City Council Study Session Agenda and Packet 2017 05 09

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SUBJECT: POLICE MASTER PLAN WITH COMPENSATION AND BENEFITS DATE: MAY 9, 2017 PAGE 14OF17 Money Purchase Plan Years of Service Option EE = Employee ER = Employer p 401 Social SecurityMedicare TOTAL ER contribution GRAND TOTAL Years of Service EE ER 0-3 years 5.0% 5.5% 6.20% 1.45% 13.15% 18.15% 3-5 years 5.5% 6.0% 6.20% 1.45% 13.65% 19.15% 5-10 years 6.010 6.5©% 6.20% 1.45% 14.15% 20.15% 10-15 years 6.5% 7.0% 6.20% 1.45% 14.65% 21.15% 15+ years 7.0% 7.59,6 6.20% 1.45% 15.15% 22.15% Pros: Provides an incentive to have a Tong -term career with the City. As wages increase, retirement benefit also increases which should provide a greater opportunity to retire with a healthy retirement fund. Cons: Many Officers are anticipating a change in their retirement options and are hopeful that a defined benefit program is the option that is selected. There could be considerable disappointment among the Officers and the possibility of increased turn -over as they search for an agency that offers a defined benefit retirement option. Implementing now will not allow tenured employees to build sufficient retirement savings. Police Officers feeling compelled for purely financial reasons to continue working past their desired retirement age of 55 and into their 60s or 70s, when they may be more challenged by the physical demands of the job, until they are eligible to collect their full Social Security benefit. Cost: Implementing the years of service approach outlined in the table above would increase the City's costs by about $21,000 annually, with this amount changing as employees move through the years of service, retire and new employees are hired, and as wages increase over time. Recommendation for Implementation: Meet with Sworn Officers and discuss and present information regarding this option. Ask for their feedback. CITY COUNCIL COMMUNICATION