8.5. SR 07-07-2014 - Laserfiche WebLink

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City of Elk Request for Action River To Item Number Mayor and City Council 8.5 Agenda Section Meeting Date Prepared by General Business July 7, 2014 Tim Simon, Finance Director Item Description Reviewed by Consider 2015 Benefit Level for Elk River Fire Cal Portner, City Administrator Relief Association Reviewed by Action Requested Approve,by motion, an increase to the Elk River Fire Relief Association benefit level to $5,360 per year of service effective January 1, 2015. 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. A request for an increase in the per-year of service pension amount for the next year (effective January 1) must also be acted on by the Council before August 1. The 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 and have reached the age of 50 years and have completed at least five years of active membership are entitled to a reduced service pension. The association recommended at its June 4 board meeting to request an increase of 3.75%, or$193, from the current benefit level of$5,167 which was last approved effective January 1, 2014, to $5,360 effective January 1, 2015. The increase does not require a city contribution for 2015. Over the past few years, relief assets have climbed back to a funding level over 110%. A combination of investment returns,planning,and increases in State Fire Aid have helped with the recovery. The board representing the association has changed its thought process from historically requesting increases to be at 100% funding ratio,which didn't allow for much 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 110% to absorb more market volatility without triggering any mandatory city contributions. The association will bring a policy forward on funding levels later this year as they will be reviewing a draft policy at its next meeting. The association's projections indicate that based on a 5-percent return to have a funding ratio over 110% if this increase is approved. The year-to-date returns are 3.1 percent (May 31). The assets are managed under The Parr McKnight Wealth Management Group of Wells Fargo. Brian McKnight will be at the meeting if you have any questions about the 60% stocks and 40% bonds allocation that the association maintains. P a w E R E U 6 Y NaA f RE]