HomeMy WebLinkAboutPublic Agency Retirement System - PARS - Supplementary Retir PLIC
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Making retirement work foryou. City of I f untine.,ton Beach
NOV 8 2010
HUMAN RESOURCES
ADNAIIVISTRATION
November 3, 2010 ke {+ '
Ms. Michele Carr
Director of Human Resources
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
RE: Pacific Life Guaranteed Annuity Contract G-27506.01
Dear Michele:
Enclosed please find the Pacific Life Master Annuity Contract in connection with the
PARS Supplementary Retirement Plan. Please have Mr. Wilson, as the Plan
Administrator and authorized signer, sign and date both the Contractholder's Copy
and the Pacific Life Copy. Please retain the ContracthoIder's Copy for your records
and return the Pacific Life Copy to our office in the enclosed envelope.
Should you have any questions or concerns, please do not hesitate to contact me at
(800) 540-6369 extension 132 or by email at svolcan@pars.org.
Sincerely,
Shauna Volcan
Sr. Manager, Plan Implementation
/enclosure
4350 Von Karman Ave.,Ste. 100
Nevipart Saich,CA 92600-2043
301154 .9359
fax 3�30.;360,3Ga7
WNTRACTHOLDER Cope
PACIFIC LIFE
GROUP RETIREMENT POLICY
G-27506.01
PACIFIC LIFE INSURANCE COMPANY, a Nebraska stock corporation (Pacific Life), agrees to
purchase non-participating Annuities in such amounts, and for such persons, as are designated in
writing by
CITY OF HUNTINGTON BEACH
(policyholder)
This policy is issued in consideration of the application of the policyholder, a copy of which is
attached to and made a part of this policy, and the payment by the policyholder to Pacific Life of
the first single premium necessary to purchase the first Annuity under this policy.
This policy is delivered in and subject to the laws of the State of California.
This policy is executed at Pacific Life's office in Newport Beach, California, on September 14, 2010,
to take effect as of October 1, 2010.
MASTER ANNUITY CONTRACT
President Secretary
GR-8135-27506.01 5-10
TABLE OF CONTENTS
Page No.
ARTICLE I - DEFINITIONS............................................................................................... 1
ARTICLE II - PROVISIONS RELATING TO ANNUITIES
2.01 Annuity Benefits ..................................................................................................2
2.02 Annuity Premiums ..............................................................................................2
2.03 Premium Payments.................................................................................................2
2.04 Adjustment of Annuity by Pacific Life ..................................................................3
2.05 Assignment of Benefits .......................................................................................3
2.06 Certificates .........................................................................................................4
ARTICLE III -AVAILABLE FORMS OF ANNUITY
3.01 Annuity Forms ....................................................................................................5
ARTICLE IV- GENERAL PROVISIONS
4.01 The Contract .......................................................................................................7
4.02 Assignment of Policy ..........................................................................................7
4.03 Notice Required ..................................................................................................7
4.04 Amendment of Policy ..........................................................................................7
4.05 Information to be Furnished to Pacific Life ..........................................................7
4.06 Nonparticipation ..................................................................................................8
4.07 Discontinuance of Policy .....................................................................................8
4.08 Termination of Policy ..........................................................................................8
4.09 Non-Waiver of Policy Provisions .........................................................................8
POLICY APPLICATION
GR-8135-27506.01 5-10
ARTICLE I - DEFINITIONS
1.01 As used in this policy, the following terms, when initial capital letters are used, shall
have the meaning set forth below, unless a different meaning is clearly required by the
context:
(a) "Plan" means the City of Huntington Beach PARS Supplementary Retirement Plan,
which meets the requirements for qualification under Section 401 of the United
States Internal Revenue Code as now or hereafter amended, and whose trustees
have instructed the policyholder that monies arising under such Plan may be
applied under this policy for persons covered under such Plan.
(b) "Annuity" means a benefit purchased under this policy that consists of a series of
equal, or substantially equal payments made at regular intervals to a designated
person or persons and that is guaranteed by Pacific Life as to both dollar amount
and duration.
(c) "Gross Premium" means the amount or the sum of the amounts paid to Pacific Life
to purchase an Annuity under this policy.
(d) "Net Premium" means the Gross Premium reduced by the amount of premium tax
and commission or other payment to agents or brokers, if any, arising from the
receipt o f the Gross Premium.
(e) "Annuity Commencement Date" means the first day of the month as of which
payment of an Annuity purchased under this policy is to commence.
(f) "Annuity Confirmation Letter" means each letter from Pacific Life to the policyholder
specifying the terms and conditions of the Annuity purchase under this policy for a
person or a group and which is to be reviewed and signed by an authorized
representative of the Plan.
Page 1
GR-8135-27506.01 5-10
ARTICLE II - PROVISIONS RELATING TO ANNUITIES
2.01 Annuity Benefits
Subject to Pacific Life's consent, Pacific Life shall, from time to time, upon the written
direction of the policyholder and receipt of the Gross Premium, purchase an Annuity for
such person or persons, in such manner and amounts, and upon such terms and
conditions as are specified in the written direction of the policyholder. All Annuity
payments shall be made as of the first day of the month. In no event, shall Pacific Life
purchase an Annuity under this policy if the monthly Annuity payment to the annuitant is
less than fifty dollars ($50.00) or if such Annuity is to be provided other than from
monies arising under the Plan.
2.02 Annuity Premiums
On the date an Annuity is purchased under this policy, Pacific Life will apply the current
nonparticipating Annuity premium rates to determine a) in the case of a defined benefit
plan, the amount of premium necessary to provide such Annuity, or b) in the case of a
defined contribution plan, the amount of monthly payment under such Annuity.
However, the premium for each Annuity with an immediate income commencement
date shall not exceed the premium based on the mortality table described below, with a
no age setback for males and females, assuming an interest rate of 2% per annum.
The mortality table is based on mortality rates in accordance with the 1994 Group
Annuity Reserving Table (1994 GAR)for Females.
2.03 Premium Payments
The policyholder is expected to make the premium payments as shown in the Annuity
Confirmation Letter prepared by Pacific Life and signed by the an authorized
representative of the Plan. In the event a premium is not paid, the annuity amounts for
the involved Annuitant or Annuitants shall be reduced as follows:
1. The same rates used to purchase the original annuities shall be used to determine a
new annuity amount that is equivalent, as of the original purchase date, to the
present value of premiums paid, but reflecting the annuity amounts paid to the date
of adjustment and a $300 per annuity recalculation charge.
2. The annuity amount determined in (1.) above shall be further reduced if the yield to
maturity of a U.S. Treasury bond with a maturity closest to 10 years at the time of
purchase, "T" at the time of recalculation, is greater than the yield to maturity of the
same U.S. Treasury bond, "y" at the time of purchase. The reduction percentage
under this part shall be as stated in the applicable Disclosure Statement attached to
the Annuity Confirmation Letter.
Page 2
GR-8135-27506.01 5-10
ARTICLE II - PROVISIONS RELATING TO ANNUITUES - CONTINUED
2.04 Adjustment of Annuity by Pacific Life
If Pacific Life determines that the date of birth of an annuitant or contingent annuitant
has been incorrectly stated, the amount of the monthly Annuity payment to such
annuitant or contingent annuitant shall be such as the Gross Premium paid to Pacific
Life for such Annuity would have purchased had the date of birth of the annuitant or
contingent annuitant been correctly stated. Any overpayment or underpayment by
Pacific Life on account of any misstatement of a date of birth of an annuitant or
contingent annuitant shall, with interest at the rate of five percent (5%) per annum, be
charged against the current or next succeeding payment or payments or added to the
current or next succeeding payment to be made by Pacific Life to the annuitant or
contingent annuitant.
Any Annuity maybe suspended, reduced or terminated because of the provisions of a
Plan or of Section 401(a) of the United States Internal Revenue Code as now or
hereafter amended. No Annuity will be suspended, reduced or terminated because of
the provisions of a Plan unless such provisions were in effect at the time the Annuity
was purchased and the policyholder so certifies to Pacific Life. In the event an Annuity
is suspended, reduced or terminated, Pacific Life will determine the appropriate credit
because of such suspension, reduction or termination and pay such credit to the
trustees of the Plan designated by the policyholder.
2.05 Assignment of Benefits
The benefits, or any part thereof payable under this policy, shall not be subject to
alienation, anticipation, assignment or encumbrance by any Annuitant or beneficiary
entitled thereto, and, to the extent permitted by law, shall not be subject to any debts,
contracts or engagements of any Annuitant or beneficiary, or to any judicial process to
levy upon or to attach the same. The preceding sentence shall also apply to the
creation, assignment, or recognition of a right to any benefit payable with respect to an
Annuitant pursuant to a domestic relations order, unless such order meets the following
requirements:
A. The term "domestic relations order" means any judgment, decree or order(including
approval of a property settlement agreement)which:
1. Creates or recognizes the existence of an alternate payee's right to, or assigns
to an alternate payee the right to, receive all or a portion of the benefits payable
with respect to an Annuitant under this policy, and
2. Relates to the provision of child support, alimony payments or marital property
rights to a spouse, former spouse, child or other dependent of an Annuitant,
and
3. Is made pursuant to a State domestic relations law (including a community
property law).
Page 3
G12-8135-27506.01 5-10
ARTICLE II - PROVISIONS RELATING TO ANNUITUES - CONTINUED
B. A domestic relations order must clearly specify:
1. The name, Social Security Number and last known mailing address of the
Annuitant and the name, Social Security Number and last known mailing address
of each alternate payee covered by the order, and
2. The amount or percentage of the Annuitant's benefits to be paid to each alternate
payee, and
3. The number of payments or period to which such order applies.
C. A domestic relations order may not:
1. Require any type or form of benefit, or any option, not otherwise available to the
Annuitant under their Annuity Certificate, or
2. Require increased benefits (determined on the basis of actuarial value) to be
paid than would have been paid without the domestic relations order, or
3. Require the payment of benefits to an alternate payee which are required to be
paid to another alternate payee under another domestic relations order.
2.06 Certificates
Pacific Life shall issue to PARS Trust Administrator for delivery to each person for
whom an Annuity is provided pursuant to this policy, a certificate summarizing the
principal provisions of such Annuity. The certificate is not a contract between Pacific
Life and the annuitant; it is merely a summary of the benefits payable to the annuitant
under this policy. In the event that the certificate does not accurately state the benefits
to which the annuitant is entitled and the provisions applicable thereto, the provisions of
this policy shall govern such benefits.
Page 4
GR-8135-27506.01 5-10
ARTICLE III -AVAILABLE FORMS OF ANNUITY
3.01 Annuity Forms
An Annuity may be purchased under this policy in any of the forms described below,
provided the Annuity is in accordance with the Plan. These are the only Annuity forms
available under this policy without the consent of Pacific Life.
(a) Life Annuity
A Life Annuity provides for monthly payments to be made to an annuitant,
commencing on the Annuity Commencement Date, if the annuitant is then living,
and ceasing with the last payment due immediately prior to the death of the
annuitant.
(b) Certain Period Only Annuity
A Certain Period Only Annuity provides for a designated number of monthly
payments to be made to an annuitant, commencing on the Annuity
Commencement Date, if the annuitant is then living. The number of monthly
payments must be designated at the time the Annuity is purchased and may not
exceed two hundred forty (240) or extend beyond age ninety (90). If the annuitant
dies after the Annuity Commencement Date but before the designated number of
payments has been made to him, the payments shall continue to his beneficiary
until the total designated number of payments has been made.
(c) Life Annuity With Payments For A Period Certain
A Life Annuity With Payments For A Period Certain provides for monthly payments
to be made to an annuitant, commencing on the Annuity Commencement Date, if
the annuitant is then living, and ceasing with the last payment due immediately
prior to the death of the annuitant. If the annuitant dies after the Annuity
Commencement Date but before the expiration of the period certain term, the
payments shall continue to his beneficiary until the total designated number of
payments in the period certain term has been made.
The period certain term must be designated at the time the Annuity is purchased
and may not exceed twenty (20) years or extend beyond age ninety (90).
Page 5
GR-8135-27506.01 5-10
ARTICLE III -AVAILABLE FORMS OF ANNUITY- CONTINUED
(d) Joint and Survivor Annuity
A Joint Annuitant Annuity provides for monthly payments to be made to an
annuitant, commencing on the Annuity Commencement Date and ceasing with the
last payment due immediately prior to the death of the annuitant. However, if the
annuitant predeceases the designated joint annuitant, the joint annuitant shall be
entitled to monthly payments until the last payment due immediately prior to the
death of the contingent annuitant.
The amount of each monthly payment to the joint annuitant shall be fifty percent
(50%), sixty-six and two-thirds percent (66 2/3%), seventy-five percent (75%), or
one hundred percent (100%) of the amount of each monthly payment to the
annuitant, as specified at the time the Annuity is purchased.
Page 6
GR-8135-27506.01 5-10
ARTICLE IV- GENERAL PROVISIONS
4.01 The Contract
The policy and application constitute the entire contract. Statements made in the
application shall, in the absence of fraud, be deemed representations and not
warranties. No statement shall void this policy unless it is contained in the application,
signed by the policyholder, a copy of which is attached to this policy when issued.
4.02 Assignment of Policy
No assignment of this policy shall be made by either the policyholder or Pacific Life.
4.03 Notice Required
Any notice, directive, certificate, or other writing required by the provisions of this policy
to be delivered to Pacific Life shall be delivered in writing to its principal office at P.O.
Box 9000, Newport Beach, California 92658-9030. Any notice, certificate or other
writing required by the provisions of this policy to be delivered to the policyholder shall
be delivered in writing to the policyholder at its principal place of business.
4.04 Amendment of Policy
This policy may be amended or modified, with respect to any provision, at any time, and
from time to time, by written agreement between the policyholder and Pacific Life
without the consent of any other person. No agent has authority to change this policy or
to waive any of its provisions.
Pacific Life may, at any time upon ninety (90) days' advance written notice to the
policyholder, change the Annuity premium rates in effect under this policy and/or
change the allowance for maximum expenses and other charges of Pacific Life without
the concurrence of the policyholder. No such change will affect any Annuities
purchased prior to the effective date of such change.
4.05 Information to be Furnished to Pacific Life
The policyholder and each person entitled to receive benefits under this policy shall
furnish any information Pacific Life may reasonably require. The information shall be
submitted in the form and at the time specified by Pacific Life. Notwithstanding any
provisions of this policy to the contrary, Pacific Life shall not be obligated or required to
provide any Annuity until it has received the information in the form required. Pacific
Life may rely upon the information so received and shall not be liable with respect to
any omission or inaccuracy contained therein.
Pacific Life may require proof that any person to whom a payment is to be made is
living at the time specified for payment, and if so requested, proof shall be submitted
before payment shall be made.
Page 7
GR-8135-27506.01 5-10
ARTICLE IV- GENERAL PROVISIONS - CONTINUED
4.06 Nonparticipation
This policy shall not participate in any divisible surplus of Pacific Life.
4.07 Discontinuance of Policy
This policy may be discontinued by either the policyholder or Pacific Life upon written
notice to the other party. The effective date of such discontinuance shall be the later of
(i) ninety (90) days after the receipt of such notice by the other party, or (ii)the date
specified in such written notice.
Discontinuance of this policy by either the policyholder or Pacific Life shall in no way
affect any Annuity purchased under this policy prior to the date of discontinuance.
4.08 Termination of Policy
This policy shall terminate and cease to be of any further force or effect at the close of
the first day upon which Pacific Life has completed all of the duties and obligations
which have arisen under this policy.
4.09 Non-Waiver of Policy Provisions
Failure by Pacific Life to enforce any provision of this policy shall not affect Pacific Life's
right thereafter to enforce such provision, nor shall such failure estop it from exercising
its right to enforce any provision of this policy.
Page 8
GR-8135-27506.01 5-10
PACIFICLIFE
APPLICATION
G-27506.01
Application is hereby made.to Pacific Life Insurance Company by
City of Huntington Beach, whose Main Office Address is 2000 Main
Street, Huntington Beach, California 92648, for Group Retirement Policy
No. G-27506.01, which is attached to this Application. The terms of the
attached Policy are approved and its terms accepted.
This Application is executed in duplicate, one counterpart being retained
by applicant and the other returned to Pacific Life Insurance Company.
It is agreed that this Application supersedes any previous application for
the Policy.
Dated this day of 20
at ` tom` A--
CITY OF YUNTINGTON BEACH
(Full or Corporate Name of Applicant)
By.
Signature and Title
Ft?AS TO FORM
CITY ,1 b .
GR-8276
Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Toll free: 1-800-800-7646 x. 3442
CALIFORNIA LIFE AND HEALTH INSURANCE GUARANTEE ASSOCIATION ACT
SUMMARY DOCUMENT AND DISCLAIMER
Residents of California who purchase life and health insurance and annuities should know that the
insurance companies licensed in this state to write these types of insurance are members of the
California Life and Health Insurance Guarantee Association ("CLHIGA"). The purpose of this Association
is to assure that policyholders will be protected, within limits, in the unlikely event that a member insurer
becomes financially unable to meet its obligations. If this should happen, the Guarantee Association will
assess its other member insurance companies for the money to pay the claims of insured persons who
live in this state and, in some cases, to keep coverage in force. The valuable extra protection provided
through the Association is not unlimited, as noted in the box below, and is not a substitute for consumers'
care in selecting insurers.
The California Life and Health Insurance Guarantee Association may not provide coverage for this
policy. If coverage is provided, it may be subject to substantial limitations or exclusions, and
require continued residency in California. You should not rely on coverage by the Association in
selecting an insurance company or in selecting an insurance policy.
Coverage is NOT provided for your policy or any portion of it that is not guaranteed by the insurer
or for which you have assumed the risk, such as a variable contract sold by prospectus.
Insurance companies or their agents are required by law to give or send you this notice. However,
insurance companies and their agents are prohibited by law from using the existence of the
Guarantee Association to induce you to purchase any kind of insurance policy.
Policyholders with additional questions should first contact their insurer or agent or may then
contact:
Executive Director
California Life and Health Insurance Guarantee Association
P.O. Box 16860
Beverly Hills, CA 90209
(323) 782-0182
or
Consumer Service Division
California Department of Insurance
300 South Spring Street
Los Angeles, CA 90013
(800) 927-4357 or(213) 897-8921
Below is a brief summary of this law's coverages, exclusions and limits. This summary does not cover all
provisions of the law; nor does it in any way change anyone's rights or obligations under the Act or the
rights or obligations of the Association.
05/07 1
COVERAGE
Generally, individuals will be protected by the California Life and Health Insurance Guarantee Association
if they live in this state and hold a life or health insurance contract, or an annuity, or if they are insured
under a group insurance contract, issued by a member insurer. The beneficiaries, payees or assignees of
insured persons are protected as well, even if they live in another state.
EXCLUSIONS FROM COVERAGE
However, persons holding such policies are not protected by this Guarantee Association if:
• Their insurer was not authorized to do business in this state when it issued the policy or contract;
• Their policy was issued by a health care service plan (HMO), Blue Cross, Blue Shield, a charitable
organization, a fraternal benefit society, a mandatory state pooling plan, a mutual assessment
company, an insurance exchange, or a grants and annuities society;
• They are eligible for protection under the laws of another state. This may occur when the insolvent
insurer was incorporated in another state whose guaranty association protects insureds who live
outside that state.
The Guarantee Association also does not provide coverage for:
• Unallocated annuity contracts; that is, contracts which are not issued to and owned by an individual
and which guarantee rights to group contract holders, not individuals;
• Employer and association plans, to the extent they are self-funded or uninsured;
• Synthetic guaranteed interest contracts;
• Any policy or portion of a policy which is not guaranteed by the insurer or for which the individual
has assumed the risk, such as a variable contract sold by prospectus;
• Any policy of reinsurance unless an assumption certificate was issued;
• Interest rate yields that exceed an average rate;
• Any portion of a contract that provides dividends or experience rating credits.
LIMITS ON AMOUNTS OF COVERAGE The Act limits the Association to pay benefits as follows:
LIFE AND ANNUITY BENEFITS
• 80% of what the life insurance company would owe under a life policy or annuity contract up to
$100,000 in cash surrender values;
• $100,000 in present value of annuities; or
• $250,000 in life insurance death benefits.
• A maximum of$250,000 for any one insured life no matter how many policies and contracts there
were with the same company, even if the policies provided different types of coverages.
HEALTH BENEFITS
A maximum of$200,000 of the contractual obligations that the health insurance company would owe
were it not insolvent. The maximum may increase or decrease annually based upon changes in the
health care cost component of the consumer price index.
PREMIUM SURCHARGE
Member insurers are required to recoup assessments paid to the Association by way of a surcharge
on premiums charged for health insurance policies to which the Act applies.
05/07 2
TO OUR CALIFORNIA POLICYHOLDERS
COMPLAINT NOTICE: At Pacific Life, we always try to provide our
policyholders with the best products and services. Any business
transaction, however, can be potentially misunderstood and may end up
as a complaint. Should any dispute arise about your premium or about
a claim that you have filed, you may write to:
Sharon Pacheco
Vice President and Chief Compliance Officer
Pacific Life Insurance Company
P.O. Box 9000
Newport Beach, California 92658-9030
Or call toll-free 1-800-800-7646 x. 3442.
If the problem is not resolved, you may write or call:
California Department of Insurance
Consumer Affairs Division
300 South Spring Street, South Tower
Los Angeles, California 90013
California only telephone: 1-800-927-4357
Outside California telephone: 1-213-736-3582
PLEASE NOTE: PURSUANT TO SECTION 510 OF THE CALIFORNIA
INSURANCE CODE, THE CALIFORNIA DEPARTMENT OF INSURANCE
SHOULD BE CONTACTED ONLY AFTER THE CONTACTS BETWEEN
THE COMPLAINANT AND THE INSURER OR ITS AGENT OR OTHER
REPRESENTATIVE HAVE FAILED TO PRODUCE A SATISFACTORY
SOLUTION TO THE PROBLEM.
This notice of complaint procedure is for information only and does not
become a part or condition of this policy.
Fia IC
AGENCY
RETIREMENT
SERVICES RIZ5
faking retirement work foryou.
September 15, 2010
Ms.Sandra Henderson
Department of Human Resources
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Dear Sandy:
Enclosed are the documents necessary to implement the City of Huntington Beach Excess
Benefit Plan. The non-qualified excess benefit plan will be used to pay PARS benefits to any
employees who exceed the Internal Revenue Code § 415 limits based on the combined
benefit from both Ca1PERS and the PARS Supplementary Retirement Plan.
Please complete the enclosed documents according to the following checklist.
• Excess Benefit Trust Agreement(3 copies enclosed) Q*uX✓t 3
The Trust Agreement provides for the administration of the assets of the
City's Excess Benefit Plan and outlines the broad powers and duties of the
Trustee with respect to the plan in general. Please have Mr.Wilson sign and
date all three copies and return to my attention. I will return a fully A%IN
executed original to your attention. Jt/� �
• ;Excess Benefit Plan Document(2 copies enclosed) re,41ArvA
The Plan Document outlines the terms and provisions of the City's plan and a /
describes how the excess benefit plan document works in conjunction with
the underlying. PARS Supplementary Retirement Plan. Please have Mr.
Wilson sign and date both copies and return one original to my attention.
® Investment Strategy Selection Form (1 copy enclosed) re_+._r'vt E
This document states that your agency has selected the specific investment
strategy indicated on the form. Union Bank, as investment fiduciary to the
plan, will invest plan assets in accordance with this selection. Please have
Mr. Wilson sign, date, and return the orig n my att-ntion.
6. HighMark Mutual Fund Disclosure Statement.(1 copy enclosed)
This document discloses fees earned by Union Bank for its services as
investment adviser to the Fund and acknowledges your receipt of the
accompanying Mutual Fund Prospectuses. Please have Mr. Wilson .sign,
date, and return th_ m rattention.
4350 Von Karman Ave.,Ste.100
Newport Beach,CA 92660-2043
800.540.6369
fax 800.660.8057
www.pars.org
Ms.Sandra Henderson
Department of Human Resources
September 15,2010
Page Two
• Trustee Services Fee Schedule (1 copy enclosed)
The fee schedule outlines the fees charged by Union Bank to establish and
maintain your Excess.Benefit Plan Account. Please have Mr. Wilson sign,
date,and return the original to my attention.
If you have any questions on the enclosed documents, please feel free to contact me by
phone at 800-540-6369,extension 132 or by email at svoican@pars.org.
Sincerely,
Shauna Volcan
Sr. Manager, Plan Implementation
cc: Kevin Murphy,Chief Operating Officer, PARS
Public Agency Retirement Services is not licensed to provide talc, accounting or legal advice. We submit these documents with the
understanding that they will receive proper review by the appropriate counsel.
CITY OF HUNTINGTON BEACH
EXCESS BENEFIT PLAN
EFFECTIVE JULY 6, 2010
DEFINED BENEFIT PLAN
EXHIBIT"A"
TABLE OF CONTENTS
ARTICLEI PURPOSE....................................................................................................... 1
ARTICLE II PARTICIPATION......................................................................................... 1
ARTICLE III BENEFITS; VESTING ................................................................................. 1
3.1 Amount of Benefit........................................................................................... 1
3.2 Payment of Benefit .......................................................................................... 1
3.3 Vesting.............................................................................................................2
3.4 Actuarial Equvalence.......................................................................................2
ARTICLE IV ADMINISTRATION AND AMENDMENT OF THE PLAN ...................2
4.1 Rules and Regulations......................................................................................2
4.2 Non-Alienation of Benefits..............................................................................2
4.3 Funding............................................................................................................3
4.4 Taxes...:............................................................................................................3
4.5 Amendment and Termination..........................................................................3
4.6 Compliance with Laws ....................................................................................3
ARTICLE V DEFINITIONS...............................................................................................4
ARTICLE I
PURPOSE
The purpose of this Plan is to supplement the benefits of certain Employees under the
City of Huntington Beach Public Agency Retirement System (PARS) Supplementary Retirement
Plan (the "Supplemental Retirement Plan") to the extent that such benefits are reduced by the
limitations on benefits imposed by Section 415 of the Internal Revenue Code of 1986 as
amended (the "Code").
ARTICLE II
PARTICIPATION
Those Employees who are participants in the Supplemental Retirement Plan and whose
benefits at the time of payment are reduced by the limitation on benefits imposed by Section 415
of the Code shall be Participants hereunder.
ARTICLE III
BENEFITS; VESTING
3.1 Amount of Benefit.
The value of the benefits which each Participant shall be entitled to receive under this
Plan shall be equal to the Actuarial Equivalent of the difference between the actual benefits of
such Participant under the Supplemental Retirement Plan and the Actuarial Equivalent of the
benefits that would have been payable to the Participant under such plan except for the
limitations on benefits imposed by Section 415 of the Code.
3.2 Payment of Benefit.
The benefits payable under this Plan shall be payable to the Participant or to any other
person who is receiving or entitled to receive benefits with respect to the Participant (the
"Distributee") under the Supplemental Retirement Plan. The benefits will be paid in the same
form, at the same times and for the same period as benefits are paid with respect to the
Distributee under the Supplemental Retirement Plan. Notwithstanding the foregoing, in the
event that the present value of the Actuarial Equivalent of the benefit to be paid under this Plan
(as determined by the Employer upon the advice of the actuary for PARS) at the commencement
1
of payment is $5,000 or less, the Employer may, in its discretion, elect to pay the benefit in a
single lump sum.
3.3 Vesting.
A Participant will be fully vested in his Retirement Benefit upon meeting the
requirements of Article II.
3.4 Actuarial Equivalence.
For the purpose of establishing Actuarial Equivalence, the mortality assumption shall be
1983 GAM and the interest assumption shall be 6%per annum.
ARTICLE IV
ADMINISTRATION AND AMENDMENT OF THE PLAN
4.1 Rulcs and Regulations.
The Employer has full discretionary authority to supervise and control the operation of
this Plan in accordance with its terms and may make rules and regulations for the administration
of this Plan that are not inconsistent with the terms and provisions hereof. The Employer shall
determine any questions arising in connection with the interpretation, application or
administration of the Plan (including any question of fact relating to age, employment,
compensation or eligibility of employees) and its decisions or actions in respect thereof shall be
conclusive and binding upon any and all persons and parties.
4.2 Non-Alienation of Benefits.
Except as otherwise provided in the Plan, no right or benefit under the Plan shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any
attempt to anticipate, alienate, sell, assign, pledge, encumber or charge such right or benefit shall
be void. No such right or benefit shall in any manner be liable for or subject to the debts,
liabilities or torts of a Participant or other benefit recipient. In addition, no right of a Participant
or other benefit recipient under the Plan is transferable by inter vivos gift or testamentary
disposition.
2
4.3 Funding.
The Plan shall be unfunded, and benefits under the Plan shall be paid from the general or
retirement fund of the Employer through an Excess Benefit Plan Fund hereby established for
payment of administration expense and benefit payments, subject to the claims of the Employer's
general creditors. No person other than the Employer shall by virtue of the provisions of the
Plan have any interest in such amounts. Title to and beneficial ownership of any assets, whether
cash or other investments which the Employer may earmark to pay any amount under the Plan,
shall at all times remain with the Employer, and Participants and any other persons entitled to
benefits hereunder shall not have any property interest whatsoever in any specific assets of the
Employer. The obligation of the Employer to make payments pursuant to the Plan is contractual
only. No Participant or other person entitled to benefits hereunder shall have a preferred claim
or lien on any assets of the Employer.
4.4 Taxes.
The Plan Administrator shall make appropriate arrangements to deduct from all amounts
paid under the Plan any taxes required to be withheld with respect to the Plan by any government
or governmental agency.
4.5 Amendment and Termination.
The Employer shall have the right to amend the Plan (other than this section) or terminate
the Plan at any time. If the Plan is.terminated, the actuarial equivalent present value of any
remaining benefits payable to a Participant or other person, increased by an amount determined
by the Employer to permit approximately the same after-tax payout over time to Participants as
would have been realized in the absence of such termination, shall be paid in a lump sum 30 days
after the termination of the Plan.
4.6 Compliance with Laws.
It is the intention that this Plan be a "qualified governmental excess benefit arrangement"
within the meaning of Section 415(m) of the Code, and may at any time be amended to comply
with the Code requirements to maintain such qualification and status.
ARTICLE V
DEFINITIONS
Whenever the following terms are used in the Plan, with the first letter capitalized, they
shall have the meanings first specified below.
"Code" shall mean the Internal Revenue Code of 1986 as amended.
"Employer" shall mean the City of Huntington Beach that has adopted this Plan.
"Employee" shall mean an employee of the Employer.
"Normal Retirement Age" shall mean sixty-two (62) years of age.
"Participant" shall mean those Employees eligible for participation in the Plan.
"Plan" shall mean this City of Huntington Beach Excess Benefit Plan.
"Retirement Benefits" shall mean the benefits payable to the Participant following
retirement, as described in Article III.
"Supplemental Retirement Plan" shall mean the City of Huntington Beach Public
Agency Retirement System (PARS) Supplementary Retirement Plan, effective July 6, 2010.
4
CITY OF HUNTINGTON BEACH
EXCESS BENEFIT PLAN
TheAdW
tington Beach Excess Benefit Plan is hereby adopted effective July 6, 2010.
By:
Title: City Administrator
Date: "1' at -I b
App VED AS TO FORK[
AS'
A O X
AMENDMENT TO THE
CITY OF HUNT'INGT'ON BEACH
PARS SUPPLEMENTARY RETIREMENT PLAN
WHEREAS, the City of Huntington Beach (the "Employer") has previously adopted the
City of Huntington Beach PARS Supplementary Retirement Plan (the "Plan"); and
WHEREAS, the Employer has the right to amend.said Plan in accordance with Section
5.3 of the Plan; and
WHEREAS; the Employer desires to amend the Plan to comply with recent legislation
and regulations applicable to the Plan.
NOW,THEREFORE,the Plan is hereby amended as follows:
1. Effective January 1, 2007, Section 4.4(b)(1), "Eligible Rollover Distribution," is
hereby amended in its entirety to read as follows:
"(1) Eligible Rollover Distribution. An eligible rollover distribution is any
distribution of all or any portion of the balance to the credit of the distributee, except
that an eligible rollover distribution does not include the following: (i) any
distribution that is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or the life expectancy) of the distributee
or the joint lives (or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten (10) years or,more; (ii) any
distribution to the extent such distribution is required under Section 401(a)(9) of the
Internal Revenue Code; (iii) any hardship distribution; and (iv) the portion of any
distribution that is not includible in gross income, provided that effective January 1,
2002, a portion of a distribution will not fail to be an eligible rollover distribution
merely because the portion consists of after-tax employee contributions that are not
includible in gross income. However, such portion may be transferred only: (A) to an
individual retirement account or annuity described in Section 408(a) or (b) of the
Internal Revenue Code (or, on or after January 1, 2008, to a Roth IRA described in
Section 409A of the Code) or to a qualified defined contribution plan described in
Section 401(a) of the Internal Revenue Code; (B) on or after January 1, 2007, to a
qualified defined benefit plan described in Section '401(a) of the Internal Revenue
Code or to an annuity contract described in Section 403(b) of the Internal Revenue
Code, that agrees to separately account for amounts so transferred (and earnings
thereon), including separately accounting for the portion of the distribution that is
includible in gross income and the portion of the distribution that is not so
includible."
Page 1 of 4
2. Effective January 1, 2008, Section 4.4(b)(2), "Eligible Retirement Plan," is hereby
amended by adding the following to the end of the Section:
"With respect to eligible rollover distributions made on or after January 1, 2008, an
eligible retirement plan shall also include a Roth IRA as described in Section 408A of
the Code, provided that the distributee is not restricted from making such a rollover
from this Plan to a Roth IRA pursuant to Section 408A(c) of the Code."
3. Effective July 1, 2010, Section 5.4, "Military Service," is hereby amended by adding
the following to the end of the section:
"In the case of a Member who dies while performing qualified military service, the
survivors of the Member are entitled to any additional benefits (other than benefit
accruals relating to the period of qualified military service) provided under the Plan
had the Member resumed and then terminated employment on account of death."
4. The definition of"Annual Benefit" in Article VI, Section 6.1, is hereby amended in
its entirety to read as follows, effective for limitation years beginning on or after July
1, 2009:
"Annual Benefit" means a benefit payable annually in the form of a straight life
annuity (with no ancillary benefits) under a plan to which Employees do not
contribute and under which no rollover contributions are made, or to which assets
have been transferred from a qualified plan that was not maintained by the Employer.
If the benefit is payable in a form other than a straight life annuity, such form must be
adjusted actuarially to be the equivalent of a straight life annuity before applying the
limitations of Section 6.2(a). Such actuarial adjustment shall be made pursuant to the
applicable provisions of Treasury Regulation Section 1.415(b)-1(c), which are
incorporated herein by reference. The actuarial adjustment to the equivalent of a
straight life annuity will apply to all Plan benefits. No actuarial adjustment is
required for the following: qualified joint and survivor annuity benefits, pre-
retirement disability benefits, pre-retirement death benefits, post-retirement medical
benefits, and the value of an automatic benefit increase feature made in accordance
with applicable Treasury Regulations."
5. Article VI, Section 6.2 is hereby amended in its entirety to read as follows, effective
for limitation years beginning on or after July 1, 2009:
4c6.2 Annual Limitation on Benefits.
Notwithstanding any other provision of the Plan:
(a) The Annual Benefit payable with respect to a Member under the Plan for any
Limitation Year shall not exceed an amount equal to $160,000, or such other dollar
limitation determined for the Limitation Year by automatically adjusting the
$160,000 limitation by the cost of living adjustment factor prescribed by the
Page 2 of 4
Secretary of the Treasury under Section 415(d) of the Code in such manner as the
Secretary shall prescribe. The new dollar limitation shall apply to Limitation Years
ending within the calendar year of the date of the adjustment.
(b) If the Member has less than ten Years of Participation with the Employer, the
limitation in Section 6.2(a) shall be reduced by multiplying it by a fraction, the
numerator of which is the Member's full and partial Years of Participation, and the
denominator of which is ten. To the extent provided in Treasury Regulations or in
other guidance issued by the Internal Revenue Service, the preceding sentence shall
be applied separately with respect to each change in the benefit structure of the Plan.
The reduction provided in this paragraph does not apply to payments made to the
Member if his payments commence after he has become disabled (within the meaning
of Code Section 415(b)(2)(1)), and does not apply to payments made on account of
the Member's death.
(c) If the Annual Benefit of a Member begins prior to age 62, the limitation under
Section 6.2(a) applicable to the Member at such earlier age is an Annual Benefit
payable in the form of a straight life annuity beginning at the earlier age that is the
actuarial equivalent of the limitation applicable to the Member at age 62 (adjusted
under subsection 6.2(b) above, if required). The limitation applicable at an age prior
to age 62 shall be determined in accordance with the provisions of Treasury
Regulation Section 1.415(b)-1(d), which are incorporated herein by reference. The
reduction in this Section 6.2(c) shall not apply for a Member who is a "qualified
participant," as defined in Code Section 415(b)(2)(H).
(d) If the Annual Benefit of a Member begins after age 65, the limitation under
Section 6.2(a) applicable to the Member at such a later age is an Annual Benefit
payable in the form of a straight life annuity beginning at the later age that is the
actuarial equivalent of the limitation applicable to the Member at age 65 (adjusted
under subsection 6.2(b) above, if required). The limitation applicable at an age after
age 65 shall be determined in accordance with the provisions of Treasury Regulation
Section 1.415(b)-1(e), which are incorporated herein by reference.
(e) Pursuant to Treasury Regulation Section 1.415(b)-1(a)(7)(iii), the rate of a
Member's accrual shall not be limited by this Article VI (but at all times the annual
benefit payable to the Member is not subject to the limits set forth in this Article VI).
(f) The limitation in Section 6.2(a) is deemed satisfied if the Annual Benefit payable
to a Member is not more than $1,000.00 multiplied by the Member's number of years
of service or parts thereof(not to exceed ten) with the Employer, and the Employer
(or a predecessor employer) has not at any time maintained a defined contribution
plan in which such Member participated.
If the Employer maintains one or more defined benefit plans, in addition to this Plan,
covering an Employee who is also a Member in this Plan, the sum of the Annual
Benefits of all the plans will be treated as a single benefit for the purposes of applying
Page 3 of 4
the limitations of Section 6.2(a). For purposes of the preceding sentence, Annual
Benefits under a "qualified governmental excess benefit arrangement," as described
in Section 415(m)(3) of the Code, shall be disregarded. If the Annual Benefits
exceed, in the aggregate, the limitations of Section 6.2(a), the Normal Retirement
Benefits under this Plan will be reduced (but not below zero) until the sum of the
benefits of the Related Plan(s) satisfy the limitations. In the case of an individual
who was a Member in one or more defined benefit plans of the Employer as of the
first day of the first Limitation Year beginning after December 31, 1986, the
application of the limitations of this Section 6.2 shall not cause the limitation under
Section 6.2(a) for such individual under all such defined benefit plans to be less than
the individual's Current Accrued Benefit. The preceding sentence applies only if
such defined benefit plans met the requirements of Section 415 of the Code, for all
Limitation Years beginning before May 6, 1986. For purposes of this Section 6.2(f),
an individual's Current Accrued Benefit means a Member's Accrued Benefit under
the Plan, determined as if the Member had separated from service as of the close of
the last Limitation Year beginning before January 1, 1987, when expressed as an
annual benefit within the meaning of Section 415(b)(2) of the Code. In determining
the amount of a Member's Current Accrued Benefit, the following shall be
disregarded: (i) any change in the terms and conditions of the Plan after May 5, 1986;
and (ii) any cost of living adjustments occurring after May 5, 1986.
(g) If a Member makes one or more contributions to the Plan to purchase "permissive
service credit," as defined in Code Section 415(n)(3), then the limitations of this
Article VI shall be treated as met only if either (i) the limitations provided in Code
Section 415(b) are met, determined by treating the accrued benefit derived from such
contributions as an annual benefit for purposes of Code Section 415(b), or (ii) the
requirements "of Code Section 415(c) are met, determined by treating all such
contributions as annual additions for purposes of Code Section 415(c)."
This Amendment is hereby adopted this I rday of N44, , 2011,
effective as of the dates set forth above.
City of Huiatinglon Beach
By: --r'
AP VED AS TO pOR,�i Its: City Administrator
McGRAT-9
^I ATTORNEY
Page 4 of 4
PUSUC
AGENCY
RETIREMENT f�
SERVICES
Making retire ent work,foryou.
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ti
To: Valued PARS Client
From: PARS/Plan Compliance
Date: May 9, 2011
Re: Interim Amendments to the PARS Volume Submitter Plan Document
Enclosed please find an IRS required interim amendment to your PARS Supplementary
Retirement Plan (SRP). These interim amendments are required from time to time based on the
IRS staggered remedial amendment cycles.
The amendment reflects recent legislation with respect to 1) the definition of Eligible Rollover
Distribution; 2) the definition of Eligible Retirement Plan; 3) the HEART Act; and 4) the final 415
Regulations. These amendments are in compliance with recent IRS guidelines and do not
require any changes to your current administration procedures in place.
We have enclosed 2 originals of the plan amendment. Please keep one signed original with your
PARS SRP Plan Document and return the second signed original to our office in the enclosed
envelope. Please return the amendment to our office no later than May 31, 2011.
If you have any questions about the enclosed plan amendment, please feel free to contact
Shauna Volcan at(800) 540-6369 x 132 or svolcan@pars.org.
Thank you.
� j City ®f Huntington Beach
2000 Main Street ® Huntington Beach, CA 92648
(714) 536-5227 ® www.huntingtonbeachca.gov
f
a
Office of the City Clerk
' Joann L. Flynn, City Cleric
June 6, 2011
PARS
Plan Compliance
4350 Von Karman Ave., Ste. 100
Vie, CA 92660
To Whom it May Concern:
Enclosed for your records is a fully executed duplicate original of the Amendment to the
City of Huntington Beach PARS Supplementary Retirement Plan.
Sincerely,
an L. Flynn, CMC
City Clerk
JF:pe
Enclosure
G:followup:agrmtltr
Sister Cities: Anjo,Japan ® Waitakere,New Zealand
Council/Agency Meeting Held: . L�3 O 0
Deferred/Continued to:
❑ Approved ❑ Conditionally Approved ❑ Denied Cityr erk ignatur
Council Meeting Date: May 3, 2010 Department ID Number: HR 10-11
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL. ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Administrator
PREPARED BY: Michele Carr, Director of Human Resources
Paul Emery, Deputy City Administrator
SUBJECT: Adopt Resolution No. 2010-38 Authorizing a Public Agency
Retirement System (PARS) Supplementary Retirement Plan (SRP)
Statement of Issue: Authorize a retirement incentive program to eligible City of Huntington
Beach staff under the condition the program meets the fiscal, managerial, and operational
goals of the City.
Financial Impact: Savings from position vacancies.
Recommended Action: Motion to:
Adopt Resolution No. 2010-38, "A Resolution of the City Council of the City of Huntington
Beach Establishing the Public Agency Retirement System (PARS) Supplementary
Retirement Plan (SRP)."
Alternative Action(s):
Motion to: Do not Adopt Resolution No. 2010-38, "A Resolution of the City Council of the
City of Huntington Beach Establishing the Public Agency Retirement System (PARS)
Supplementary Retirement Plan (SRP)."
-1553- Item 10a - Page 1
REQUEST FOR COUNCIL. ACTION
MEETING DATE: 5/3/2010 DEPARTMENT ID NUMBER: HR 10-11
Analysis: In an effort to address the City's short and long term financial challenges,
the City will be required to effectively change its operational structure. Labor comprises the
largest segment of general fund expenditures, and the City will be required to reduce staff
and restructure operations to address projected budget deficits in the coming fiscal years.
An option to successfully address labor reductions is the implementation of the Public
Agency Retirement System (PARS) Supplementary Retirement Plan (SRP). This option
may assist the City in minimizing/reducing the need for layoffs to overcome budget
shortfalls.
The PARS SRP differs from the CalPERS Golden Handshake program in that it provides
separating employees with additional cash compensation, not additional service credit
used to calculate the employee's CaIPERS benefit.
The PARS SRP further differs from the CalPERS Golden Handshake program in that the
cost of the program has a static payback period. The implementation of the CalPERS
Golden Handshake program impacts the City's CalPERS rates permanently.
A PARS SRP can be highly successful if it:
• Achieves the targeted number of participants
• Accomplishes the City's restructuring goals for future staffing as determined by the
City Administrator
■ Accomplishes the City's short and long-term financial goals, including measurable
savings
• Permits separating retirees to elect plan benefit options that are uniquely tailored to
their personal financial goals, rather than providing a cookie-cutter benefit (e.g. 2
years of service credit)
A PARS SRP permits the City to map its own strategy with respect to payment for the
program, backfilling of positions — both number and timing, and program cost. The
program is effective when the City determines the optimal number of positions to remain
vacant.
The PARS SRP cost analysis includes all of the proper labor expense components to
permit the City to appropriately estimate its savings through program implementation. The
cost/benefit analysis factors in the cost of the SRP program, including administrative costs,
the value of natural attrition and any other factors needed to provide an accurate analysis
of potential program implementation savings.
The PARS SRP program would be offered to select City of Huntington Beach employees
(MEA, MEO and Marine Safety only) who have attained age 50 by a defined date and who
have 5 years of City of Huntington Beach service. Each employee would have the
Item 10. - Page 2 -1554-
REQUEST FOR COUNCIL ACTION
MEETING DATE: 5/3/2010 DEPARTMENT ID NUMBER: HR 10-11
opportunity to select from a menu of benefit options, each of which would be determined by
calculating 7% of the individual employee's base annual salary.
The potential savings to the City depends upon the back-fill rate based on the City
Administrator's restructuring plan. The estimated savings in year one ranges from $1.3MM
up to $2.3MM at a replacement ratio of 60% and 40%, respectively. The five-year
estimated savings could be as high as $5.6MM up to $11.6MM again depending on the
replacement ratio. These figures assume approximately 77 program participants.
PARS would provide all administrative support to eligible employees, including education
workshops, benefit consultation, enrollment and plan administration. These items are
included as part of the overall program costs and are factored into the calculated potential
program savings.
The program would not be implemented if an adequate number of participants do not enroll.
Projected Timeline:
1. City Council approval of PARS Incentive May 3, 2010
2. Enrollment Packets Mailed to Employees' Home May 5, 2010
3. Employee Orientation Meeting Week of May 10, 2010
4. Employee Enrollment Workshop Week of June 14, 2010
5. Enrollment Window Closes June 18, 2010
6. City receives Post-Analysis no later than June 25, 2010
7. City announces whether Plan goes forward no later than July 6, 2010
8. Employees Resign from City employment on or before September 30, 2010
9. Employees Retire under PERS, & PARS SRP on or before October 1, 2010
10. Benefits Commence October 1, 2010
Environmental Status: N/A
Strategic Plan Goal: Maintain financial viability and our reserves
Attachment(s):
Descriptiom
1. Resolution 2010- 38,"A Resolution of the City Council of the City of Huntington
Beach Establishing the Public Agency Retirement System (PARS)
Supplementary Retirement Plan (SRP)," w/Exhibit "A" 2010 PARS
Supplementary Retirement Plan COHB Miscellaneous Employees
-1555- Item 10. - Page 3
Item 10. - Page 4 -1556-
RESOLUTION NO. 2010-38
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF HUNTINGTON BEACH ESTABLISHING THE
PUBLIC AGENCY RETIREMENT SYSTEM (PARS)
SUPPLEMENTARY RETIREMENT PLAN (SRP)
WHEREAS,the City of Huntington Beach(the "City") is a member of the Public
Agency Retirement System(PARS) for the purpose of providing tax qualified retirement
benefits; and
WHEREAS, it is to be determined to be in the best fiscal interest of the City and its
employees to provide a supplementary retirement program to eligible employees who wish to
voluntarily exercise their option to separate from City service; and
WHEREAS, the PARS Trust has made available a Supplementary Retirement Plan(SRP)
supplementing CalPERS and qualifying under the relevant sections of the Internal Revenue Code
and the California Government Code,
NOW, THEREFORE,the City Council of the City of Huntington Beach does hereby
resolve as follows:
1. The City Council, being a member of the PARS Trust, does hereby adopt the
PARS Supplementary Retirement Plan, effective May 3, 2010; and
2. In order for the City to reach stated fiscal and operational objectives, a minimum
savings must be achieved. If this minimum is not reached,the City may withdraw the retirement
incentive. If the City withdraws the retirement incentive, resignations may be rescinded; and
3. The City Council hereby appoints the City Administrator, or his/her successor or
his/her designee as the City's Plan Administrator for the PARS Supplementary Retirement Plan;
and
4. The City's PARS Administrator is hereby authorized to execute the PARS legal
and administrative service documents on behalf of the City to implement a PARS supplemental
benefit program. In addition, if the City's PARS Administrator finds that the PARS
supplemental plan benefit must be limited under Section 415 of the Internal Revenue Code, then
the Plan Administrator will implement replacement benefit programs at no additional cost to the
City.
10-2495/46419
Resolution No. 2010-38
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 3rd day of May , 2010_
M o
REVIE APPROVED: APP D AS TO FORM:
/12
City A iris ator Attorney P d
Exhibit A IT T AN AP V
2010 PARS Supplementary Retirement Plan
Direct uma esources
10-2495/46419
Resolution No. 2010-38
2010 PARS Supplementary Retirement Plan Exhibit A
City of Huntington Beach
Miscellaneous Employees
With regard to the PARS Supplementary Retirement Plan for 2010, the City proposes the
following:
1.0 Eligibility
1.1 Those Miscellaneous employees and Marine Safety (excluding Executive
Management employees and elected officials) who:
a) are employed by the City as of May 3, 2010;
b) are fifty (50) years of age as of September 30, 2010;
c) have at least five (5) years of City service as of September 30, 2010;
d) Resign from City employment effective no later than September 30, 2010; and
e) retire under PERS effective no later than October 1, 2010.
2.0 Participation Requirements
2.1 Participating employees shall submit all required PARS enrollment materials and City
Letter of Resignation to PARS on or before the deadline date of June 18, 2010.
Resignations of participants are irrevocable as of the enrollment deadline and may not
be rescinded unless the City withdraws the incentive pursuant to Paragraph 2.2 below.
2.2 If after the close of the enrollment window the City determines that the plan does not
meet the City's fiscal and operational objectives, the City may withdraw the incentive,
provided it notifies the employees of the withdrawal of the incentive on or before July
6, 2010. If the City withdraws the incentive for employees, their Letter of Resignation
will be automatically rescinded.
2.3 Participation in the retirement incentive requires
a. Submission of required PARS enrollment materials and City Letter of
Resignation to PARS by June 18, 2010;
b. Resignation from City employment effective no later than September 30,
2010; and
c. Retirement from PERS and the PARS Supplementary Retirement Plan on or
before October 1, 2010.
Prepared by PARS (Public Agency Retirement Services) Pagel
Resolution No. 2010-38
2010 PARS Supplementary Retirement Place
City of Huntington Beach
Miscellaneous Employees
3.0 Incentive Payments
3.1 Regarding the basic incentive under this plan:
a) The basic, unmodified benefit shall be a monthly cash payment for the lifetime of
the participant.
b) The monthly cash payment amount shall equal one-twelfth of seven percent
(7.00%) of Final Pay.
c) For purposes of this plan, Final Pay shall be defined as the employee's current
base annual salary as of July 1, 2010.
3.2 Alternative monthly forms of payment of equivalent present value to the basic benefit
shall be offered. They shall include:
a) Joint-and-survivor payments;
b) Payments made for the life of the participant, subject to a ten year minimum;
and
c) Fixed term payments of from five (5) to fifteen (15) years. These payments are
guaranteed to the participant for the full term selected.
3.3 The amount of monthly payment shall be fixed as of June 18, 2010 and shall not be
subject to increase thereafter.
3.4 The choice of form of payment (and the choice of payment beneficiary if choosing a
joint and survivor form of payment) shall become final as of June 18, 2010 and shall
not be subject to change thereafter.
3.5 PARS benefits are to commence October 1, 2010.
4.0 Contract Administrator
The Contract Administrator for the Retirement Incentive shall be PARS.
4.1 In the event the plan is cancelled due to insufficient participation, the Employer shall
pay Phase 11 Systems/PARS a one-time fee of$5,000.00.
4.2 The fee for Phase 11 Systems/PARS shall be 5.0% of plan contributions to the PARS
Trust for services related to the Supplementary Retirement Plan.
Prepared by PARS (Public Agency Retirement Services) Page 2
Resolution No. 2010-38
2010 PARS Supplementary Retirement Plan
City of Huntington Beach
Miscellaneous Employees
Projected Timeline:
1. City Council approval of PARS Incentive May 3, 2010
2. Enrollment Packets Mailed to Employees' Home May 5, 2010
3. Employee Orientation Meeting Week of May 10, 2010
4. Employee Enrollment Workshop Week of June 14, 2010
5. Enrollment Window Closes June 18, 2010
6. City receives Post-Analysis no later than June 25, 2010
7. City announces whether Plan goes forward no later than July 6, 2010
8. Employees Resign from City employment on or before September 30,
2010
9. Employees Retire under PERS,
& PARS SRP on or before October 1, 2010
10. Benefits Commence October 1, 2010
Prepared by PARS (Public Agency Retirement Services) Page 3
Res. No. 2010-38
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, JOAN L. FLYNN the duly elected, qualified City Clerk of the City of
Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby
certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a regular meeting thereof held on May 3, 2010 by the following vote:
AYES: Carchio, Coerper, Green, Bohr, Dwyer, Hansen
NOES: None
ABSENT: Hardy
ABSTAIN: None
Ci Clerk and ex-offici Jerk of the
City Council of the City of
Huntington Beach, California
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. Established in 1983
• 3rd Largest Multiple Employer Public
Retirement System in California
• 500+ Member Agencies
® Over 250,000 Participants
® 900+ Retirement Plans
• Headquarters in Newport Beach, California
City of Huntington Beach
May 3, 2010
j—/&ho ION
ARS",
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SampHing of 400 PARS SRP Clients
Cities and Counties School Districts
• City of Burbank 0 Huntington Beach City School District
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• City of El Monte 0 Long Beach Unified School District
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• City of Newport Beach • San Diego Unified School District
• City of Oxnard • San Francisco Unified School District
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City of Huntington Beach
May 3, 2010 0
PARS""
PARS Supplementary
Rethremen:lnt rVD_-_1an
• Retirement Incentive Plans encourage Ion term or
senior employees, typically at the top of tge- salary
schedule, to retire early.
• The savings are achieved by replacing the senior
employee with a lower paid employee or not replacing
at all.
• The goal is to double or triple the number of natural
attrition retirements.
• Given the current budget crisis, additional retirements
from a Retirement Incentive Plan can reduce the need
for layoffs for some agencies. City of Huntington Beach
May 3, 2010
r"
e r. ry s
By
SKP Pr
® Conduct Fiscal Analysis Steps
® Prepare draft "Plan Language" on eligibility, benefit
level, and timeline
® Obtain City Council authority to offer plan contingent
on meeting fiscal and operational objectives
® Offer Plan during 45 day window
® Close Plan and conduct Post Fiscal Analysis
® Plan proceeds/plan cancelled
® If Plan proceeds employees retire
City of Huntington Beach
May 3, 2010
PARS AnaSys'U's
Total Compensation Differential between
Retiring Employee and Replacement
Employee
® Retirement Health Care Cost
® Retirement Incentive Cost
® Current Natural Attrition
® Future Loss in Natural Attrition
Savings due to Non-Replacements
NET SAVINGS (COST)
City of Huntington Beach
May 3, 2010
fts
tore
260 Eligible Miscellaneous Employees
30
25
o�
20
LU
15
10-
5-
0- 1 1 11- lid 1 1 1jk I I I I I I I
50 55 60 65 70 75
City of Huntington Beach
Age May 3, 2010
Proposed Nan Desmign
® Offered through a tax-qualified plan — Internal
Revenue Code Section 401(a)
- Benefit level is 7% of Final Pay, which means:
Final Pay x 7% divided by 12 = Monthly Lifetime Benefit
Example: Final Pay = $50,000 x 7% _ $3,500 divided by 12 = $291.66 per
month for life.
- Employees can choose among 14 different payout options
ranging from a monthly lifetime payout to fixed term
payments of 5 to 15 years.
City of Huntington Beach
May 3, 2010
Sam Senef'ft Mustrat000n
7% with Base Pay of $69,119 for average iscellaneous Employee
Option Duration Monthly Benefit
Option 1 Retiree's Life $403.19
Option 2 Retiree's and Beneficiary's Life $350.77
Option 3 Greater of Lifetime or 10 years $390.28
Option 5 * 5 Years $1,146.60
Option 6 * 6 Years $982.22
Option 7 * 7 Years $865.20
Option 8 * 8 Years $777.78
Option 9 * 9 Years $710.10
Option 10 10 Years $656.23
Option 11 11 Years $612.40
Option 12 12 Years $576.09
Option 13 13 Years $545.58
Option 14 14 Years $519.62
Option 15 15 Years $497.30
City of Huntington Beach
May 3,2010
r e logNo Requkements
1. Are employed as a Miscellaneous or Marine Safety
employee (excluding Executive Management employees
and elected officials) by the City as of May 3, 2010
2. Are fifty (50) years of age as of September 30, 2010
3. Have completed at least five (5) years of City service as
of September 30, 2010
4. Resignation from City employment effective no later than
September 30, 2010
5. Retire under PERS and PARS on or before October 1,
2010
City of Huntington Beach
May 3, 2010
_ a..„. MIS
Proposed Plan [DerAgn
Benefit
Dumber of
Projected Plan
Group Level Eligible Participation
Employees
Miscellaneous 7% of 260 Eligible 77 Retirements
Final Pay Employees (29.62% of eligible group)
Marine Safety 7% of 2 Eligible I retirement
Final Pay Employees (50.00% of eligible group)
City of Huntington Beach
May 3,2010
i
ma t. 'c r�xi Wit" `�
MiscellaneousEmployees Rscag Projection
_—Assuming 77 Retirements
- • • s . • -
100% Replacement 77.00 ($827,418) ($3,225,410) ($6,532,608)
90%Replacement 69.30 ($330,129) ($1,621,899) ($3,646,395)
80% Replacement 61.60 $167,159 ($18,389) ($760,182)
70% Replacement 53.90 $664,448 $1,585,122 $2,126,030
60% Replacement 46.20 $1,161,736 $3,188,632 $5,012,243
50% Replacement 38.50 $1,659,025 $4,792,143 $7,898,456
40% Replacement 30.80 $2,156,313 $6,395,653 $10,784,669
30% Replacement 23.10 $2,653,601 $7,999,164 $13,670,881
20% Replacement 15.40 $3,150,890 $9,602,674 $16,557,094
10% Replacement 7.70 $3,648,178 $11,206,185 $19,443,307
0% Replacement 0.00 $4,145,467 $12,809,695 $22,329,520
City of Huntington Beach
May 3, 2010
pw
Marine Safety Employees cal Projection
Assumang I ReUrement
a e -i � -• e - -s
- � a e o • � s e
100% Replacement 1.00 ($7,712) ($47,600) ($114,637)
0% Replacement 0.00 $117,az4 $357,165 $616,259
City of Huntington Beach
May 3, 2010
Proposed 'Toflm
pinefraine Anion
May 2010 City Council authorization to offer plan to eligible
employees
May 2010 PARS mails individual benefit illustration packets to
eligible employees.
Mid-May 2010 PARS holds orientation meetings.
Mid-June 2010 PARS holds individual benefit counseling.
June 18, 2010 PARS enrollment window closes.
June 25, 2010 City receives PARS Post-Analysis.
July 6, 2010 City Council determines whether or not plan objectives
have been met. If so, plan is allowed to proceed.
September 30, 2010 Employees resign prior to this date.
October 1, 2010 PARS checks commence to participants.
City of Huntington Beach
May 3, 2010
. ..�nh., .t.;r,. ...,
PARS Supplementary 1 mend Plan
Please call with any questions
Kevin Murphy
Chief Operating Officer
PARS
800-540-6369 x 128
kmurphy@pars.org
City Of Huntington Ouch
May 3, 2010