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HomeMy WebLinkAbout2014 Ordinance No. 046• • ORDINANCE NO. % SERIES OF 2014 BY AUTHORITY COUNCIL BILL NO. 49 INTRODUCED BY COUNCIL MEMBER GILLIT AN ORDINANCE AMENDING TITLE 3, CHAPTER 4, SECTION 2, SUBSECTION 2, OF THE ENGLEWOOD MUNICIPAL CODE 2000 PERTAINING TO THE CITY OF ENGLEWOOD NONEMERGENCY EMPLOYEES RETIREMENT PLAN AND TRUST AS AMENDED AND RESTATED EFFECTNE DECEMBER 31, 2012. WHEREAS, the Nonemergency Employees Retirement Plan changes were recommended by the Nonemergency Employees Retirement Board on August 12, 2014; and WHEREAS, changes need to be made to the Nonemergency Employees Retirement Plan (NERP) to clarify language defining "spouse"; and WHEREAS, the Nonemergency Employees Retirement Plan (NERP) must correctly define "spouse" for the purposes of complying with federal tax laws and the Colorado Civil Union Act; and WHEREAS, the effective date of May 1, 2013 for the amendment allows the Nonemergency Employees Retirement Plan to comply with the necessary effective dates for federal tax laws and the Colorado Civil Union Act. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ENGLEWOOD, COLORADO, THAT: Section 1. The City Council of the City of Englewood, Colorado hereby authorizes amending Title 3, Chapter 4, Section 2, Subsection 2, entitled Definitions of the Englewood Municipal Code 2000, by the addition of a new paragraph CC, to read as follows: 3-4-2-2: Definitions. Unless the context otherwise requires, the definitions and general provisions contained in this Subsection govern the construction of this restated Plan. A. Accrued Benefit means the benefit detennined in accordance with Section 3-4-7 hereof. B. Accumulated Contributions means the sum of the Member1s contributions to this Plan, credited with interest thereon at the rate of three and one-half percent (3.5%) per annum to the date payment of the Member's benefit commences. C. Actuarial (or Actuarially) Equivalent means equality in value of the aggregate amounts expected to be received under different forms of payment based on interest rate and mortality assumptions as defined below unless otherwise specifically provided in the Plan: 1 9b i 1. Interest Rate Assumption for Alternative Periodic Benefits. The interest rate used for purposes of computing alternative periodic forms of benefits shall be seven and one- half percent (7.5%) effective January l, 1986. 2. Interest Rate Assumption/or Single-Sum Payments. Effective for the calendar year beginning on January 1, 1986, and for each calendar year following sequentially thereafter, the interest rate used for purposes of computing single-sum payments shall be the immediate annuity rate (subject to adjustment as required for deferred annuities) used by the Pension Benefit Guaranty Corporation as of the January 1 coincident with or preceding the date as of which the amount of the alternative form of benefit is being determined hereunder. 3. Mortality Assumption. a. Effective January 1, 2012, the mortality assumption for calculation shall be a unisex rate that is fifty percent (50%) male, fifty percent (50%) female, taken from the 1994 group annuity mortality table. For the period July 1, 1999 to December 31, 2011, such mortality assumption shall be a unisex rate that is fifty percent (50%) male, fifty percent (50%) female, taken from the 1983 group annuity mortality table. Prior to July 1, 1999, such mortality assumption shall be a unisex rate that is fifty percent (50%) male, fifty percent (50%) female, taken from the 1971 group annuity mortality table. b. Solely for purposes of Section 3-4-16-2, hereof, on and after January 1, 2012, the mortality assumption for calculation shall be a unisex rate that is fifty percent (50%) male, fifty percent (50%) female, ta.ken from the 1994 group annuity mortality table. In the case of distribution with annuity starting dates on or after December 31, 2002, the mortality table used to adjust any benefit or limitation under Code Section 415(b)(2)(B), (C), or (D) as set forth in Section 3-4-16-3 of the Plan is the table prescribed by Rev. Rul. 2001-62. D. Beneficiary means the person or persons who are so designated by the Member, or Vested Member, in accordance with Section 3-4-8-7, to receive any payment to which a Beneficiary may become entitled under this Plan. E. Board or Retirement Board means the Board appointed by the City Council and charged with the general administration of the Plan as set forth in Section 3-4-11-1 hereof. F. City means the City of Englewood, State of Colorado. G. City Council means the City Council of the City. H. Code or Internal Revenue Code means the Internal Revenue Code of 1986 26 USC (1986), as amended from time to time. I. Compensation means the total cash remuneration paid to a Member for a calendar year by the City for personal services while earning Credited Service as reported on the Member's income tax withholding statement or statements (Form W-2, or its subsequent equivalent), including longevity pay and excluding bonuses, extra pay, compensation time, overtime, lump-sum payments in lieu of accrued vacation time, sick leave, or personal leave, worker's compensation and any contribution by the City under this Plan, or the like, but including 2 • J. K. L. M. any compensation that the Member has elected to have deferred under Section 457 and Section 125 of the Internal Revenue Code. Effective January 1, 1989, the amount of a Member's compensation for the purposes of the Plan during any Plan Year shall not exceed two hundred thousand dollars ($200,000.00) subject to cost-of-living adjustments in accordance with Code Section 415( d). In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, for Plan Years beginning on or after January I, 1996, the annual compensation of each "noneligible member" taken into account under the Plan shall not exceed the Omnibus Budget Reconciliation Act '93 annual compensation limit. The OBRA '93 annual compensation limit is one hundred fifty thousand dollars ($150,000.00), as adjusted by the commissioner for increases in the cost of living in accordance with Code Section 40l(a)(l 7)(b). The cost of living adjustment in effect for a calendar year applies to any period, not exceeding twelve (12) months , over which compensation is detennined (detennination period) beginning in such calendar year. If a . determination period consists offewer than twelve (12) months, the OBRA '93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the detennination period, and the denominator of which is 12 . A "noneligible member" is any Member who first became a Member in the Plan during a Plan Year beginning on or after January 1, 1996. Effective January 1, 1989, through December 31, 1996, in detennining the compensation of a Member for purposes of this limitation, the rules of Code Section 414( q)( 6), shall apply, except in applying such rules, the tenn "family" shall include only the spouse of the Member and any lineal descendants of the Member who have not attained age 19 before the close of the year, effective January 1, 1989 through December 31, 1996, if, as a result of the application of such rules the adjusted annual compensation limitation is exceeded then the limitation shall be prorated among the affected individuals in proportion to each such individual's compensation as detennined under this Subsection 2-10-2-2(i), of the Englewood Municipal Code prior to the application of this limitation. For purposes of calculating Compensation on or after January 1, 2002, the limitation under Code Section 401 (a)(l 7) is increased to two hundred thousand dollars ($200,000 .00), as adjusted. Credited Service means the period of Service rendered by an Employee as a Member for which credit is allowed. Disability means a physical or mental condition which entitles the Member to receive a disability income under the long-term disability insurance contract maintained by the City. Effective Date This Plan was originally effective January 1, 1970 and has been amended and restated from time to time. Employee means any person employed by the City as a full-time, non-exempt, non- confidential, non-supervisory (hourly) employee who is covered by the overtime provisions of the Fair Labor Standards Act. For the purposes of this retirement Plan, police officers, paid firefighters, elected officials and temporary employees shall not be considered to be Employees. If a person who was excluded from this definition of Employee is later detennined to have been misclassified or is reclassified, the person shall continue to be treated as not an Employee for all Plan purposes for periods prior to the date the person's classification is revised. 3 N. Exempt Employee means an Employee having one of the following titles as defined by City Personnel Policies and Procedures: City Manager, Deputy City Manager, any Department Directors, Municipal Court Judge, City Attorney, and Assistant City Attorney. Effective January 1, 1988, "Exempt Employee" shall also include any managerial, supervisory or confidential employee as defined by City Personnel Policies and Procedures. 0. Final Average Monthly Compensation means 1/36 of a Member's total Compensation during the thirty-six (36) consecutive full calendar months ( determined without the inclusion of any Break in Service) within the last one hundred twenty (120) completed full calendar months of employment with the City which yield the highest average Compensation. In the event the Member was employed for fewer than thirty-six (36) consecutive full calendar months, such average monthly compensation shall be based on his Compensation for the thirty-six (36) successive full months during his last one hundred twenty (120) full calendar months of employment with the City that would yield the highest average, or his full period of such employment, if less than thirty-six (36) months . For purposes of calculating Final Average Monthly Compensation, a retroactive increase in a Member's Compensation shall be considered Compensation only for the calendar month for which the increase is paid (not for the month in which the payment occurs). P. Insurance Company means any insurance company or companies appointed by the City for long-term disability coverage, or as provided in Subsection 3-4-12-3 hereof. Q. Leave of Absence means any absence authorized by the Employer under such Employer's standard personnel practices, provided that all persons under similar circumstances must be treated alike in the granting of such Leave of Absence, and provided further that the Employee returns or retires within the period specified in the authorized Leave of Absence. R. Member means any person included in the membership of this Plan as provided in Section 3-4-3 hereof. S. Normal Retirement Age means age sixty-five (65). T. Normal Retirement Date means the first day of the calendar month coincident with or next following the sixty-fifth (65th) birthday of the Member. U. Plan means City of Englewood Nonemergency Employees Retirement Plan and Trust, as amended from time to time. V. Plan Administrator means the Retirement Board of the City. W. Plan Year means the calendar year starting January 1 and ending December 31. X. Previous Plan means the Plan (including the City of Englewood Retirement Plan and any predecessor plan(s) thereto) in force and effect for the period prior to December 31, 2012. Any reference herein to the Previous Plan as of a certain date or for a certain period shall be deemed a reference to the Previous Plan as then in effect. Y. Retired Member means a fonner Member whose employment tenninated by reason of retirement according to Section 3-4-6-1 , 3-4-6-2 or 3-4-6-3 and who is receiving or is entitled to receive, or whose Beneficiary or estate is entitled to receive, benefits under this Plan. 4 • • • Z. Retirement Benefit or Pension means any Retirement Benefit provided for in Section 3-4-7 hereof. AA. Retirement Fund or Fund means the "City of Englewood Nonemergency Employees Retirement Fund," maintained by the Retirement Board or in accordance with the terms of the Trust Agreement, amended from time to time, which constitutes a part of this Plan. BB. Service means a person's period or periods of employment as an Employee used in determining eligibility or the amount of benefits as described in Section 3-4-4 hereof. ~ Spouse. Effective May 1, 2013. spouse is defined as follows: Cal for pumoses of federal tax laws applicable to this Plan. spouse is defined according to federal tax laws. including Rev. Rul. 2013-1 Z and subsequent regulations and rulings. and includes a spouse lawfully married under the laws of one of the so states. the Qi strict of Columbia. au s. territory or a foreign jurisdiction. regardless of whether the spouses remain residents of the state. territory or jurisdiction in which they were married; Cbl for all other purposes. spouse is defined according to federal tax laws and. in addition, spouse is defined to include parties to a Colorado civil union. GG Im-Trustee means any qualified and acting Trustee appointed by the City Council as Named Fiduciary for the investment and management of Plan assets, as provided in Section 3-4-12 hereof. OOEE. Vested Member means a former Member whose Credited Service has terminated by reason other than retirement or Disability, who has completed at least five (5) years of Credited Service and who is entitled to receive, or whose Beneficiary or estate is entitled to receive, benefits under this Plan. A Vested Member shall become a Retired Member upon the actual commencement of benefit payments. Section 2. Safety Clauses. The City Council hereby finds, detennines, and declares that this Ordinance is promulgated under the general police power of the City of Englewood, that it is promulgated for the health, safety, and welfare of the public, and that this Ordinance is necessary for the preservation of health and safety and for the protection of public convenience and welfare. The City Council further determines that the Ordinance bears a rational relation to the proper legislative object sought to be obtained. · Section 3. Severability. If any clause, sentence, paragraph, or part of this Ordinance or the application thereof to any person or circwnstances shall for any reason be adjudged by a court of competent jurisdiction invalid, such judgment shall not affect, impair or invalidate the remainder of this Ordinance or it application to other persons or circwnstances. Section 4. Inconsistent Ordinances. All other Ordinances or portions thereof inconsistent or conflicting with this Ordinance or any portion hereof are hereby repealed to the extent of such inconsistency or conflict. Section 5. Effect of repeal or modification. The repeal or modification of any provision of the Code of the City of Englewood by this Ordinance shall not release, extinguish, alter, modify, or change in whole or in part any penalty, forfeiture, or liability, either civil or criminal, which shall have been incurred under such provision, and each provision shall be treated and held as 5 still remaining in force for the purposes of sustaining any and all proper actions, suits, proceedings, and prosecutions for the enforcement of the penalty, forfeiture, or liability, as well as for the purpose of sustaining any judgment, decree, or order which can or may be rendered, entered, or made in such actions, suits, proceedings, or prosecutions. Section 6. Penalty. The Penalty Provision of Section 1-4-1 EMC shall apply to each and every violation of this Ordinance. Introduced, read in full, and passed on first reading on the 2nd day of September, 2014. Published by Title as a Bill for an Ordinance in the City's official newspaper on the 5th day of September, 2014. Published as a Bill for an Ordinance on the City's official website beginning on the 3rd day of September, 2014 for thirty (30) days. Read by title and passed on final reading on the 15th day of September, 2014. Published by title in the City's official newspaper as Ordinance No. 1fg Series of 2014, on the 19th day of September, 2014. Published by title on the City's official website beginning on the 17th day of September, 2014 for thirty (30) days. This Ordinance shall take effect thirty (30) days after publication following final passage. I, Loucrishia A. Ellis, C ity Clerk of the City of Englewood, Colorado, hereby certify that the above and foregoing is J-Jpie copy of the Ordinance passed on final reading and published by title as Ordinance No. :1Je. Series of 2014. 6 ., COUNCIL COMMUNICATION Date: Agenda Item: Subject: September 2, 2014 11 a i Bill for an Ordinance adopting amendments to the City of Englewood NonEmergency Retirement Plan (NERP) Document Initiated By: Staff Source: City of Englewood, Finance and Administrative Frank Gryglewicz, Director Services Department COUNCIL GOAL AND PREVIOUS COUNCIL ACTION The City Council and staff has not discussed the changes incorporated in the attached bill for an ordinance. RECOMMENDED ACTION Staff recommends City Council approve the attached bill for an ordinance making necessary changes to the NonEmergency Retirement Plan (NERP) Document. BACKGROUND, ANALYSIS, AND ALTERNATIVES IDENTIFIED -The purpose of the attached bill for an ordinance is to amend the NERP to correctly define "spouse" for the purpose of complying with federal tax laws and the Colorado Civil Union Act. The effective date of May 1, 2013 for the amendment allows the NERP to comply with the necessary the effective dates for federal tax laws and the Colorado Civil Union Act. The amendment has no impact on retiree benefits other than identifying who is a spouse as required by federal and Colorado laws. FINANCIAL IMPACT There is no financial impact to the NERP. LIST OF ATTACHMENTS Explanation of NERP Amendment to Comply Proposed Bill for Ordinance. ,i EXPLANATION OF AMENDMENTS TO CITY OF ENGLEWOOD NONEMERGENCY EMPLOYEES RETIREMENT PLAN ("NERP") TO COMPLY WITH IRS NOTICE 2014-19 AND THE COLORADO CIVIL UNION ACT The Need for This NERP Amendment. This NERP amendment is necessary to specify how the NERP accommodates differences in Colorado and federal laws defining "spouse.• The NERP must correctly apply different definitions of "spouse" for different purposes. In the case of NERP provisions mandated by federal tax laws that refer to a "spouse" (e.g. NERP provisions addressing rollovers and minimum required distributions), the NERP may not include Colorado civil unions in the definition of "spouse," but must treat same-sex marriages in other states and countries as "spouses" according to IRS rules. In the case of NERP provisions that refer to "spouse" but are not mandated by federal tax law, the NERP must include Colorado civil unions in the definition of "spouse." IRS Notice 2014-19 states that amendments to satisfy federal tax law must be adopted no later than December 31, 2014 (with technical extensions into 2015 for certain situations). (For further discussion of why I believe the NERP must apply the Colorado Civil Union Act -definition of "spouse" for provisions not mandated by federal tax law, see the paragraph below entitled Note Regarding Application of the Colorado Civil Union Act to the NERP.) Effective Date. The May 1, 2013 effective date of this amendment is based on the following rationale: IRS Notice 2014-19 requires the effective date of section (a) of this amendment (regarding the definition of spouse for federal tax laws) to be no later than June 26, 2013 (or September 16, 2013 for same-sex spouses who do reside in a state that does not recognize their marriage but were validly married in another state or country). Section (b) of this amendment is based on the Colorado Civil Union Act, which took effect May 1, 2013. Because the difference between the IRS effective dates and the Colorado effective date is only a few months, it appears best to use same May 1, 2013 effective date for all of this definition in order to avoid unnecessary confusion. (Because some states authorized same-sex marriage before May 1, 2013, this effective date could be set earlier. Please advise if you wish to consider an effective date earlier than May 1, 2013, but an earlier effective could present additional complications.) Meaning of the NERP Amendment. The Retirement Plan amendment assures the IRS that the Plan has been amended according to the requirements of IRS Notice 2014-19 to comply with the definition of "spouse" that Rev. Rul. 2013-1 7 mandates for applying federal tax laws, e.g., the minimum required distribution rules of NERP section 3-4-6-5 and the spousal rollover rules of NERP section 3-4-1 7-3. The amendment for the Colorado Civil Union Act creates new consent requirements under the NERP for parties to a Colorado civil union. This result is due to the NERP consent requirements that apply to "spouses" but are not mandated by federal tax law. Section 3-4-8-1 requires spouse consent to payment in a form other than a joint and survivor annuity, and section 3-4-8-7 requires spouse consent to a member's selection of a nonspouse beneficiary. This amendment means that the NERP must treat parties to a Colorado civil union as "spouses" for purposes of these spouse consent requirements. Note Regarding Application of the Colorado Civil Union Act to the NERP. This amendment assumes that the NERP will apply the Colorado Civil Union Act to define "spouse" in circumstances where the NERP is not required to apply the federal tax law definition of "spouse." Although the Colorado Civil Union Act does not directly state that it applies to a retirement plan such as the NERP, the Act includes the following statements that appear to require the NERP to treat parties to a Colorado civil unions as "spouses": • Parties to a civil union have the "rights, benefits, protections ... as are granted to spouses" as derived from "statute, administrative or court rule, policy, common law, or any other source of law." [ emphasis added] • The applications of the Act "include but are not limited to" ... naming a "beneficiary" under PERA and "survivor benefits under local firefighter and police pensions." Based on these provisions, I conclude that it is advisable for the NERP to define "spouse• according to the Colorado Civil Union Act where federal tax law permits. ....