MANAGEMENT;AMENDING SECTION 6,BENE-
FIT AMOUNTS AND ELIGIBILITY;AMENDING SECTION 9,OPTIONAL
FORMS OF BENEFITS;AMENDING SECTION 14,MAXIMUM PENSION;
AMENDING SECTION 24, REEMPLOYMENT Al' ER RETIREMENT;
AMENDING SECTION 25,DEFERRED RETIREMENT OPTION PLAN;
PROVIDING FOR SEVERABILITY OF PROVISIONS; REPEALING ALL
ORDINANCES IN CONFLICT HEREWITH AND PROVIDING AN EFFEC-
TIVE DATE.
If a person decides to appeal any decision made by the above City Commission with
respect to any matter considered at such hearing,they will need a record of the pro-
ceedings,and for such purpose they may need to ensure that a verbatim record of the
proceedings is made,which record includes the testimony and evidence upon which
the appeal is to be based.All interested parties are invited to attend and be heard
with respect to the above.In accordance with the Americans with Disabilities Act,
persons needing a special accommodation or an interpreter to participate in this
proceeding should contact the City Clerk's office at 407-905-3105 at least two days
prior to the date of hearing.
November 22,2018 18-05723W