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Memorandum
To: Village Council
From: Thomas G. Bradford, Village Manager
Date: February 4, 1998
Subject: Resolution Approving Gabriel, Roeder, Smith & Company
Actuarial Services Agreement; Agenda Item
Not- too long ago, I reported to you that the general employees of
the Village had approached me and indicated they wished the
Village to convert its retirement plan from a defined benefit
plan to a defined contribution plan. The Village Council
indicated that this would be acceptable to them. In the course
of pursuing this matter, I have concluded that it is beyond my
realm of expertise to undertake certain aspects of this effort.
For example, I am not qualified to make recommendations relative
to the various mutual funds packages offered by the investment
firms available to the Village for placement of employee
retirement funds. Additionally, we need an actuarial to advise
us on the structuring of the defined contribution plan.
Likewise, an actuarial is needed, with appropriate input from the
Village, to calculate what, if any, amount of the Village
contributions on behalf of each of the general employees could be
credited to the employee for a. cash payment, subject to IRS tax
penalties, or for roll-over into the employees new defined
contribution plan.
In this regard, I- have contacted Steve Palmquist, the Actuarial
that is the account representative for the Village of Tequesta
Employee ' s Pension Trust Fund, in order to secure the services of
his company in this regard. I have worked with Mr. Palmquist in
the creation of the Employee' s Pension Trust Fund and have found
him to provide professional service at a reasonable price.
It is recommended that the Village Council approve the Gabriel,
Roeder Agreement in an amount not to exceed $5, 000 to enable this
work effort to proceed. Mr. Palmquist indicates such to be
estimated at less than $5, 000, but I have included this amount
within the Resolution to give some leeway to any expenses and
cost overruns that may occur in this work effort.
It is recommended that the Village Council authorize the funding
for such to come from the Undesignated General Fund Balance,
currently estimated to be $710,822 .
TGB/krb
council\020498-7.sam
RESOLUTION NO. 11-97/98
A RESOLUTION. OF THE VILLAGE COUNCIL OF THE
VILLAGE OF TEQUESTA, APPROVING A PROPOSAL
FROM GABRIEL, ROEDER, SMITH & COMPANY IN AN
AMOUNT NOT TO EXCEED $5,0000 FOR ACTUARIAL
AND CONSULTING SERVICES ASSOCIATED WITH
AMENDING GENERAL EMPLOYEE RETIREMENT
BENEFITS TO BE A DEFINED CONTRIBUTION PLAN,
AND AUTHORIZING THE VILLAGE MANAGER TO
ENGAGE THE FIRM FOR SUCH SERVICES.
NOW, THEREFORE, BE IT RESOLVED BY THE VILLAGE COUNCIL OF THE
VILLAGE OF TEQUESTA, PALM BEACH COUNTY, FLORIDA, AS FOLLOWS:
Section 1. The Proposal from Gabriel, Roeder, Smith &
Company in an Amount Not to Exceed $5, 000 for Actuarial
Services and Consulting Services, attached hereto as Exhibit
"A" and incorporated by reference as part of this
Resolution, is hereby approved and the Village Manager of
the Village of Tequesta is authorized to engage the firm for
such services on behalf of the Village of Tequesta.
Section 2. Funding for the aforementioned Proposal is to be
Provided from the FY 1998 Undesignated Fund Balance
Estimated to be $710, 822 with the Director of Finance to
Include the Same with Future Budgetary Amendments to
Accomodate Same.
THE FOREGOING RESOLUTION WAS OFFERED by Councilmember
, who moved its adoption. The motion was seconded by
Councilmember , and upon being put to a vote, the
vote was as follows:
FOR ADOPTION AGAINST ADOPTION
The Mayor thereupon declared the Resolution duly passed and
adopted this 12th day of February, A.D. , 1998 .
MAYOR OF TEQUESTA
Elizabeth A. Schauer
ATTEST:
Joann Manganiello
Village Clerk
wp60\res\gabriel
Village of Tequesta
FED n iag8
GABRIEL,ROEDER,SMITH & COMPANY
Consultants&Actuaries
301 East Las Olas Blvd. •Suite 200•Ft.Lauderdale,FL 33301 •954-527-1616•FAX 954-525-0083
•
January 30, 1998
Mr. Tom Bradford
Town Manager
Village of Tequesta
357 Tequesta Drive
Tequesta, Florida 33469
Dear Tom:
•
As requested, we are submitting a proposal to provide actuarial and consulting services in connection
with the withdrawal of general employees from the Town's Retirement Plan. •
You have indicated that general employees hired after 1995 would rather participate in a defined
contribution plan than the defined benefit plan in which they presently participate. We are assuming
for purposes of this proposal that you do not wish us to provide a comparison of the pros and cons
of each type of plan, i.e., the decision to change has already been made.
We are also assuming that you will not need any assistance in choosing a defined contribution vendor.
The marketplace for a small group of employees with little in the way of startup funds is quite limited.
Since you already use ICMA for the Town's deferred compensation plan, you will likely use ICMA for
the new defined contribution plan.
•
The main service we will perform is to calculate the actuarial present value of accrued pension benefits
for each general employee participating in the existing Plan. Such value or, if greater,the employee's
own contributions will be transferred to the new plan. To prepare these calculations, we will need
for each general employee member of the Retirement Plan the following:
(a) Date of birth
(b) Date benefits begin to accrue, i.e., date of hire or later date as provided by the Plan.
(c) History of compensation as provided by the Plan.
(d) Accumulated employee contributions, with interest (if provided by Plan).
The date as of which the above information is to be collected is the day before you expect the new
defined contribution plan will become effective. For example, if it appears that the new plan would
be effective April 1, 1998, then the requested information would be collected as of March 31, 1998.
•
Mr. Tom Bradford
City of Tequesta
January 30, 1998
Page 2
Our fee for this service will range from $1,700 to $2,000.
Another necessary part of the process will be an amendment to the Retirement Plan providing for the
withdrawal of general employees and the removal of references to general employees throughout the
Plan document. If you would like us to handle this assignment, results of which would have to be
reviewed by the Town's Attorney, we would need a floppy disk containing the present Plan document.
Our fee would range from $2,000 to $2,400.
Other steps that would be needed are as follows:
• Notify Loomis Sayles and Prudential of amounts that will be withdrawn from the
Pension fund, and provide them with instructions on transferring money to ICMA.
• Notify Office of Police/Fire Retirement Trust Funds and Bureau of Local Retirement
Systems that general employees are withdrawing from the existing Plan and being
transferred to a new plan.
Please contact us if you have any questions.
Sincerely yours,
J. Stephen Palmquist
JSP/or