City Council Study Session Agenda and Packet 2017 05 09

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Statewide Defined Benefit Plan for members of affiliated Social Security Employers Deferred Retirement Option Plan (DROP) Requirements In order to enter DROP, the member must meet one of the following criteria: • be eligible for normal retirement (at least 25 years of service and age 55); or • be vested (5 - 24 years of service and age 55); or • be eligible for early retirement (at least 30 years of service or age 50). Instead of terminating employment and receiving retirement benefits, a member could choose to participate in the DROP and continue employment for a maximum of five years. A written agreement between the member and the employer is required. While participating in the DROP, a member earns no additional service credit toward retirement. There are also no further contributions made to a member's SRA. Calculation During this period of time, the member's retirement benefits as well as employee contributions are paid into a DROP account. The member directs the investment of his or her DROP account in any of the in- vestment options offered by FPPA. Currently FPPA offers a variety of investment options through Fidelity Investments (the record keeper). Payment At the end of the DROP period, the member ceases employment and receives the amount accumulated in the DROP account. Payments from the DROP account may be paid as periodic payments, a lump sum, or a member could choose to convert all or a portion of the DROP account to "a monthly lifetime benefit" which may include a survivor benefit and a benefit adjustment. The "conversion to a monthlybenefit"option must be elected prior to the first distribution from the SWDB-SS Plan. The member's DROP payments are in addition to the benefits paid from the SWDB-SS Plan and the SRA. Benefit Adjustment (formerly referred to as COLA) Benefit adjustments are not guaranteed and are determined annually by the FPPA Board of Di- rectors based on the most recent actuarial study. The amount of the benefit adjustment can be 0% to 3%, or the greater of the Consumer Price Index (CPI) per year. Benefit adjustments may begin once the retired member has been receiving retirement benefits for at least 12 calendar months prior to October 1. Any benefit adjustment increases, when awarded, are effective October 1. Plan Contribution Rates Statewide Defined Benefit Plan - Supplemental to Social Security Member Contribution Rate Implementation Schedule Effective Mandatory Member Mandatory Employer Total Combined Member and January 1 of Year Contribution Rate Contribution Rate Employer Contribution Rate 2015 2016 2017 2018 2019 2020 2021 2022 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 8.25% 8.50% 8.75% 9.00% 9.25% 9.50% 9.75% 10.00% 10