From
Lisa Norris, Human Resources Director
Title
Retiree Rate Structure for 2018 Information Only
Presenter
Lisa Norris, Human Resources Director and Anna Doll, Deputy City Manager
Recommended Action
Approve
Analysis
As discussed at the Budget Workshop in August, benefits are changing for 2018 to simplify plan design, remain market competitive and fund our costs that continue to rise. We promised follow up with you all once retiree rates were restructured to achieve the same goals. Retiree structures have been modified over the years with the most substantial changes occurring in 1999 and again in 2005. The reduction from 3 plans to 2 plans requires another restructure for retirees. The following strategies were key in crafting a structure:
Simplify and condense number of retiree rates:
Currently have 500+ total rates that vary single year increments of Grand Prairie service and date of retirement. This is very difficult to maintain and creates inconsistent costs amongst retirees of similar years of service.
Remain market competitive against our survey cities:
We remain very competitive against our market and actually charge much less. We created a structure to help improve our fiscal position over time and align better with market to fund ourselves as was our focus on the active side. Everyone is impacted and we understand that, but tried to minimize and limit impact where possible and reasonable for those who gave so many years of their career to our city.
Consider actuarial cost of retirees when developing rates to protect fiscal liability into the future:
Current retiree structures were NOT accrual based on retiree costs. The actuarial cost of retirees is 180% greater than an active and we have corrected that in the new structure.
Provide the most competitive rates to those retirees that dedicated 25 or more years of full time service to our city:
We currently set the “best” rate for retirees who served our city for 30 years. However, employees are eligible to retire with 25 years of service (YOS).
Consider impact to existing retirees
With over 500 rates, we have people with the same tenure paying different rates due to structure modifications over time. We have over 170 total retirees currently to consider.
Final rates will be presented in this special Finance and Government meeting on October 3, 2017.
Financial Consideration