2011-01-17_Supplemental Agenda Packet--Dossier de l'ordre du jour supplémentaireCity of Saint John
Common Council Meeting
Monday, January 17, 2011
Location: Common Council Chamber
Supplemental to Agenda
12.5 Commissioner of Finance: Limits on Pension Transfers for Terminating Employees
City of Saint John
Seance du conseil communal
Le Lundi 17 Janvier, 2011
Lieu Salle du conseil communal
Ordre du jour supplementaire
12.5 Commissaire aux Finances: Restrictions relatives aux transfers de pensions des employes cessant
leur emploi
REPORT TO COMMON COUNCIL
January 15, 2011
His Worship Mayor Ivan Court and
Members of Common Council
Your Worship and Councillors:
SUBJECT: Limits on Pension Transfers for Terminating Employees
BACKGROUND:
At its meeting on February 15, 2010 Common Council received a report
from the Trustees of the Pension Plan related to the obligations of the
sponsor of the Plan, the City of Saint John, with respect to providing funding
for the full commuted value of pensions for employees terminating
employment with the City.
In accordance with the terms of the Pension Benefits Act ("FBA") and the
Regulations ("PBR") adopted under the PBA, Section 19(11) "If the transfer
ratio is less than one, the administrator may transfer the transfer value of
the benefit under subsection (10) but shall not transfer the commuted value
of the benefit unless
(a) the administrator is satisfied that an amount equal to the transfer
deficiency relative to the transfer has been remitted by the employer to the
pension fund, or
(b) the transfer deficiency relative to the transfer is less than five per cent of
the Year's Maximum Pensionable Earnings for the calendar year and the
total of transfer deficiencies relative to all transfers made since the last
review date of the most recently filed actuarial valuation report does not
exceed five per cent of the transfer assets of the plan as of the date of the
request for the transfer."
At the February 15, 2010 meeting the following resolution was adopted by
Common Council:
"Resolved that Common Council agree to fund and provide the full
commuted value of pensions for employees terminating employment with
the City of Saint John at the time of termination."
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The Ow of :Saint fohn
Report to Common Council Page 2
January 15, 2011
ANALYSIS:
In the report it was indicated that the funding requirement of the City based
on this resolution based on previous experience could be approximately
$350,000 per year. For 2010 the amount contributed by the City to fund this
obligation was $153,591. This is an unbudgeted expenditure but does
increase the operating expenses of the City.
As we move into 2011 we not able to predict the level of funding that may
be required but as the result of terminations that are in the process of being
finalized we can report that should the City provide the funding as required
the expense at the time would be approximately $200,000.
Based on this fact and the potential for additional contributions that may
arise during the balance of 2011 it is recommended that Common Council
rescind the February 15 2010 resolution. The result of this action would
be that anyone terminating employment would only receive a transfer based
on the transfer ration of the most recent valuation and that the balance
would be paid as outlined under the Regulations of the PBA as set out
above.
RECOMMENDATION:
That Common Council rescinds the following recommendation adopted at
the meeting of February 15, 2010:
"Resolved that Common Council agree to fund and provide the full
commuted value of pensions for employees terminating employment with
the City of Saint John at the time of termination."
Respectfully sub
Grego J Veomans, CGA, MBA
Commi ner of Finance