In 1945 the City of Fort Worth established the Employees' Retirement Fund of the City of Fort Worth (Fund) which is a tax-qualified government pension plan (Plan). The City picks-up and pays member contributions on a pre-tax basis for the employee. Since 2007, the Fund has been governed by 6243i of the Texas Revised Civil Statutes. The statute permits both the Retirement Fund Board and the City Council to make rules governing the Fund. The Fund is also subject to Article 16, Section 66 of the Texas Constitution, which prohibits accrued pension benefits from being decreased. Section 2.5-4 of the Retirement Ordinance currently allows employees who terminate employment with the City and receive a refund of their contributions to "buy back" their prior credited service if the employee later returns to service with the City. The employee must repay the total amount of all contributions plus Regular Interest (now calculated as the two-year Treasury Bill rate). The employee has (90) days from their reemployment to elect to buy back prior credited service. An employee who elects to purchase prior credited service is given seven years to complete the purchase of their prior credited service. Staff is recommending that the Retirement Ordinance be amended to change the interest rate on the purchase of prior credited service to the assumed rate of return in place on the date the employee elects to purchase prior credited service. This will ensure that any purchase of prior service credit fully restores the Fund by capturing the earnings that are assumed to have occurred if the withdrawal had not occurred. Staff is also recommending that the payment period for the purchase of prior credited service be reduced from seven years to three years for more efficient administration of the Fund. Attached is the copy of ordinance that Staff is recommending be adopted. A red-line copy of the ordinance is also attached for reference. This M&C does not request approval of a contract with a business entity.
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