HomeMy WebLinkAboutHandouts_Regular_08/09/2007 (2)July 12, 2007
General Employee Pension Plan Item Summarized
(Not a complete transcript -summarized points)
• According to Mr. Palmquist most governmental pension plans allow some sort of interest
on employee contributions
• Board proposal was to add 3% interest on employee contributions
• In his experience, modest proposal -calculations of present values of extra payouts that
would be made, interest paid to terminating employees, only about $1600.
• Converted to annual Village cost -Village contribution increase of $100 per year.
• Divided by annual payroll of employees -1 /1 OOt" of 1 % of payroll
Watkins Normal business?
Palmquist Yes -typical in public sector for interest to be credited to employee
contributions. An amendment to the Ordinance would be presented for
first reading for consideration. Before second reading, an Actuarial
Impact Statement would be filed with the State, which was largely
completed with the January report that was done and presented to the
Board.
Amero How many people does this affect?
Palmquist 25
Amero You take 5% of their pay and it only comes out to $100?
Palmquist They contribute 5% of their pay to the Pension Fund. That's already in the
plan. What is being proposed is if an employee leaves before being
vested, the Village would credit 3% interest on the 5% of their
contribution. It would be treated like a savings account.
Humpage So they would have like $30 on $1000 in interest? That is standard
practice?
Palmquist Yes.
Amero It's governmental -it's not universal -some governmental agencies buy
into it -others do not.
Paterno Asked what was common in the whole world -private.
Palmquist Private sector, except for the mega corporations, there were not many
defined benefit pension plans.
Palmquist The total financial impact on the present value of all future expected
payouts is only about $1600; and converted to an annual cost was roughly
$100 to the Village per year.
I
c
L!
J