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93-2850 Ordinance ORDINANCE NO. 93-2850 AN ORDINANCE AMENDING ORDINANCE 89-2640, WHICH CREATED THE CITY SUPPLEMENTAL PENSION FUND FOR FIREMEN AND POLICEMEN IN THE CITY OF MIAMI BEACH, FLORIDA; PROVIDING 1) REPLACING ALL REFERENCES TO FIREMEN AND POLICEMEN WITH FIREFIGHTERS AND POLICE OFFICERS, RESPECTIVELY; 2) CHANGING THE INVESTMENT POLICY TO THE PRUDENT PERSON RULE; 3) REDUCING PENSION BENEFITS FOR ALL NEW MEMBERS EMPLOYED AFTER MAY 19, 1993; 4) REDUCING THE USE OF OVERTIME FOR CALCULATING PENSION BENEFITS FOR CURRENT MEMBERS TO 70% OF THE CURRENT LIMIT; AND 4) OFFERING TWO OPTION PERIODS FOR EARLY RETIREMENT INCENTIVES; PROVIDING FOR SEVERABILITY; REPEALING ALL ORDINANCES IN CONFLICT THEREWITH; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City Commission of the City of Miami Beach adopted Ordinance 89-2640, which created the "Supplemental Pension Fund for Firemen and Policemen in the City of Miami Beach; and WHEREAS, the City, through contract negotiations with the International Association of Firefighters and the Fraternal Order of Police have negotiated changes affecting this pension fund; and WHEREAS, it is the desire to replace all references to Firemen and Policemen with Firefighters and Police Officers, respectively, so as to make all such references gender neutral; and WHEREAS, changing the investment policy for the plan's assets to the "prudent person" rule for investing would assist in achieving the assumed rate of return; and WHEREAS, the benefits for future employees (hired after the effective date of this amendment) would be decreased from that of the current employees; and WHEREAS, the utilitzation of overtime for purposes of calculating pension benefits for current employees will be reduced to 70% of the current limit; and WHEREAS, in the effort to reduce the overall cost of pension benefits and to accelerate the process of employee diversity in the Police and Fire Departments, the City has offered an incentive for the early retirement of current employees; and NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA: SECTION 1. - That Ordinance 89-2640 (as amended) be amended to read as follows: Section 1. Establishment of Supplemental Pension Fund A special fund shall be created to be known as the City Supplemental Pension Fund for Firemen Firefighters and Policemen Police Officers in the City of Miami Beach; said fund to be used exclusively for the purpose provided for in this Supplemental System, which Fund shall be collected, administered and disbursed according to the provisions of this Supplemental System. section 2. Method of Financing The Said Supplemental Pension fund shall consist of monies derived from the following sources: 2.01 On and after the Effective Date, the City shall pay into the fund of the Supplemental System with respect to each fiscal year such amount as is actuarially determined to be required under this Plan, in addition to the personal contributions of members, computed on an interest rates as determined from time to time by the Board of Trustees. Any forfeitures arisinq under this Supplemental System shall be used to reduce the contributions of the city otherwise payable. 2.02 All computations of liability in connection with the Supplemental System created hereby shall be based on such tables and rates approved by the Board of Trustees. The actuary for the Base System shall be the Actuary for the Supplemental System. The Actuary for the Supplemental System shall recommend such tables and rates for adoption by the board. On the basis of such tables and rates, the Actuary for the Supplemental System shall determine the amounts required to be paid into the Supplemental System by the City, as provided for in Section 2.01. 2.03 There shall be a complete actuarial evaluation prepared by the Actuary at least every three (3) years, and the City shall make such adjustments in its contributions as shall be shown to be required by such actuarial evaluation. The money required to meet all the obligations of this Supplemental System, over and above the personal contributions forthcoming from the members, is a liability and obligation of the City of Miami Beach. The expenses of the Supplemental System shall not be separately budqeted so long as that method is permitted by law. Therefore, the City conunission of the City of Miami Beach may levy annually, in the manner provided by Law, upon all taxable property within said City, such millage on the assessed valuation thereof as is necessary to produce the amounts required hereby to be contributed by said city to this Supplemental System. Nothing in this Supplemental System shall be construed to prevent the City Administration from appropriating monies from the General Fund or from any Special Funds of the City, for the purpose of creating or adding to the Pension Fund created under this Supplemental System, and the City shall have the right to appropriate monies from the General Fund or any special Fund of the City in addition to a millage. And furthermore, the City shall have the right and power to designate other sources of revenue for 2 the Pension Fund created by this Supplemental System, including the designating of certain fines and forfeitures for violation of the City Ordinances to be paid to this Fund instead of the general revenue of said City. No monies raised by taxation or otherwise provided for in the Pension Fund created under this Supplemental System shall be used other than for the purpose of this Supplemental System. 2.04 Except as hereinafter provided, commencing with the first payroll period beginning on or after the Effective Date, every member shall contribute an amount equal to ten (10%) percent of his salary or wages reduced by the amount of salary or wages he is contributing under the Base System, and shall be entitled to receive the benefits of this Supplemental System. On and after the Effective Date, the city shall, solely for the purpose of compliance with section 414(h) of the Internal Revenue Code, pick up the member contributions required to be made under this Supplemental System by employees on salary or wages paid with respect to payroll periods beginning on or after the Effective Date, and the contributions so picked up shall be treated as employer contributions in determining tax treatment under the Internal Revenue Code. section 3. Definitions 3.01 The term "employee" shall mean any regular member of the Police Department or Fire Department who has attained regular civil Service Status in such Departments under the Official Classifications of positions in the Classified Service of the City of Miami Beach, Florida, having a rank in such department other than Civilian rank and other than the classification of School Guard. The Chiefs of the Police and Fire Departments who have held classified positions with the City of Miami Beach shall be considered employees for the purposes of this Supplemental System. The Chiefs of the Police and Fire Departments who have never held classified positions with the City of Miami Beach shall not be considered employees for purposes of this Supplemental System. (Ordinance No. 90-2715) 3.02 The terms "Fircmcn" "Firefighters" and "Policcmcn" "Police Officers" shall be synonymous with the term "employee" as defined above. 3.03 The term "..:idm:" "widow" or "widower" shall mean the lawfully wedded wH-e spouse of a member of the Fire or Police Departments living with the member at the time of fl45 death. 3.04 For thc purpoDc of dctcrmining mcmbcr contributionD undcr thiD Supplcmcntal SYDtcm, thc tcrm "Dalary or wagcD" Dhall mcan Dalary or ..,ragcD bcforc rcduction for thc picJccd up mcmbcr contributionD and bcforc rcduction for any amountD contributcd in accordancc ~{ith Scctiono 125 or 457 of the Intcrnal Rcycnuc Codc. 3 For the purpose of determininq member contributions under this Supplemental System. with respect to members who were employed by the city prior to May 19, 1993. the term "salary or waaes" shall mean salary or waqes before reduction for the picked-uP member contributions and before reduction for any amounts contributed in accordance with sections 125 or 457 of the Internal Reyenue Code. Solely with respect to members employed by the City on or after May 19, 1993 the term "salary or wages" shall refer only to base pay and lonaevity pay, excluding any payment of overtime, shift differential or extra compensation allowance such as uniform allowance, but determined before reduction for the picked-up member contributions and before reduction for any amounts contributed in accordance with sections 125 or 457 of the Internal Revenue Code. Furthermore, "salary or wages" taken into account for any purpose under this Supplemental System, including for purposes of determining a member's contribution to this Supplemental System under section 2.04, shall not exceed $200,000 per year. As of January 1 of each calendar year beginning on or after January 1, 1990, the foregoing limitation shall be adjusted in such manner as shall be determined by the Secretary of the Treasury. 3.05 The term "Base System" shall mean the Police and Firemen's Pension Act, City of Miami Beach, Florida Chapter 23414, Laws of Florida, Special Acts of 1945, as amended from time to time. 3.06 The term "Supplemental System" shall mean this Police and Fircmcn'o Firefiahters' Supplemental Pension System, as set forth in this document or as amended from time to time. 3.07 The term "Effective Date" shall mean June 1, 1989 except that if the City is required to initiate funding prior to October 1, 1989, the Effective Date shall be October 1, 1989. 3.08 The term "Base System Benefit" shall mean the amount of benefit payable to or on behalf of a member, if any, under the Base System on account of the member's retirement, death or disability, as the case may be, under a provision of the Base System. 3.09 The term "physically and/or mentally handicapped child" shall mean a dependent child of a member having reached the age of eighteen (18) who is primarily dependent upon the member for the child's livelihood or support due to a mental or physical condition or handicap of the adult child which requires, or otherwise would have required, the member to provide primary support for the adult child. 3.10 The term "dependent parent" shall mean a parent of a member for whom a member is entitled, or would have been entitled, to claim a dependency exemption for Federal income tax reporting purposes. The masculine pronoun shall mean the feminine where appropriate, 4 and vice versa. section 4. Membership 4.01 Any employee of the City who is an employee as herein defined on the Effective Date or who becomes an employee as defined herein after the Effective Date shall automatically be a member of this System. However, any member may irrevocably elect, in writing and prior to January 1, 1990 or prior to retirement, if earlier, to wai ve his membership in this Supplemental System and, in such event, he shall not become a member hereunder, shall not make contributions hereunder, and shall not be entitled to any benefits hereunder. 4.02 A member who retired from the Base System on or after January 1, 1989 and prior to the Effective Date shall become a member of this Supplemental System on the Effective Date and have his pension recalculated to reflect the provisions of section 7.01(B) and (C) with respect to payments due and owing on and after the Effective Date; provided, however, that such member may irrevocably elect in writing prior to the Effective Date to waive his membership in this System, in which event he shall not become a member hereunder, and shall not be entitled to any benefits hereunder. A member who retired from the Base System on or after January 1, 1989 and prior to the Effective Date and who has at least twenty (20) years of creditable service and who is entitled to receive benefits under the Supplemental System may contribute an addi tional amount to the Supplemental System on or after the Effective Date but no later than January 1, 1990 in order to receive service credit for his years of active military service in the u.S. Army, Navy, Air Force, Marines or Coast Guard occurring prior to his date of employment with the City. A member may purchase up to four (4) years of such service. The price for each such year shall be ten (10%) per cent of the aggregate of his salary or wages during the twelve (12) calendar months immediately preceding the date of his retirement and such price shall be prorated accordingly if a member's election includes a fractional year of service. Any additional benefit attributable to military service purchased under this Section 4.02 shall be determined in accordance with the three (3%) per cent rate as described in Section 7.01(B) (1). (Ordinance No. 89-2652) 4.03 Whenever a member shall sever his employment voluntarily prior to becoming eligible for a pension but retain his civil service rights with the City, and if such member does not have returned to him the monies provided for in Section 18 hereof, he shall, upon resuming his employment as an employee as defined herein, again become a member; provided, however, that between the date of such severance and the date of such re-employment he shall be entitled to no benefits hereof excepting those which may have 5 accrued to him prior to such severance, and further provided upon such re-employment he shall submit to the medical examination required by section 4.06. For purposes of determininq the provisions of the System which applY to a member who was employed bY the city prior to May 19. 1993 and is rehired on or after Mav 19. 1993 if such a member did not receive a distribution of his accumulated contributions u~on his termination of employment. he shall be treated as a member employed by the city prior to May 19. 1993; in all other cases. the member shall be deemed a new employee as of his date of reemployment and the provisions of the Plan applicable to new members on and after May 19. 1993 shall qovern. 4.04 As of the Effective Date, there shall be transferred to the Pension Fund of this Supplemental System an amount equal to three (3) times the accumulated amount of contributions, together with interest thereon to the date of transfer, that were paid by the employee into the City of Miami Beach Employees Retirement System with respect to employees as defined herein who are members of the City of Miami Beach Employees Retirement System as of the Effective Date and who are not members of the Base System as of such Date . Simultaneously with such transfer, said employees shall become members of this Supplemental System. The funds so transferred, together with interest thereon to the date of transfer, shall be credited against the City' s liability for creditable service already accrued prior to the date of transfer with respect to persons who become members of this Supplemental System in accordance with this Section 4.04. 4.05 Membership in this Supplemental System shall automatically cancel the membership and participation of any employee in any other pension annuity or retirement System for employees of the City of Miami Beach to which the said City contributes, other than membership and participation in the Base System. 4.06 All employees of the city who become employees as defined herein and who become members of this Supplemental System in accordance with the provisions of this section 4, shall submit to a physical examination as prescribed by the Board of Trustees; however, the result of such examination shall not affect eligibility for membership in this Supplemental System, but shall be used for the proper administration of the Supplemental System by the Board. This physical examination requirement shall be deemed satisfied with respect to any member who has fulfilled this requirement under the Base System as of the Effective Date or who fulfills said requirement under said System after the Effective Date. 4.07 Whenever any employee is employed by the city prior to May 19. 1993 and becomes a member of this Supplemental System, the 6 City, within thirty (30) days thereafter, is hereby authorized, empowered and directed to prepare a contract for execution between the parties hereto, to-wit: the City and said employee, which contract shall be in the following form: THIS AGREEMENT, made and entered into this day of 19 between the City of Miami Beach, a municipal corporation under the laws of the State of Florida, hereinafter referred to as City, party of the first part, and (individual employee), hereinafter described as employee, party of the second part. WITNESSETH: THAT WHEREAS, the City has established the Police Officers and Fircmcn'o Firefiqhters' Supplemental Pension System City of Miami Beach, Florida, and WHEREAS, it is beneficial to the said City to have its said employees protected by the terms of said Supplemental System and benefits and the said employee is desirous of participating in said Supplemental System and benefits, it is thereupon UNDERSTOOD AND AGREED by and between the parties that the party of the second part does hereby allot, out of his salary or wages paid to him by the City and determined before reduction for picked-up contributions in accordance with section 2.04 or any amounts contributed on a pre-tax basis in accordance with Sections 125 and 457 of the Internal Revenue Code, an amount equal to ten (10%) per cent of said salary or wages from the Effective Date (or date of membership, if later), reduced by the amount of salary or wages he is contributing under the Base System, and does hereby authorize and direct the disbursing officer or officers of said City to retain out of said salary or wages said amount, in compliance with the terms of the Supplemental System, and to continue to make said allotment and authorize said deduction throughout the entire time of his employment or re-employment or until such time as he shall be entitled to receive the pension allowance or benefit provided by the Fund. For the purpose of determining member contributions under this Supplemental System, salary or wages shall be computed in accordance with the provisions of Section 3.04. IT IS FURTHER UNDERSTOOD AND AGREED by and between the parties that the said City, party of the first part, will accept said allotment or deduction from the salary or wages of said employee aforesaid, and when, under the terms of the Supplemental System, said employee or other beneficiary of said employee shall be entitled, under the terms of the Supplemental System, to receive the benefits from said Fund herein created, will pay said sum or sums from said Fund and all other benefits so authorized to said employee or his other beneficiaries, in accordance with the terms of this Supplemental System, without diminution or deduction. IT IS FURTHER UNDERSTOOD AND AGREED that this contract shall 7 remain in force without change, modification or amendment, until all the purposes now intended to be fulfilled shall have been fully performed, except that payment or other benefits to the party of the second part or his beneficiaries may be increased but not diminished. IT IS FURTHER UNDERSTOOD AND AGREED that the percentage of the allotment of or deduction from the salary or wages of the said employee shall not be increased during the term of this contract but may only be decreased or diminished by the party of the first part, nor shall said employee lose any rights under the terms of this contract by reason of the refusal of said city at any time during the terms hereof to make allotment or deduction from said salary or wages. IT IS FURTHER UNDERSTOOD AND AGREED that it is the intention of the parties hereto to create vested rights in the respective parties not to be hereinafter impaired for any cause whatsoever. IT IS FURTHER UNDERSTOOD AND AGREED that the terms of the Supplemental System hereinbefore set forth are declared to be a part of this contract and this contract is to be construed with reference thereto. IN WITNESS WHEREOF, the party of the first part has hereto caused these presents to be executed, signed and sealed, with the seal of said City, by its duly authorized officers, and the said party of the second part has hereunto set his hand and seal the day and year first above written. (Here follow signatures and seals.) Said contract or agreement is to be executed in duplicate, one copy to be retained by the city, the other copy to be delivered to the said employee joining in said contract, and shall thereafter be and remain a contract binding upon the said City and the employee, and enforceable in any Court in the State of Florida having jurisdiction of actions upon contracts in like amount, and by such relief, ordinary or extraordinary, at law, or in equity as may be suitable or appropriate in similar causes. section 5. Administration of system The general administration and responsibility for the proper operation of the Supplemental System are vested in a Board of Trustees consisting of nine persons. The Board of Trustees shall be identical to the Board of Trustees of the Base System. Election or appointment to the Board of Trustees of the Base System shall constitute an election or appointment to the Board of the Supplemental System. The Chairman and Secretary of the Board of Trustees of the Supplemental System shall be the Chairman and Secretary of the Board of Trustees of the Base System. (A) The Trustees shall serve without compensation, but they may be reimbursed for all necessary expenses which they may actually expend through services on the Board. 8 (B) Each Trustee shall, within ten days after his appointment or election, take an oath of office before the city Clerk of said City, that so far as it develops upon him he will diligently and honestly administer the affairs of the said Board, and that he will not knowingly violate or willingly permit to be violated any of the provisions of the law applicable to the retirement system. Such oath shall be subscribed to by the member making it and certified by the said Clerk and filed in his office. (C) Each Trustee shall be entitled to one vote on the Board. Five votes shall be necessary for a decision by the Trustees at any meeting of the Board. The Chairman shall have the right to one vote only. (D) Subject to the limitations of this Supplemental System, the Board of Trustees shall from time to time establish rules and regulations for the administration of funds of the Supplemental System and for the transaction of its business, including provisions for compulsory attendance of its members. (E) The Board of Trustees shall engage such actuarial and other services as shall be required to transact the business of the Supplemental System. The compensation of all persons engaged by the Board of Trustees and all expenses of the Board necessary for the operation of the Supplemental System shall be paid at such rates and in such amounts as the Board of Trustees shall agree but in no case shall the total expenditures for such services or operations under this Supplemental System exceed three (3) per cent of the maximum of the combined pension funds under the Base System and this Supplemental System for each fiscal year less the amount of actual expenditures for services or operations under the Base System. All funds shall be disbursed by the Board of Trustees. (F) Any trustee who neglects the duties of his office shall be removed by the Board of Trustees. Section 6. Investment of Funds 6.01 Money shall be withdrawn from the pension fund under the Supplemental System only upon warrants executed by a majority of the Board. The Board shall have exclusive charge of the investment of any surplus in said fund not needed for the current obligations thereof..!... by inveotment of O:lme in the follo\dng % Bondo, noteo, oecuritieo or other e.:idenceo of indebtedneoo \.hicn :lre the direct oblig:ltiono of the Covernment of the united Et:lteo :lnd for \.hich the full faith :lnd credit of the government io pledged. LO:lno, inoured or guar:lnteed ao to principal and intereDt by the Covernment of the United Et:lteD or by any ngency or inotrument:llity thereof, to the extent of ouch inDur:lnce or guarnnty. Bondo, noteD and other DecuritieD of any county or 9 inoorporated oity in any state of the United stateo or the Diotriot of ColuHlbia, uhioh are the diroot obligation of ouoh oounty or oi ty and for paYHlent of \.hich oaid go~...ernHlental body hao the la\.ful author i ty to levy taxeo or H1alec aooeooHlents. Bondo, noteo or other c~...idenoco of imie:etedneoo whioh are payable from revenueD of any otructure or improvement owned by any otate or inoorporated oity within the united states. Dividend paying otoolco, oalffiftan ar preferred, af any oorporation oreated and exiotinq under the lam3 of the United stateo or of any 8tate, provided that the aHlount 00 inveoted ohall at no tiHle exoeed fifty (50%) per oent of the total fundo inveoted. Group annuity contraoto \lith one or H10re inourance oompanieo authorized to do buoineoo in the state \dth aooeto af not 1000 than two billion dollaro. Suoh group annuity oontraoto H1ay provide for direot paYHlent of benefito by the inouranoe oOHlpany to H1eHlbero, retiranto, penoionero or benefioiaries, or H1ay provide for the paYHlent of fundo to be H1ade to the Board to be applied to\/ard aHlounto payable to ouch peroono purouant to the provioiono of thio SuppleHlental 8yoteHl. Bondo, noteo or other intereot bearing obligationo of any oolvent oorporation organized under the la\JO of the United stateo, or any state, territory or poooeooion of the United states. Shares or savings aooounto of federal savings and loan asoooiations, to the extent that they aro insured by an agenoy or an inotruHlentality of the GovernHlent of tho United states. The trustees shall. in acquirinq. investinq. reinvestinq, exchanqing, retaininq, sellinq and manaqinq property for the benefit of the City Sup~lemental Pension Fund for Firefiqhters and Police Officers in the City of Miami Beach. exercise the iudament and care under the circumstances then prevailinq, which persons of prudence, discretion and intelliqence exercise in the manaqement of their own affairs, not in regard to speculation but in reqard to the permanent disposition of their funds, considerinq the probable income as well as the probable safety of their capital. Within the limitations of the foreqoinq standard, a trustee is authorized to acquire and retain every kind of property, real, personal or mixed, and every kind of investment specificallY includinq, but not bv way of limitation, bonds, debentures and other corporate obliqations. and stocks, preferred or common, which persons of prudence, discretion and intelliqence acquire or retain for their own account and, within the limitations of the foreqoinq standard, a trustee may retain property acquired, without limitation as to time and without reqard to its suitability for oriqinal purchase. The intent of this provision is to remove any and all restrictions which are otherwise imposed bv Chapter 175 or 185 Florida statutes and which may be removed. 6.02 Monies needed for the meeting of the current obligations 10 may be deposited in a depository recognized by law for the deposit of funds of the state of Florida and upon posting of similar security to that required for public deposits. The City of Miami Beach shall have the custody of and responsibility for any funds, stocks, bonds, notes or other evidences of indebtedness and such custody shall be for the purpose of safekeeping only, without any discretion in the City of Miami Beach regarding the propriety of any withdrawal or transfer of any such funds, stocks, notes, other evidences of indebtedness or funds. Section 7. Benefits Payable 7.01 SCF7ioc aBd Disability BCBcfits Service Benefits for Members Who Were Emploved by the city 1993 (A) and Disability Prior to May 19, The Board shall, upon application, retire members meeting any one of the following requirements: (1) The attainment of age Fifty (50) years. (2) Permanent and total disability incurred in the line of duty in the Police or Fire Department, or in the Unclassified Service as provided in Section 18 hereof, irrespective of the number of years of service. (3) Permanent and total disability incurred other than in the line of duty, after five (5) years of creditable service. (B) A member shall be entitled to receive, upon retirement after the attainment of age Fifty (50), or upon retirement under the provisions of Subsection (A) (2) or (3), a monthly pension payable for life equal to subparagraph (1) plus subparagraph (2), reduced by subparagraph (3) as follows: (1) Three (3%) per cent of the average monthly salary or wages of the member for each year of the first fifteen (15) years of creditable service, being computed as to a part of a year on a pro rata basis to the nearest month; plus (2) Four (4%) per cent of the average monthly salary or wages of the member for each year of creditable service in excess of fifteen (15) years, being computed as to a part of a year on a pro rata basis to the nearest month; reduced by (3) the base System Benefit. In the event a service retirement pension becomes payable under this Supplemental System prior to the date the service retirement pension is payable under the Base System, the member's pension payable hereunder shall be recomputed at such time as the Base System Benefit becomes payable to reflect payment of such Benefit. For purposes of determining a member's benef it under this Supplemental System, the "average monthly salary or wages" of the 11 member shall be based on the average of the two (2) highest paid years of the member prior to the date of retirement or termination. For purposes of such calculation, salary or wages shall be computed on the salary or wages upon which the member's contribution to the Supplemental System was computed, as defined in Section 3.04. NotwithDtanding that dcfinition, hmicTJ'cr, thc incluDion of ovcrtime in the b.-o (2) higheot paid yearo ohall be limited in cach year to an amount ",Thich io equal to the difference beblCen the member'o annualized pay rate at the time of retirement or termination and the higheot annualized pay rate for the next higher salary ran]{. Notwithstandinq that definition. however. with respect to a member retirinq before October 1. 1994. the inclusion of overtime in the two (2) highest paid years shall be limited in each year to an amount which is equal to the difference between the member's annualized pay rate at the time of retirement or termination and the highest annualized pay rate for the next hiqher salary rank. with respect to a member retiring on or after October 1. 1994. the inclusion of overtime in the two (2) highest paid years shall be limited in each year to an amount which is equal to 70% of the difference between the member's annualized pay rate at retirement and the hiqhest annualized pay rate for the next hiqher salary rank: provided. however. that in no event shall such a member's accrued benefit on his date of retirement be less than the benefit he had accrued as of September 30. 1994. determined under the terms of the Su?plemental System in effect on that date. The benefits provided hereinabove shall not be more than ninety (90%) per cent of the member's average monthly salary or wages as defined in the immediately preceding paragraph, reduced by the Base System Benefit. (C) The minimum pension for a member retiring under Section 7.01(A) (2) for permanent and total disability shall be eighty-five (85%) per cent of the salary or wages of the member at the time of disability retirement, reduced by the Base System Benefit. (D) In the event that any member eligible for benefits hereunder shall have terminated his employment after having completed at least ten (10) years of creditable service but prior to attaining the age of fifty (50) years and shall elect hereunder to decline to withdraw his accumulated contributions in the Supplemental System, then such member shall be entitled to receive upon attaining the age of fifty (50) years a monthly pension payable for life in accordance with the benefits designated in Subsection (B) hereof; provided, however, that in the event of the death of a member prior to having attained the age of fifty (50) years, then the benefits as contained in this paragraph shall become ineffective and the estate of such member shall be entitled to all monies contributed by him into this System together with accumulated interest on said sum at the rate of three (3%) per cent per annum computed until the 12 date of payment to the estate of the member. (E) Nothing herein contained shall be construed to prevent the City Manager or the Board from initiating action for the compulsory retirement of a member, eligible for retirement, prior to such age, where such member is considered to be unfit for the proper performance of his duties because of physical or mental incapacity, and upon certification by the Medical Board designated by the Board of Trustees pursuant to section 8, that such person is mentally or physically incapable of proper performance of duties, such person shall be automatically retired. 7.02 Service and Disability Benefits for Members Who Were EmDloved bv the City on or After Mav 19. 1993 1Al The Board. shall upon application. retire members meetinq any one of the followinq requirements: ill The attainment of aqe fifty-five (55) years with ten (10) or more years of creditable service. 121 Permanent and total disability incurred in the line of duty in the Police or Fire Department. or in the Unclassified Service as provided in Section 18 hereof. irrespective of the number of years of service. ..Lll Permanent and total disability incurred other than in the line of duty. after five (5) years of creditable service. ~ A member shall be entitled to receive. after the attainment of age fiftY-five (55) years with ten (10) or more years of creditable service or upon retirement under the provisions of Subsection (A) (2) or (3). a monthly pension payable for life equal to subparagraph (1) reduced bv subparaqraph (2) as follows: ill Three (3%) per cent of the averaqe monthly salary or wages of the member for each year of creditable service. beinq computed as to a part of a year on a pro rata basis to the nearest month; reduced bv 121 the Base System Benefit. In the event a service retirement pension becomes payable under this Supplemental System prior to the date the service retirement pension is payable under the Base System. the member's pension payable hereunder shall be recomputed at such time as the Base System Benefit becomes payable to reflect payment of such Benefit. For the purposes of determininq a member's benefit under this Supplemental System. the "averaqe monthly salary or waqes" of the member shall be based on the average of the three (3) hiqhest paid years of the member prior to the date of retirement or termination. For purposes of such calculation. salary or waqes shall be computed on the salary or waqes upon which the member's contribution to the Supplemental System was computed. as defined in Section 3.04. The benefits provided hereinabove shall not be more than 13 eiqhty (80) per cent of the member's ayeraqe monthly salary or waqes as defined in the immediatelY precedinq paraqraph. reduced by the Base System Benefit. l..Ql The minimum pension for a member retirinq under section 7.02 (A) (2) for permanent and total disability shall be seventy-five (75%) per cent of the salary or waqes of the member at the time of disability retirement. reduced by the Base System Benefit. l.Ql The minimum pension for a member retiring under section 7.02(A) (3) for permanent and total disability shall be fifty (50%) per cent of the salary or waqes of the member at the time of disability retirement. reduced by the Base System Benefit. lEi In the event that any member eligible for benefits hereunder shall have terminated his employment after hayinq completed at least one (1) year of creditable service but prior to attaining the aqe of fiftY-five (55) years and completinq ten (10) years of creditable service and shall elect hereunder to decline to withdraw his accumulated contributions in the Supplemental System. then such member shall be entitled to recei ye upon attaininq the age of fiftY-five (55) years or upon his termination of employment. if later. a monthlY pension payable for life. Such benefit shall be initiallY determined in accordance with the benefits desiqnated in Subsection (B) hereof. and then multiplied by a percentaqe based on the member's years of creditable service at the date of termination. Such percentaqe shall equal ten (10%) per cent for each year of creditable service UP to one hundred (100%) per cent after 10 years of creditable service. In the event of the death of a member prior to havinq attained the aqe of fiftY-five (55) Years. then the benefits as contained in the paraqraph shall become ineffective and the estate of such member shall be entitled to all monies contributed by him into this System together with accumulated interest on said sum at the rate of three (3%) per cent per annum computed until the date of payment to the estate of the member. (ll Nothinq herein contained shall be construed to prevent the City Manaqer or the Board from initiating action for the compulsory retirement of a member. eligible for retirement. prior to such aqe. where such member is considered to be unfit for the proper performance of his duties because of physical or mental incapacity. and upon certification by the Medical Board desiqnated by the Board of Trustees pursuant to Section 8. that such person is mentally or physically incapable of proper performance of duties. such person shall be automaticallY retired. ~ 7.03 Cost of Living Adjustment (A) In the case of a penoioner or beneficiary a pensioner who was employed by the city prior to May 19. 1993 or a beneficiary of such a member who has been receiving a pension for at least one year under the Base System or this Supplemental System as of October 1, 14 1989 or any subsequent October 1, the amount of pension payable to him as of such October 1, shall be increased by two and one-half (2-1/2) per cent of the amount payable to him under the Base System and this Supplemental System. The amount of the increase payable from this Supplemental System shall be the full amount of the increase (including the portion attributable to any pension payable under the Base system), reduced by any increase actually payable from the Base System. For purposes of this section ~ 7.03, the pension commencement date for a beneficiary receiving a pension as the result of the death of a retired member who was receiving a pension at the time of his death shall be the date on which the retired member began to receive his pension. ~ In the case of a pensioner who was employed by the city on or after May 19. 1993 or a beneficiary of such a member. who has been receiving a pension for at least one year under the Base System or this Supplemental System as of October 1. 1994 or any subsequent October 1. the amount of pension payable to him under the Base System and this Supplemental System as of such October 1. determined without reqard to any cost of livinq increase ~reviously qranted under this section 7.03 or under the Base System. shall be increased by one and one-half (1~%) per cent. The amount of the increase payable from this Supplemental System shall be the full amount of the increase (includinq the portion attributable to any pension payable under the Base System). reduced by any increase actually payable from the Base System. For purposes of determining the one year requirement of this Section 7.03 (B). the pension commencement date for a beneficiary receivinq a pension as the result of the death of a retired member who was receiving a pension at the time of his death shall be the date on which the retired member beqan to receive his pension. +at iQl In the case of a pensioner or beneficiary who retires after October 1, 1988 under the Base System or this Supplemental System or after October 1 of any subsequent year under this Supplemental System, and who therefore must wait more than twelve (12) months for his first increase, the amount of pension payable to him as of the October 1 next following the first anniversary of the commencement of his pension shall be increased by t\IO and one half (2 1f2'k) per cent a specified percentaqe. as hereinafter defined. of the amount payable to him under the Base System and this Supplemental System multiplied by a fraction, the numerator of which is the number of months for which his pension under said Systems has been paid and the denominator of which is twelve (12). The specified percentaqe shall be two and one-half (2~%) per cent for members who were employed by the city prior to May 19. 1993 or beneficiaries of such members and one and one-half (1~%) per cent for members who were employed by the city on or after May 19. 1993 and beneficiaries of such members. The amount of the increase 15 payable from this Supplemental System shall be the full amount of the increase (including the portion attributable to any pension payable under the Base System), reduced by any increase actually payable from the Base System. f€t 1Ql The provisions of this section ~ 7.03 shall not apply in the case of a member of the Base System who elects in writing prior to the earlier of his date of retirement or January 1, 1990 to waive his membership in this Supplemental System in accordance with the provisions of section 4.01 or 4.02. ~ 7.04 Service Connected Death Benefits If any member shall lose his life or later die within five (5) years from injuries received while in the discharge of his duties and shall leave a widow or widower or a child or children or one or more dependent parent(s), the Trustees shall authorize and direct payment of a pension to the widow or widower or a child or children or dependent parent(s) under the following terms, conditions and restrictions and at the following rates: (A) To the widow or widower, the greater of subparagraph (1) or subparagraph (2), reduced by subparagraph (3) as follows: (1) the pension to which the deceased member would have been entitled under section 7.01 (B) , determined without regard to clause (3) thereof, or section 7.02(B), whichever is applicable. (2) eighty-five (85%) per cent of the salary or wages of the member at the date of his death, (3) the Base System Benefit. (B) If there be no surviving widow or widower, or if such widow or widower remarries or dies, then the benefit set forth in Subsection (A) above shall be paid in equal portions to each child of the deceased member. Payment to any such child shall cease at such time as (1) the child attains age eighteen (18) (or age twenty-two (22) in the case of a child who is a full-time student in high school or college), (2) the child marries or dies, or (3) the child recovers in the case of a physically or mentally handicapped child. (C) If there are no benefits payable to a child or children, then the benefit set forth in Subsection (A) above shall be paid to the dependent parent of the deceased member. If both parents are dependent, such benefit shall be shared equally. (D) The beneficiary of a member of the Base System who became entitled to the service connected death benefit under the terms of the Base System on or after June 1, 1988 and prior to the Effective Date, shall be entitled to receive the service connected death benefit described in this Section ~ 7.04 assuming, solely for this purpose, that the Supplemental System was in effect on and 16 after June 1, 1988. Payment of the death benefit shall commence as of the Effective Date and, to the extent applicable, the Trustees shall authorize and direct that retroactive payments, calculated in accordance with the foregoing provisions of this section ~ 7.04, be made to the appropriate beneficiary as herein before described. (E) the trusteeship and disbursement of the pension to any child or children or dependent parent is to be determined by the Board of Trustees. (F) a legally adopted child shall have the same rights as a natural born child, but no pension shall be allowed to any stepchild or stepchildren of a deceased member. (G) Pension payments to widows or widowers, children and dependent parents shall not be decreased or reduced due to benefits received by them under any Workers' Compensation Law. ~ 7.05 Non-Service Connected Death Benefits If any member shall die from causes not attributed to his duties, and such death shall occur after his having completed five (5) years of creditable service, or if any such member shall die subsequent to his having met the requirements for retirement under Section 7.01(A) (1) or 7.02 (A) (1), whichever is applicable, regardless of whether or not pension payments have commenced, the Trustees shall authorize and direct payment to the widow or widower and/or child or children and/or a dependent parent in equal monthly installments as follows: (A) To the widow or widower, if she shall have been married to the deceased member for ten (10) years or more, the amount of the pension to which the deceased member was entitled or receiving at the time of death or would have been entitled at the time of death under Section 7.01 or 7.02 of this Supplemental System, for the first twelve (12) months, and thereafter the greater of Subparagraph (1) or Subparagraph (2), reduced by Subparagraph (3) as follows: (1) seventy-five (75%) per cent of the pensions payable under the Base System and this Supplemental System, payable with respect to a member who was employed by the City prior to May 19. 1993 and who retired on or after October 1. 1988, and fifty (50%) per cent of the pensions payable under the Base System and this Supplemental System payable with respect to a member who was employed by the city on or after May 19, 1993. or (2) twenty-five (25%) per cent of the average monthly pay for the two (2) highest paid years, reduced by (3) the Base System Benefit. The monthly installments shall continue until the remarriage or death of the widow or widower. If the widow or widower shall have been married to the deceased member less that ten (10) years, the benefits as above provided shall be payable until remarriage or 17 death, but in no case longer than for the period of the normal life expectancy of the deceased member at the time of his death, determined in accordance with the 1979 George B. Buck Mortality Table for males or such other table as shall be formally adopted by the Board of Trustees. (B) If the beneficiary of a member of the Base System who was not eligible to become a member of this Supplemental System is or becomes entitled to the non-service connected death benefit under the terms of the Base System on or after October 1, 1988, the beneficiary shall be entitled to receive the non-service connected death benefit described in this section foG4 7.05. Payment of the death benefit shall commence as of the Effective Date or following the member's date of death, if later. (C) To the child or children or dependent parent(s), the provisions of section ~ 7.04 governing the conditions and restrictions applicable to the administration of children's or parents' pensions shall apply. 7.06 Enhanced Retirement Pension lhl Any active member employed by the city prior to May 19, 1993 who will reach age forty-eiqht (48) on or before July 28, 1993 shall be eliqible to elect, by written application filed with the Board durinq the period from May 29, 1993 throuqh July 28, 1993, to retire and to receive an enhanced retirement pension as follows: 11l A member who on his date of retirement has not attained aqe fifty (50) shall have his aqe increased to aqe fifty (50) and thereby qualifY for retirement under section 7.01(A)(1). ill A member who on his date of retirement has attained aqe fifty (50) will have his years of creditable service increased by two (2) years for purposes of determining the amount of his retirement pension. However. in no event shall a member's retirement pension calculated under this section 7.06(A) exceed ninety (90%) per cent of the member's average monthly salary or waqes as defined in section 7.01(B) reduced bY the Base System Benefit. The member's pension under this Section 7.06 (A) shall commence on his date of retirement which shall be no later than July 28. 1993. A member's election under this section 7.06(A) shall be irrevocable on his date of retirement. Failure by an otherwise eliqible member to affirmatively elect, by JulY 28, 1993, to retire pursuant to the provisions of this section 7.06(A) shall constitute an irrevocable waiver of such riqht. ~ Any active member employed bY the city prior to May 19, 1993 who will reach age forty-eiqht (48) on or before September 30, 1994 shall be eliqible to elect, by written application filed with the 18 Board durinq the period from August 2, 1994 throuqh Se~tember 30, 1994, to retire and to receive an enhanced retirement pension as follows: i1l A member who on his date of retirement has not attained aqe fifty (50) shall have his aqe increased to aqe fifty (50l and thereby qualifY for retirement under section 7.01(A)(1). ~ A member who on his date of retirement has attained aqe fifty (50) will have his years of creditable service increased by two (2) years for purposes of determininq the amount of his retirement pension. However, in no event shall a member's retirement pension calculated under this Section 7.06(B) exceed ninety (90%) per cent of the member's averaqe monthly salary or waqes as defined in section 7.01(B) reduced bY the Base System Benefit. The member's pension under this section 7.06 (B) shall commence on his date of retirement which shall be no later than September 30, 1994. A member's election under this section 7.06(B) shall be irrevocable on his date of retirement. Failure by an otherwise eliqible member to affirmatively elect, by se~tember 30, 1994, to retire ?ursuant to the provisions of this section 7.06(B) shall constitute an irrevocable waiver of such riqht. section 8. Medical Board The Board of Trustees shall designate a medical board to be composed of three physicians who shall arrange for and pass upon all medical examinations required under the provisions of this Supplemental System, shall investigate all essential statements or certificates made by or on behalf of a member in connection with an application for disability or retirement and shall report in writing to the Board of Trustees its conclusions and recommendations upon all matters referred to it. The payment for such services shall be determined by the Board of Trustees. section 9. Compulsory Retirement On compulsory retirement of a member on act of the Board of Trustees any such retired member shall have the right to appeal against such retirement by the Board of Trustees by appealing to a Court of proper jurisdiction, and said member shall defray his own expense in his appeal of such compulsory retirement. section 10. Cessation of Pension The pension provided for herein shall cease upon conviction of a felony of a member receiving the benefits herein provided and actual incarceration in a Penitentiary. A pension as provided herein shall be paid to the ~ spouse or children or 19 dependent parent(s) as herein prescribed for a deceased member under this Supplemental System, until his official release from incarceration, then the pension will be paid to the pensioner again. section 11. Dismissal Members entitled to a pension shall not forfeit the same upon dismissal from the department, but shall be retired as herein prescribed. section 12. Recovering from Disability In the event a member who has been retired on a pension on account of permanent and total incapacity regains his health and is found by the Board of Trustees of this Supplemental System to be in such physical and mental condition as to meet the requirements of the Personnel Department for service acceptable to the City, the Board shall order his pension discontinued, and he shall be ordered to resume active service in the department from which he was retired at the same of similar work as that at which he was employed prior to his disability retirement, or at other work within the limits of his physical or mental capabilities at a rate of compensation not less than seventy (70%) per cent of the pay at the time of his return to active service for the classification occupied by him prior to his disability retirement. Upon request of the city manager, the Board shall review the condition of any member receiving a pension for disability and shall submit to the City Manager a report thereon; and if there shall be substantial evidence that the retired member is capable of performing service acceptable to the city in the Department from which such member was retired, he shall be ordered to resume active duties and his pension shall be discontinued. Section 13. computation of Pension Service 13.01 In computing service allowance, creditable service shall mean all service which is counted as creditable service under the Base System or under the city of Miami Beach Employees Retirement System as of the member's date of retirement or termination, all periods of time of actual work for which wages or salaries were received by the member in the service of the Fire and Police Departments, all military service for which employee contributions are made as provided in section 19, and all Accumulated ~otal Credit transferred to this Supplemental System in accordance with section 4.04. Notwithstanding any provision to the contrary, in no event shall the same period of service be counted more than once as creditable service under this Supplemental System. 13.02 Employees who become members of this Supplemental 20 System, in order to receive credit for service rendered on and after the Effective Date and prior to their becoming a member, shall make contributions in the amount such member would have contributed had he been a member during the period of service for which credit is being purchased. In order to receive such credit employees shall make payment within six (6) months of becoming a member. Notwithstanding the foregoing, any employee who transfers to the Base System or this Supplemental System whereby the Accumulated Total Credit in any other Pension System of the City is transferred to either the Base System or this System, then and in that event all of the creditable service time in such other System shall be considered creditable pension service time as hereinabove provided, and such employee need make no additional contribution for time credited. 13.03 The Board of Trustees shall establish a service record of all employees who may be entitled to participate in the benefits of this Supplemental System, and shall keep a record thereof. section 14. Nonassignability of Pension No pension provided for herein shall be assignable or subject to garnishment for debt or to other legal process, and no pension provided for herein shall be subject to any deductions or assessments by the city of Miami Beach, Florida, nor shall any benefits hereunder be altered or modified in any respect due to the fact that any member may be the recipient of any benefits from any other pension or pension plan; provided, however, Workers' Compensation benefits paid by the City to a retired member shall be credited against any pension payments payable on account of permanent and total disability incurred in the line of duty in the Police or Fire Department, or in the Unclassified Service as provided in section 18. section 15. Duration of Member's Pension Pensions granted to retired members shall be paid to them for life and shall not be revoked nor in any way diminished except as provided in this Supplemental System, and the payment of the member to this Fund shall cease upon his retirement and acceptance of a pension. Section 16. Assets for Benefits of Members and Beneficiaries All assets of the Fund shall be held by the Board of Trustees in trust for use in providing the benefits of the Supplemental System and paying its expenses not paid directly by the city; provided that no part of the corpus or income of the Fund shall be used for, or diverted to, purposes other than for 21 exclusive benefit of members or their beneficiaries under the system, prior to the satisfaction of all liabilities for benefits with respect to them or for the administrative expenses of the system; and provided further, that no person shall have any interest in or right to any part of the earnings of the Fund, or any rights in, or to, any part of the assets thereof, except as and to the extent expressly provided in this Supplemental System. In case of termination of the Supplemental System, or in the event of the discontinuance of contributions thereunder having the effect of such termination, the rights of all members of the Supplemental System to benefits accrued to the date of such termination or discontinuance, to the extent then funded, shall be nonforfeitable. section 17. Re-examination of Pensions The Board of Trustees shall have the power to examine into the facts upon which any pensions are granted under this Supplemental System, and to ascertain if any pension has been granted or obtained erroneously, fraudulently, or illegally for any reason. Said Board shall also be empowered to purge the pension rolls of any pensions granted under this Supplemental System, if the same are found to be erroneous, fraudulent or illegal for any reason; and to reclassify any pensioner who, under this Supplemental system, is erroneously, improperly or illegally classified. section 18. Return of contribution Whenever any member in the service of either the Fire or Police Departments shall sever his connection with such department either voluntarily or by lawful discharge, or by death not attributed to his active duties prior to the completion of five (5) years of membership in the Department, or by death in active service leaving no widow or widower, or children or dependent parent(s) surviving him entitled to pension benefits under this Supplemental System, such member, or his estate, shall be entitled to the return of all of the monies he has contributed into this Supplemental System, together with accumulated interest on said sum, at the rate of three (3%) per cent per annum, computed until date of payment to said member, or his estate unless in the event of discharge or voluntary severance such member has at that time qualified under the terms of this Supplemental System for a pension as herein provided for: except that any member of this Supplemental System who separates from active service with the Fire or Police Departments to accept an appointment to any office in the Unclassified Service of the city shall continue to have all the rights, privileges and responsibilities of this Supplemental System provided, however, that any member of this Supplemental System who separates from active service with the Fire or Police Departments 22 to accept an appointment to any office in the Classified Service of the City shall immediately become a member of the City of Miami Beach Employees Retirement System and shall receive creditable service under that System for service which is creditable hereunder. Upon becoming a member of said System the Trustees shall transfer from the funds of this Supplemental System to the City of Miami Beach Employees Retirement System an amount equal to three (3) times the accumulated amount of the member's contributions, together with interest thereon to the date of transfer, that were paid by the employee to this Supplemental System. For purposes of this section, monies a member has contributed shall include picked- up member contributions together with interest thereon. section 19. Military Service 19.01 Any member of the Supplemental System or any probationary employee in the Fire or Police Department who is absent from the service of the City because of service in the Armed Forces of the united States and if he shall have returned to the service of the city having applied to return while his reemployment rights were protected by law shall be entitled to preserve all retirement rights and privileges under this Supplemental System provided that such member, or such probationary employee after he becomes a member, shall contribute into the Supplemental System a sum equal to the amount such member would have contributed had he been a member during the period of service for which credit is being purchased, and creditable toward service retirement as in this section hereinafter provided. Payment of such contributions shall be made within six (6) months after discharge from such active military service. 19.02 A member who has at least twenty (20) years of creditable service and who is entitled to receive benefits under the Supplemental System may contribute an additional amount to the Supplemental System in order to receive service credit for his years of active military service in the U.S. Army, Navy, Air Force, Marines or Coast Guard occurring prior to his date of employment with the City. A member may purchase up to four (4) years of such service. The price for each such year shall be ten (10%) per cent of the aggregate of his salary or wages during the twelve (12) calendar months immediately preceding the date of such purchase, and such price shall be prorated accordingly if a member's election included a fractional year of service. Any additional benefit attributable to service purchased under this section 19.02 shall be determined in accordance with the three (3%) per cent benefit rate as described in Section 7.01(B) (1) or 7.02(B) (1). 23 Section 20. Distribution Limitation Notwithstanding any other provision of this Plan, all distributions from this Plan shall conform to Section 401(a) (9) of the Internal Revenue Code in general and to Section 401(a) (9) (C) of said Code in particular, as such Section was amended by the Technical and Miscellaneous Revenue Act of 1988. Section 21. Limitations on Benefits (A) In addition to the other limitations set forth in this Supplemental System and notwithstanding any other provision of this Supplemental System, the pension payable under this Supplemental System shall not increase to an amount in excess of the amount permi tted under Section 415 of the Internal Revenue code, with such limitation specifically subject to subparagraphs (F) and (G) of Section 415(b) (2) of said Code. (B) For purposes of applying the limitations of Section 415 of the Internal Revenue Code, the term "compensation" shall be determined by reference to the provisions of subparagraphs (1) and (2) of Title 26 of the Code of Federal Regulations, Section 1.415-2(d), as modified by subparagraph (10) of said Regulation. SECTION 2. REPEALER - All ordinances or parts of ordinances in conflict herewith be and the same are hereby repealed. SECTION 3. SEVERABILITY - If any section, subsection, sentence, clause or phrase of this Ordinance is held to be invalid or unconstitutional by any court of competent jurisdiction, then said holding shall in no way affect the validity of the remaining portion of this Ordinance. SECTION 4. EFFECTIVE DATE - This Ordinance shall take effect ten days after its adoption, with the application of the provisions herein to become effective retroactive as of May 19, 1993. PASSED and ADOPTED this 19th day of ATTEST: ~~L\('""V(\ C l'~h G~ CITY CLERK 1st reading 5/5/93 2nd rea51i-ryg 5/19/93 FORK-APPROVED :/, /' c' .._......" ,./ \ /' .// . ~~~~ ./ Z;;C-?t!-.uc(' Q,.e'L;~ a~L . '-..-"" Clty Attorney %~h3 amended by: Ordinance No. 89-2652, 7/26/89 Ordinance No. 90-2715, 9/19/90 24 CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139 CITY OF MIAMI BEACH OFFICE OF THE CITY MANAGER TELEPHONE: (305) 173-7010 FAX: (305) 173-n12 COMMISSION MEMORANDUM NO. ;;) 5 ~ ..Q3 May 19, 1993 FROM: Mayor Seymour Gelber and Members of the City Commission Roger M. CarttJ · d t1 . City Manager ~ DATE: TO: SUBJECT: AMENDING ORDINANCE 89-2840, BEING THE "CITY SUPPLEMENTAL PENSION FUND FOR FIREMEN AND POUCEMEN IN THE CITY OF MIAMI BEACH" PROVIDING FOR PLAN AMENDMENTS AS AGREED BETWEEN THE CITY OF MIAMI BEACH AND BOTH THE INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS AND THE FRATERNAL ORDER OF POUCE. ADMINISTRATION RBCOKMENDATION: The Administration recommends that the City commission adopt the attached Ordinance on second reading, which amends Ordinance 89- 2640, being the "ci ty Supplemental Pension Plan for I'iremen and Policemen in the City of Miami Beach". First reading of the aformentioned Ordinance was on May 5, 1993. BACKGROUND: On Thursday, March 11, 1993, the Administration and two of the City's unions, the International Association of Fire Fighters (IAFF) and the Fraternal Order of Police (FOP), reached tentative agreement on the maj or economic terms for their two-year labor agreements. Included in the respective agreements is the issue of "pension refora" for both current and future employees. On April 21, 1993, the City commission ratified the Labor Agreement with the International Association of Fire Fighters, Local 1510. On May 5, 1993, the City commission ratified the Labor Agreement with the Fraternal Order of POlice, William Nichols Lodge No.8. BBlIEl'IT CBAlIGBS: The negotiated changes in pension benefits for current and future employees represented by both the IAFF and FOP are as follows: A. FUTURE EMPLOYEES 1. Increases the normal retirement age from 50 years to 55 years of age with 10 years of service. vestinq is incremental at 10% per year. (Section 7.02) 2. Reduces the benefit accumulation from 3% for each year for the first fifteen years and 4% for each year thereafter to 3% per year for all years of service. Maximum payable reduced from 90% to 80%. (section 7.02) 7 DATE R-3-~ S.-l ~~q3 AGENDA ITEM 3. Changes the definition of final average monthly earnings from the average of the two highest years of base pay, longevity, allowances, and overtime to the averaqe of the three hiqhe.t years of vaqe. and .alarie. to include ba.e pay and lonqevity only. (Section 3.04) 4. Reduces the mlnlmum pension for service connected disability from 85% to 75%. (Section 7.02(C)) 5. Sets the minimum pension for non-service connected disability, w.ith 5 years Qf ser:vice to 50'. (Section 7.02) 6. . Reduces the cost of living adjustment from 2~' per year, compounded to 1~% per year, not compounded. (Section 7.03) 7. Bliminate. the requirement for ne. hire. to .iqn individual contract for the "suppl_ental" Plan. (Section 4.08) B. EXISTING EMPLOYEES 1. Reduces the amount of overtime allocated for purposes of calculating pension benefit to 70% of the current liait. (Section 7.01) 2. Provides two (2) option periods for an early retirement incentive that would grant 2 years of age or 2 years of service to eligible members. The first 60-day option period would be provided during the period May 29 to July 28, 1993; the second period would be August 2 to September 30, 1994. (Section 7.06) C. GENERAL CHANGES 1. Changes all reference to "firemen" and "policemen" to read "firefighters" and "police officers", respectively. 2. Expenses of the "Supplemental" plan shall be paid from the plan assets. (Section 2.03) 3. Changes the investment policy for plan assets to provide for the "Prudent Person" rule. (Section 6.01) ANALYSIS: The impact of the recommended changes to the pension plan and benefits for current and future employees was analyzed by the actuary for the Police and Fire Pension Systems, Buck Consultants, Inc., and is estimated to be $5.4 million during the next 10 years (Attachment A). The major assumptions utilized were as follows: 1. 50% of the 31 members eligible to exercise this option during the first option periOd would do so. 2. Replacements would be at salary ranges 15% lower, with the reduced pension benefits. 3. Total membership would be stable, with all vacancies filled. 4. Annualized return of actuarial assets would be 8.5%. 5. wi thout the retirement windows and two-tier salary plan, payroll growth would be 1~% higher; the payroll factor for estimating the impact of allowances and overtime would be reduced from 10% to 9%. 6. Other assumptions for salary increases and rates of separation would remain unchanged from the regular valuation assumptions. 8 7. No other changes, other that those already agreed, would be made during the ten year period. For the current fiscal year, these changes would further reduce the City's contribution to the Supplemental Plan by $18,500. This amount is in addition to the reduction of $270,587 already realized by the Ci ty in contributions to the Supplemental Plan due to revised actuarial requirements. The original impact/analysis of the recommended changes in pension benefits for fut.l'1.re elll.['lny...es in thp- IAFF and FOP was projected in the Pension Review committee's ("Green") Report at $5.8 million. IMPLEMBNTIIIG TBB CBAlIGES: Pension benefits for Firefighters and Police Officers employed by the City of Miami Beach are provided from two pension plans. These plans are the "City Pension Plan for Firemen and policemen in the city of Miami Beach" commonly known as the "Base" plan; and the "City Supplemental Pension Plan for Firemen and policemen in the City of Miami Beach" commonly known as the "Supplemental" plan. The "Base" plan was created under Chapter 23414, Laws of Florida, special Acts of 1945: as a result, changes to the "Base" plan may be accomplished only by referendum. The "supplemental" plan was created by Ordinance 89-2640, effective October 1, 1989, to provide the additional benefits over and above the Base benefits; changes to the "Supplemental" plan may be enacted by amendments to that ordinance. All of the negotiated pension changes will be accomplished by amending the Ordinance for the "supplemental" plan. COHCLUSIOIl: The proposed ordinance amending Ordinance 89-2640 implements the important aspects of pension reform negotiated between the City and both the International Association of Fire Fighters and the Fraternal Order of Police. PFL:me 9