8.3. SR 07-15-2013 - Laserfiche WebLink

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v El l Request for Action River To Item Number Mayor and City Council 8.3 Agenda Section Meeting Date Prepared by General Business July 15, 2013 Tim Simon, Finance Director Item Description Reviewed by Elk River Fire Relief Association 2014 Benefit Level Cal Portner, City Administrator Reviewed by Action Requested Approve by motion the Elk River Fire Relief Association benefit level per year of service benefit to $5,167 per year, effective January 1, 2014. Background/Discussion Prior to August 1 of each year,the Elk River Fire Relief Association is required to certify to the city the required municipal contribution for the following year. An increase in the service pension must also be acted on by the Council before August 1. The Fire Relief Association operates under a defined benefit plan. The pension liability is calculated by the number of active service years multiplied by a set benefit level. Members who retire with less than 20 years of service, have reached age 50, and have completed at least five years of active membership are entitled to a reduced service pension. The Relief Association Board recommended at its May 29 board meeting to request an increase of 1.5% or $76 in the per year benefit level to $5,167 effective January 1,2014, from the current benefit level of $5,091,which was last approved effective January 1,2008. The proposed increase does not require a city- required contribution for 2014. Since the last approved increase in 2008, the markets have seen historic decreases, and as a result numerous funding ratios in pensions across the country have seen a decrease. The markets have recovered somewhat as has the reliefs funding ratio. The Relief Board has changed its thought process from historically requesting an increase to be at 100% funding ratio,which doesn't allow for market volatility, and if the market drops it may be several years until the next increase. The current practice is to request smaller gradual increases and leaving the funding ratio over 100% to absorb more market volatility without triggering mandatory city contributions. The Relief Association projections indicate that based on a 5% return to have a funding ratio over 100% if this increase is approved. The year-to-date returns are 5.8 percent Qune 30). The mayor, fire chief, and finance director serve as trustees of the Association, and will be available to answer questions. Relief Association representatives will also be at the meeting. p0WIeE0 0 NAWREI