AgdaPkt 2004-04-12 - Laserfiche WebLink

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I' I . I I . II . RER(J". (o.ZA-1 '-- April 12, 2004 Subject 401 (a) (Defined Benefit) Separation Incentive Plan (SIP). Recommendation It is recommended that the City Council approve a Resolution adopting the trust agreement and Plan document to establish a 401(a) Defined Benefit Plan, including the appointment of the City Manager or his designee as the Plan Administrator and the authorization of the Plan Administrator to execute all documents relative to the administration of this plan. Background The City will need to reduce the workforce to assist in budget reduction goals. While layoffs can be a difficult option, they are often the only choice. Separation Incentive Plans offer employers the opportunity to meet workforce reduction goals in a more humane and less damaging way relative to morale. The model Separation Incentive Plan developed by Phase II Systems gives public agencies the ability to locally design and implement separation plans that complement and enhance regular retirement benefits that employees receive through the Califomia Public Employees Retirement \- System. The Separation Incentive Plan allows for flexibility in offering separation packages without the strict statutory requirements imposed by the Califomia Public Employees Retirement System Golden Handshake program. Specifics of the plan can be designed by the City, which can include selection of specific classifications or individuals to participate in the plan as \l\Æ311 as more flexible distribution options for the employee(s) such as lump-sum payment, IRA rollover, fixed tenn payments, joint and 100% survivor payment. Recently the Human Resources Director and Employee Benefits Coordinator have been involved in discussions with two firms - National Deferred Compensation and Phase II Systems about different options to assist the City in finding a cost effective way to achieve the workforce reductions through the use of a Separation Incentive Plan. A comparison of the plans proved that Phase II Systems provided more experience, administrative services and the ability to meet the City's timeline. Thus it was decided that engaging Phase II S~tems would be in the City's best interest. Phase II Systems is a privately held firm located in Newport Beach, Califomia that is in the business of designing, implementing and maintaining 401(a) and 457 deferred compensation plans exclusively for public agencies. Phase II Systems has been in operation since 1983 and in 1991 created the Public Agency Retirement System (PARS) Trust. Phase II developed and administers the City's 401 (a) plan for Executive Management, and the City is satisfied with the service and expertise delivered by Phase II Systems. PARS is the third largest multiple employer retirement system in Califomia, after the Public Employee's Retirement System and the Califomia State Teachers Retirement System, offering and administering retirement plans and incentives for over 250 agencies in Califomia. PARS is a trust arrangement established and maintained to provide economies of scale and efficiency of '- administration to public agencies that adopt it to hold 401 (a) plan assets for the benefit of their employees. Member agencies and employees of member agencies assets will be accounted for separately from the assets of other agencies participating in the trust.