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HomeMy WebLinkAboutTR-78-96 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON REPORT GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Meeting: File,# iA�fv� Date: September 23, 1996 Res. #Le0 a / `{—)-`.i'(=� By-Law# Report#:.TR_7R_C96_ File#: Subject: OMERS EARLY RETIREMENT STATUS REPORT Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: i 1. THAT Report TR-78-96 be received for information. BACKGROUND: 1.0 At the Council meeting of July 8, 1996, Council approved Report TR-65-96 (Attachment "A"), dealing with several OMERS issues, one of which was the OMERS Type 7 Early Retirement Plan. 1.1 Based on discussions with OMERS representatives, it was anticipated that both enrollment packages and lists of eligible employees under the various alternatives would be made available during the summer months. 1.2 OMERS has now indicated that the enrollment packages and criteria will not be ready until late September at the earliest. If OMERS does provide full information by the end of September, staff may be able to bring a full report to General Purpose and Administration Committee for the October 21, 1996 meeting. If the OMERS timing is delayed into early October, it will adjust the timing of the report to Council accordingly. Ressubmitted, Reviewed by, H.BSc., A.M.C.T., W.H. Stockwell, Treasurer. Chief Administrative Officer. • I MM/NT/hjl Attachment I APAPELA 4-LE 814 1-IS PRIMED IX RECYCLED PAPER THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON ATTACHMENT"A" REPORT Meeting: COUNCIL File# Date: July 8, 1996 Res. # By-Law# Report #: TR 65 96 File#: Subject: OMERS Recommendations: It is respectfully recommended to Council the following: 1. THAT Report TR-65-96 be received; 2. THAT the recommendations outlined in this report be approved; and 3. THAT the appropriate By-Laws be forwarded to Council when available from OMERS. BACKGROUND: 1.0 At a meeting held on March 11, 1996, the Council for the Municipality of Clarington passed the following resolution: "That the correspondence received from the Municipal Finance Officers Association of Ontario (MFOA), pertaining to the Ontario Municipal Employees Retirement Board (OMERS) Early Retirement Plan (ERP's), be received and referred to the Treasurer for review and report." A copy of the correspondence is attached (Attachment "A"). 1.1 The correspondence dealt with two issues. First, there is a proposal to continue a similar OMERS Type 7 Supplementary Early Retirement Plan to the one in which the Municipality participated in under the Social Contract Act. 1.2 Secondly, MFOA was requesting that a resolution be endorsed to eliminate the age and factor differential for eligibility for early retirement between police and fire personnel and all other OMERS members. See Attachment "A" for a copy of MFOA's proposed resolution. P.oEa 0 8 1 5 TR-65-96 Page - 2 _ C OMERS TYPE 7 EARLY RETIREMENT PLAN: 2.0 Subsequent to the above correspondence, the Ontario Government approved the proposal to extend the Type 7 Supplementary Plan with one notable difference. The Plan was devised in order to encourage reorganizations and downsizing of Municipal governments. The Plan under the Social Contract duration provided for the cost of the benefit to be paid out of the OMERS pension surplus in order that the early retirement plan could be offered to Municipal employees at no cost to the Municipality. The approved plan extension is an employer-paid plan whereby the Municipality would have to fund the cost of the early retirement benefit. 2.1 The Municipality may choose to offer any or all of the following benefits to any or all classes of employees: a) an unreduced early retirement pension from age 60; b) an 80 factor; C) improved reduced early retirement pension; and d) early retirement within 15 years of NRA 65: 2.2 Under the plan the Municipality entered into previously (per confidential Report TR-50-94), only the unreduced early retirement pension from age 60 and an 80 factor options were offered to eligible employees. 2.3 It is recommended that the same two options be offered to eligible employees under the new employer-paid early retirement agreement and the other alternatives be investigated for potential opportunities. 2.4 Of the eighteen (18) employees provided with the early retirement option under confidential report TR-50-94, seven (7) employees took advantage of the opportunity. This plan concluded at the end of the Social Contract period, March 31, 1996. 2.5 Some additional conditions attached to the new Type 7 plan include: (a) there must be a certified downsizing plan; (b) the agreement with OMERS is for a one year renewable time frame; and (c) the last day to enter into a Revised Type 7 agreement is March 31, 1999. 2.6 At the current time, enrollment packages are not yet available from OMERS. They will be made available sometime during the summer months. Lists of eligible employees will. also not be available until the enrollment package is ready. 816 TR-65-96 Page - 3 - t 2.7 It is recommended that once the enrollment packages are available from OMERS, staff and/or Mayor/Clerk, as appropriate be authorized to enter into an agreement with OMFRS for the payment of the supplementary benefits provided under the Revised Type 7 early retirement plan. 2.8 It is recommended that the 1996 budget be used as the basis to establish a downsizing and restructuring program within the context of the plan. 2.9 It is recommended that Department Heads be authorized to offer the early retirement option to eligible employees as provided by OMERS, and be authorized to enter into early retirement agreements for employees who are eligible based on the same criteria but who are not a part of the OMERS plan. 2.10 Staff will report back to Council on the status of the plan after the summer break. 2.11 It is also recommended that, as with the previous Type 7 plan, that the employees interested in the early retirement option be offered continuation of coverage under the Municipality's Master Insurance Plans that exist and as they are identified in the Collective Agreement(s) at the time that the employee elects to retire, to a maximum of 5 years or normal retirement age, whichever is less. EQUAL TREATMENT OF CONTRIBUTORS UNDER OMERS TYPE 7 PLANS: 3.0 MFOA was requesting that a resolution be endorsed to eliminate the age and factor differential for eligibility for early retirement between police and fire personnel and a_11 other OMERS members. Under the OMERS Type 7 plan available during the Social Contract period, police and fire personnel were eligible after attaining a 75 factor (age + years of service) or using a normal retirement age (NRA) of 60 in determining eligibility for early retirement within 15 years of NRA. All other contributors required an 80 factor and a normal retirement age of 65. 3.1 Since the correspondence was received, the Province has removed this differential from the revised Type 7 to provide equal treatment of all contributors by including an 80 factor or NRA of 65 for eligibility for the early retirement plan. Therefore, it is not neces=,3-r-y to take further action on the MFOA request. COMERS ELIGIBILITY FOR COUNCILLORS: 4.0 A Council may elect to participate in OMERS. The Council, as a class is treated separately for purposes of OMERS membership. At the effective date of Council participation individual Councillors may elect not to join OMERS, however, should the class for Council be established, all new, future members of Council who are under the age of 71 and who are not OMERS pensioners must join the plan. The terms and conditions for Councillors membership are similar to those for regular municipal employees. 817 TR-65-96 Page - 4 - 4.1 A survey was done of comparable area municipalities. One of the four area municipalities surveyed has Council participation in the OMERS plan. 4.2 The OMERS plan is structured such that the employee contributes approximately 6% of his/her earnings per pay period and the employer matches this contribution. In the case of Councillors, as one third of the Councillor's salary is a non-taxable expense reimbursement, only two-thirds may be included in contributory earnings. Therefore OMERS contributions are calculated on the taxable two-thirds of the salary paid to the Councillor. 4.3 The pension benefits earned by Councillors are the same as for other OMERS NRA 65 members. OMERS assumes that Councillors are continuous full-time members and therefore Councillors earn credited service for each month while serving on Council. 4.4 As with other OMERS employees, Councillors are also eligible to buy-back past service in order to maximise credited service at the Councillors expense. This is directed under the OMERS Act and the Municipality is not able to match the employer portion for any buy- back options exercised. This is the case with most buy-back options offered to employees at large with few exceptions. 4.5 It is recommended, in order to treat all eligible members on a consistent basis, that Councillors be established as a class under the OMERS plan and that existing Councillors be provided the option to become an OMERS member. 4.6 It is recommended that OMERS be notified of Council's decision regarding Council enrollment in OMERS. OMERS will then return a sample By-law for Council approval. Once OMERS has received a certified copy of the By-law, the Municipality will notify OMERS which councillors elect to join and those who elect not to join. Once the plan is established, all future Councillors will be required to participate with deductions taken directly from each pay cheque. Respectfully submitted, Reviewed by, ie A..Marano, H.BSc., A.M.C.T., W.H. Stockwell, Treasurer. Chief Administrative Officer. MM/NT/hjl Attachment 818 G/Gam/7b li `tl b`t GJt ; nunILtML t inH".`-� 1tfbbbZJi1by t1. Claranor "own of C Pa 41697^1060 h1F0A 562 F(11 FEE 23 COUNCIL DIRECTION Attachment "A" MFOA MUNICIPAL FINANCE OFFICERS'ASSOCIATION OF ONTARIO • TO TH1H TREASURER • Ontario Municipal Employees Retirement Board (OMEEIS) Early Refi-mment Plans (ERPs) With the end of the Social Contract stipulations scheduled for March 1996, the OMERS Board, at the Urging of MFOA and many others, submitted a request to the Provincial Government to extend Type 7 Supplementary Early Retirement Plans (a; an employer-paid option) indefinitely. It appears that approval may be granted which could extend Type 7 Supplementary flans to 1999. The original Early Retirement Plan (EI.ZP) Type 7 was developed as an employer-paid option to facilitate anticipated downsizing, and was referred to within. OMERS as a Supplementary Plait. Supplementary plans required several elements: • a certified downsizing plan (approved by Council and passed under by-lame with certification from an authorized municipal ofAcial); • a reasonable payback term; • regular payments made to OMERS by the employer (spread over a period of up to 10 years); and • a two-year sunset clause stipulated by Management Board. With the introduction of the Social Contract, the OMERS Board approv.:d the use of$200 million of pension liability savings arising from wages frozen under the Social Contract Act. to allow municipalities to develop downsizing plans with as few layoffs as possible. This initial S?00 miiiion was augmented periodically when demand eAceeded cash reserves. Plans are being discussed at present to continue a similar supplementary plan with the following conditions: The price of the extension to 1999 will be recovered at full cost or some portion -hereof, at the discretion of the 01v1ERS Board. Previously this post was provided at no charge to municipalities. _ew Supplementary Plans are to be instituted under one-ye,,.r agreements, as r-,quired by the Pension Conunission of Ontario, and the option exists to develop Type 7 Suppletlmenmry Plans wbera costs of the Plan are shored by the employer and employee. Regulations are being considered to prevent double dipping - thy;: is, receiving two pension payments from the same retirement fund arising from two distinct periods of employment. For example, if an employee retires under a Type 7 Supplementary nUfl IL I rHL t'1r1(ire-I 19dbb?: 41b9 M. Marano, '.'awn of C Page 803 4169?91©6F� h1F0A 562 P02 FEB 23 '9 t, Plan, and subsequently returns to work for another OMERS employer, the pension payable under the original Early Retirement Plan is reduced b�' a corresponding r amount (the amount attributable to the Type 7 Supplementary f,:.an enhancement} to reflect years worked for the subsequent employer. Previously, Type 7 Supplementary Plans contained provisions for police and fire personnel to become eligible after atta'ttiing a 75 factor (age + years of servic(,) using a normal retirement age (NRA) of 60, as opposed to an 80 factor and a NRA of age 65 for all other OMERS contributors. The practice of continuing this differential between police and fire and all. o0aer OWRS employees/ers is currently being debated. During, the last ground of discussions that followed the first introduction of supplementary Plan,►, employers were financially alarmed that police and fire had been treated preferentially. Sir.ce dais practice Might be extended for police and fire in the second routxl of supplement<<ry plans, MPOA urges you to voice your concerns to O11rfjERS and to the Government of Ontario. We ask that your municipality endorse the attached resolution and forward it as :3oon as possible to the list provided as well as your Member of Provincial Parliament. February 13, 1996 The Municipal Finance Officers Association of Ontario requests that ou endorse orse th., attached resolution and forward it to the: following: Hon. David Johnson Ms Joanne Fulkers on Chair of Management Board of Cabinet Chair, OMERS Office of the Chair 1 University Awaiue 12th Floor, Ferguson Block Suite 1000 77 Wellesley St; West Toronto, Ontaric Toronto, Ontario M5J 2P1 I 1 �' fax (416) 360-8758 fax (416) 327-3790 Hon. Robert Runciman Your Member of Provincial Nfinister and Solicitor General Parliament Office of the Solicitor General and Correctional Services cc. NI OA Suite 400 175 Bloor St. East A-MO Toronto, Ontario J"-,C � M4W 3P,8 fax (416) 326-508S — ... .::y Hon. Al Leach Minister of Municipal Affairs and Housing n- ,�'=-:-- 1 17th Floor, 777 Bay Street - �lJ{ L J__ Toronto. Ontario MSG 2E5 fax (416) 326-5085