Source: https://ecode360.com/9692955
Timestamp: 2018-06-20 07:59:04
Document Index: 784840482

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City of Kalamazoo, MI Employee Retirement System
Ch 2 Art X Employee Retirement System
§ 2-223 Established; citation of article; intent.
§ 2-224 Definitions.
§ 2-225 Board of Trustees.
§ 2-226 Officers of Board of Trustees.
§ 2-227 Composition of membership of retirement system.
§ 2-228 Termination of membership; buy-back of credited service.
§ 2-229 Service credit.
§ 2-230 Age and service requirements in event of split service.
§ 2-231 Military service credit.
§ 2-232 Buyback of unpaid leave.
§ 2-233 Service accounts.
§ 2-234 Voluntary retirement.
§ 2-235 (Reserved)
§ 2-236 Retirement allowance for Public Safety members; early retirement.
§ 2-237 Retirement allowance for general members; multipliers; early retirement reduction.
§ 2-237.1 One-time (2011) enhanced retirement option.
§ 2-238 Social security integration.
§ 2-239 Deferred retirement allowance.
§ 2-240 Retirement allowance options.
§ 2-241 Nonduty death retirement allowance.
§ 2-242 Disability retirement.
§ 2-243 Disability retirement allowance (duty and non-duty).
§ 2-244 Benefits for death in line of duty.
§ 2-245 Pension offset by worker's compensation; subrogation of rights against third party.
§ 2-246 Return of disability retirant to City employ; payment proportional to available funds.
§ 2-246.1 through § 2-246.4. (Reserved)
§ 2-246.5 Periodic payment.
§ 2-247 Refund of accumulated contributions.
§ 2-248 Annuity savings fund; members' contributions; transfers.
§ 2-249 Retirement reserve fund.
§ 2-250 Reserve for employer contributions; City contribution.
§ 2-251 Expenses.
§ 2-252 (Reserved)
§ 2-252.1 Investment Committee and management of Trust Fund.
§ 2-252.2 Investment Committee membership, appointment and duties.
§ 2-252.3 Available cash and use of assets.
§ 2-253 Method of making payments.
§ 2-254 Income fund; allowance of regular interest.
§ 2-255 Previous assets credited to retirement system.
§ 2-256 Benefits assumed.
§ 2-257 Correction of errors.
§ 2-258 Benefits, rights or funds not subject to legal process or assignment; City's right of setoff; forfeiture of retirement allowance.
§ 2-259 Protection against fraud.
§ 2-260 Retirant's death benefit.
§ 2-261 Reciprocal Retirement Act.
§ 2-262 Description of funds; effect.
§ 2-263 Maximum retirement allowances.
§ 2-263.1 Eligible domestic relations orders.
§ 2-264 Termination of retirement system.
Article X: Employee Retirement System
[Derived from Adm. Code § A405; last amended 12-17-2007 by Ord. No. 1835]
Chapter 2: Administration Article X Employee Retirement System
The City of Kalamazoo Employees Retirement System established by authority of § 197 of the Charter and Ordinance No. 378, as amended, is hereby continued, as amended and restated effective January 1, 2006. This article may be cited as the "City of Kalamazoo Employee Retirement System Ordinance." The Retirement System Ordinance shall be maintained for the exclusive benefit of members and is intended to qualify as a governmental plan under Sections 401(a) and 414(d) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), and with the requirements of any other applicable law.
The following words and phrases, as used in this article, unless a different meaning is clearly required by the context, shall have the following meanings. Words used in the masculine gender shall be construed as though they were also used in the feminine or neuter gender where applicable, and words used in the singular will be construed as though they were also used in the plural, where applicable.
The sum of all amounts deducted from the compensation of a member, or "picked up" by the City pursuant to § 2-248F, and credited to his or her individual account in the annuity savings fund, together with interest credited to January 1, 1952, and regular interest credited after December 31, 1951.
An annual amount, derived from a member's accumulated contributions, payable in equal monthly installments throughout the future life of a person.
ANNUITY RESERVE
The present value of all future payment to be made on account of any annuity. An annuity reserve shall be computed upon the basis of such mortality table, and regular interest, as the Board shall from time to time adopt.
Any person, except a retirant, who is in receipt of, or who is designated to receive, a pension, retirement allowance or other benefit payable by the retirement system. Notwithstanding the foregoing, a member may designate a trust as his or her secondary beneficiary under the retirement system, and the beneficiaries of the trust with respect to the trust's interest in the member's benefit under the retirement system shall be treated as the member's designated beneficiary for purposes of Code Section 401(a)(9) and Treasury Regulation Section 1.401(a)(9)-4, provided that the terms of Q&A-5 and Q&A-6 of such Treasury Regulation are satisfied.
The Board of Trustees provided in § 2-225.
The City of Kalamazoo.
A member's salary or wages paid him or her by the City for services rendered by him as an employee of the City. Compensation shall include any amounts that are contributed by the City pursuant to a salary reduction agreement and that are not includable in the member's gross income under Code Section 125, 132(f), 401(k), 403(b) or 457(b). In case a member's compensation is not all paid in money, the City Manager shall fix the value of the portion of his or her compensation that is not paid in money.
Compensation shall not include any sums paid to a member as worker's compensation or contractual supplements thereto, unless the following requirements are both fulfilled:
The member is in receipt of said sums while the member is off work during the final three years of his or her membership because of a disability which, if permanent, would qualify him or her for a duty disability retirement allowance under § 2-243B; and
The member contributes the prescribed percentage of said sums to the annuity savings fund under § 2-248B within 180 calendar days of returning to work. Compensation shall include any employee contribution "picked-up" by the City and treated as an employer contribution pursuant to § 2-248F.
Notwithstanding the above, the following are to be considered part of compensation, both for purposes of an employee paying a percentage contribution to the system, and for purposes of determining final average compensation: overtime (except for Public Safety members), holiday pay, sick time pay, vacation pay, retroactive pay, certification bonus, education bonus, standby pay, emergency leave pay, critical leave pay, funeral leave pay, transit annual leave, transit annual leave payout (up to 160 hours), night shift premium, and longevity.
Notwithstanding the above, the following are not to be considered part of compensation, both for purposes of an employee paying a percentage contribution to the system, and for purposes of determining final average compensation: deferred compensation match by the City, Public Safety overtime, compensation ("comp") time, lump sum sick time payout, car stipend, mileage payment, discretionary bonus, incentive bonus, performance bonus, food allowance, tool allowance, parking allowance, clothes cleaning allowance, clothing allowance, insurance waiver, equipment overtime.
Notwithstanding any other provision of the retirement system to the contrary, for plan years beginning on or after January 1, 1994, but before plan year 2002, the annual compensation of each member taken into account under the retirement system shall not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual compensation limit is $150,000, as adjusted by the Commissioner for increases in the cost of living in accordance with Code Section 401(a)(17)(B). If compensation for any prior determination period is taken into account in determining an employee's benefits accruing in the current plan year, the compensation for that prior determination period is subject to the OBRA '93 annual compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the first plan year beginning on or after January 1, 1994, the OBRA '93 annual compensation limit is $150,000.
The annual compensation of the member taken into account in determining benefit accruals under the retirement system in any plan year beginning after December 31, 2001, or such other consecutive twelve-month period over which Compensation is otherwise determined under the retirement system (the "determination period") shall not exceed $200,000, as adjusted by the Commissioner for increases in the cost of living in accordance with Code Section 401(a)(17)(B).
The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12.
The number of years and fraction thereof standing to a member's credit, as provided in this article. Effective January 1, 1999, as to Public Safety members, and effective March 13, 2000, as to KMEA members, the amount of service time that will be credited to such a member who is classified and worked as a part-time employee of the City will be calculated by pro-rating the number of hours worked in a year against the number of hours regularly scheduled in that year for a full-time employee in that classification. For example, an employee who works 30 hours per week in a position where full-time employees regularly work 40 hours per week will be credited with 00.75 year of service for that year. For Public Safety members, credited service as of January 1, 1999, shall be the amount of time which has elapsed between that date and each individual's seniority date, in addition to any time purchased pursuant to the split-service provisions set forth below. When a Public Safety member is absent from work and receiving sick pay benefits (either the member's or from donated sick leave time) from which pension contributions are deducted, the period of time the employee is absent and receiving sick leave benefits will be counted towards the member's credited service. Public Safety members on medical leave of absence who are receiving worker's compensation benefits may have period of such leave counted towards credited service by electing at the commencement of the leave to make regular pension contributions while on the leave.
A payment by the retirement system to the eligible retirement plan specified by the distributee.
An employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse. Effective January 1, 2007, a distributee further includes a nonspouse beneficiary who is a designated beneficiary as defined by Section 401(a)(9)(E) of the Internal Revenue Code. However, a nonspouse beneficiary may only make a direct rollover to an individual retirement account or individual retirement annuity established for the purpose of receiving the distribution, and the account or annuity will be treated as an "inherited" individual retirement account or annuity.
[Amended 11-19-2012 by Ord. No. 1905]
An individual retirement account described in Code Section 408(a);
An individual retirement annuity described in Code Section 408(b);
A qualified retirement plan described in Code Section 401(a) or 403(a);
For distributions made after December 31, 2001, a tax-sheltered annuity plan described in Code Section 403(b) or an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state, which agrees to accept and separately account for amounts transferred into such plan from this Retirement System; and
For distributions made after December 31, 2007, a Roth individual retirement account, subject to applicable code requirements.
This definition shall also apply in the case of a distribution made after December 31, 2001, to a surviving spouse, or to a spouse or former spouse who is the alternate payee under an EDRO. Subsection A(1) and (2) contained herein shall apply in the case of a distribution made after December 31, 2006, to a beneficiary.
Any distribution of all or any portion of the refund of accumulated contributions paid to a member, a surviving spouse, a spouse or former spouse who is the alternate payee under an EDRO, or, effective January 1, 2007, a beneficiary, under the retirement system, except that an eligible rollover distribution does not include:
Any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the member or for the joint lives (or joint life expectancies) of the member and the member's beneficiary, or for a specified period of 10 years or more;
Any distribution to the extent such distribution is required under Code Section 401(a)(9);
The portion of any distribution that is not includible in gross income; and
The portion of any distribution made on or after January 1, 2002, which is attributable to a hardship distribution described in Code Section 401(k)(2)(B)(i)(IV).
Any person in the employ of the City whose services are compensated by the City, including officers of the City.
EXEMPT EMPLOYEE or EXEMPT MEMBER
Any general member who is not a member of a bargaining unit.
The average of the highest annual compensation received by a member during any period of three consecutive years of his or her credited service contained within his or her 10 years of credited service immediately preceding the date his or her employment with the City last terminated. If the member has fewer than three years of credited service, his or her final average compensation shall be the average of the annual rates of compensation for his or her total period of credited service.
A member's annual rate of compensation at the time his or her employment with the City last terminated.
Any member except a public safety member.
The Investment Committee established in § 2-252.1 et seq.
Any employee who is included in the membership of the retirement system.
An annual amount, derived from money provided by the City, payable in equal monthly installments throughout the future life of a person, or for a temporary period, as provided in this article.
The present value of all future payments to be made on account of any pension. A pension reserve shall be computed upon the basis of such mortality and other experience tables, and regular interest, as the Board shall from time to time adopt.
Any member who works within the Public Safety Administration and who is both sworn and exempt. For purposes of this article, said Administrator will be treated as if a Public Safety member except as otherwise noted.
Any employee in the Public Safety Department of the City holding the rank of patrol officer, including probationary patrol officer, or higher rank; and, in the case of a fire fighter, any employee in the Fire Department of the City holding the rank of fire fighter, including probationary fire fighter, or higher rank; and including any Public Safety officer employed in the Public Safety Department. The term "Public Safety member" shall mean any person employed by Public Safety, including probationary members, holding the rank of sworn officer, but shall not include:
Any person who is privately employed as a Public Safety member; nor
Any person who is temporarily employed as a Public Safety member; nor
Any civilian employee in the Public Safety Department.
Such rate or rates of interest per annum, compounded annually, as the City Commission shall from time to time adopt.
Any member who retires with a retirement allowance payable by the retirement system.
A member's severance from the employ of the City with a retirement allowance payable by the retirement system.
The sum or the annuity and pension payable to a retirant or beneficiary. In determining a retirant's or beneficiary's retirement allowance, the retirement system shall apply the actuarial assumptions that are set forth in Appendix A,[1] which is attached hereto.
RETIREMENT SYSTEM or SYSTEM
The City of Kalamazoo Employees Retirement System.
Personal service rendered to the City by an employee of the City. Service shall include time off work due to a disability which, if permanent, would qualify the individual for a duty disability retirement allowance under § 2-243B.
All assets possessed by the retirement system, including those attributed to the pension reserve fund, the retirement reserve fund, the annuity savings fund and the income fund, all property and rights purchased with such amounts, and all income attributable to such amounts, property or rights. Any forfeitures shall be included in the trust fund and shall not be applied to increase the benefits any member would otherwise receive under the retirement system. The trust fund shall be held and invested in accordance with § 2-252.1.
The Uniformed Services Employment and Reemployment Rights Act of 1994, as amended from time to time.
[Amended 6-29-2009 by Ord. No. 1855; 10-4-2010 by Ord. No. 1874]
For a general member, shall be age 55 years, provided he or she has 15 or more years of credited service. For each year past age 55, the required number of years of credited service shall be reduced one year until:
For exempt employees hired prior to September 1, 2010, at age 62 and thereafter the required number of years of credited service shall be five;
For exempt employees hired on or after September 1, 2010, at age 60 and thereafter the required number of years of credited service shall be 10;
For KMEA members hired prior to January 1, 2009, at age 62 and thereafter the required number of years of credited service shall be eight;
For KMEA members hired on or after January 1, 2009, at age 60 and thereafter the required number of years of credited service shall be 10;
For AFSCME members, at age 61 and thereafter the required number of years of credited service shall be nine; and
For ATU members, at age 60 and thereafter the required number of years of credited service shall be 10.
Beginning January 1, 1984, "voluntary retirement age" for a Public Safety member shall be after 25 years of credited service, or age 50 with 10 years of credited service, whichever occurs first.
Subject to the maximum benefits provisions set forth below, any member who continues in the employ of the City beyond his or her voluntary retirement age shall continue to accrue benefits under the retirement system; provided, however, that in the event that the City reemploys any member who has retired after reaching his or her voluntary retirement age and has commenced receiving a retirement allowance, such reemployment shall not cause said retirement allowance to be increased or altered in any way, nor shall such reemployment create for such member any accrual of any additional benefits under the retirement system.
Subject to the terms of § 2-237, the amount of the retirement allowance to which a member may be entitled upon his or her voluntary retirement may be reduced.
WORKER'S COMPENSATION PERIOD
The period a member is in receipt of weekly worker's compensation on account of a member's disability or death arising out of and in the course of the member's employment. If a member is paid a single sum in lieu of future worker's compensation, the worker's compensation period shall be the period, if any, the member was in receipt of weekly worker's compensation, plus the period arrived at by dividing the single sum by the member's weekly worker's compensation award.
The power to administer, manage and operate the retirement system, and to construe and make effective the provisions of this article, the plan, applicable state and federal statutes, provisions of the City Commission-approved collective bargaining agreements and employment agreements, and provisions of employment agreements authorized by the City Manager that expressly relate to the retirement system, is vested in a Board of Trustees, subject to such powers as are retained by the City Commission, or placed in the Investment Committee pursuant to § 2-252.1 et seq. Employment agreements authorized by the City Manager, as that phrase is used in this subsection, shall apply only to employment agreements for the positions of Deputy and Assistant City Manager, shall be limited to provisions regarding eligibility for an unreduced pension, and shall be available only to an employee in those positions whose years of service as a City employee, when combined with the employee's age, total at least 70 at the time the employment agreement is executed. The City Manager shall have the authority granted by this subsection until June 1, 2009.
The Board of Trustees shall consist of five trustees, as follows:
A City Commissioner to be selected by the Commission to serve at the pleasure of the Commission.
A citizen who is not a member, retiree, or beneficiary of the retirement system, and holds no other City position, to be appointed by the City Commission.
A Public Safety member to be elected by the Public Safety members.
A general member to be elected by the general members.
The elections of the Public Safety member trustee and the general member trustee shall be held under such rules and regulations as the Board shall from time to time adopt.
The term of office of the appointed citizen trustee, the Public Safety member trustee and the general member trustee shall be three years, one such term to expire annually.
Each trustee shall, before assuming the duties of trustee, qualify by taking an oath of office to be administered by the City Clerk. The trustee shall serve without additional compensation for his or her services as trustee.
In the event a trustee, except the appointed citizen trustee, ceases to be employed by the City, or if any trustee fails to attend three consecutive regularly scheduled meetings of the Board, unless in each case excused for cause by the remaining trustees, his or her office of trustee shall be deemed to be vacated. If a vacancy occurs in the office of trustee, the vacancy shall be filled, within 60 days from and after the date the vacancy occurred, for the unexpired portion of the term in the same manner as the office was previously filled. The City Commission from time to time may appoint a person to temporarily replace a trustee on an interim basis for reasons such as medical emergency or other need, and the person filling such a position on an interim basis shall serve on the Board of Trustees until the person who is on leave of absence is able to return to duties as a member of the Board of Trustees. The term of office of the interim trustee shall coincide with the term of office of the trustee temporarily replaced, and in no event shall the interim trustee serve in excess of 90 days from and after the date the City Commission appoints such interim trustee, unless the City Commission extends the term of such interim trustee beyond 90 days.
The Board shall hold meetings regularly, at least quarterly, and shall designate the time and place thereof. Three trustees shall constitute a quorum at any meeting of the Board. Each trustee shall be entitled to one vote on each question before the Board, and at least three concurring votes shall be necessary for a decision by the Board at any of its meetings. The Board shall adopt its own rules of procedure and shall keep a record of its proceedings. All meetings of the Board shall be public.
The Board of Trustees shall elect from its own number a chairperson and chairperson pro tem.
The Finance Director shall serve as secretary to the Board and shall be the administrative officer of the retirement system.
The City Treasurer, or his or her designee, shall be treasurer of the retirement system and the custodian of its assets.
The City Attorney shall be the legal advisor to the Board.
The Board shall appoint as medical director a physician who is not eligible to membership in the retirement system. He or she shall be directly responsible to and shall hold office at the pleasure of the Board. He or she shall arrange for and pass upon all medical examinations required under this article; he or she shall investigate all essential statements and certificates of a medical nature furnished by or on behalf of a member, retirant or beneficiary in connection with a claim for disability or death in line of duty benefits; and he or she shall report in writing to the Board his or her conclusions on medical matters referred to him or her by the Board.
The compensation for services required for the proper operation of the retirement system shall be fixed by the Board subject to the approval of the City Commission.
The Board shall recommend, jointly with the Investment Committee, the actuary for the system to the City Commission for its approval.
The membership of the retirement system shall include all persons who are in the employ of the City and all persons who become employed by the City except as provided in Subsection B of this section.
The membership of the retirement system shall not include:
Any person whose services to the City are compensated on a fee or contractual basis; nor
Any person employed to direct traffic at schools; nor
Any person, other than a person who is a member of the KMEA, who becomes employed by the City after June 30, 1967, in a position normally requiring less than 1,040 hours of work in a calendar year; nor
The medical director and the actuary; nor
Editor's Note: Former Subsection B(5), regarding retirants reemployed by the City, was repealed 6-29-2009 by Ord. No. 1855.
The City Manager or other City Commission appointee, if he or she exempts himself or herself from membership in the system. His or her past contributions, together with accrued interest, would then be paid into the program established by the International City Management Association Retirement Corporation instead of being paid to or held by the City of Kalamazoo Employees Retirement System. No contribution on behalf of the City Manager or other appointee who makes such choice shall thereafter be made to the retirement system. Neither he nor she nor any person claiming on his or her behalf or account shall have any right, title, benefit or interest in said system or the funds thereof. The system shall owe no duty to such person or persons; nor
Effective on and after January 1, 1999, the district court staff and judges of the 9th District Court, unless such person, prior to that date elected to have his or her contributions remain in the system.
In any case of doubt as to the membership status of any person, the Board shall decide the question.
Except as otherwise provided in this article, members who leave the employ of the City for any reason except retirement or death shall thereupon cease to be members and their credited service at that time shall be forfeited. In the event of reemployment by the City, such individuals shall again become members. Such employees shall have the option of having their credited service restored in full, provided they return to the annuity savings fund the amount, if any, withdrawn therefrom, together with regular interest from the date of withdrawal to the date of repayment.
In the event any member, or part-time employee who, full-time, would be a member, leaves the employment of the City to provide data processing services to the City, and said member or employee returns to City employment immediately upon leaving the employment of said private entity, and he or she has again become a member pursuant to the subsection above, he or she may also receive credited service for the time spent with said private entity as long as his or her employment with said private entity has been full-time and continuous since leaving the employment of the City, and he or she pays to the retirement system the contributions he or she would have made had he or she remained or been a member of the system, based on the actual salary received from the private entity during this time period.
Said payments shall commence within one year of reemployment and shall be completed within a five-year period from the date of rehiring. If repayment is not completed within the five-year period, any amounts paid are to be refunded, and credit for pension benefits will be computed from the most current date of employment. Current employees shall have one year from the effective date of this section, as amended, to start repayment, and completion shall be within the five-year time limit. Upon a member's retirement or death, he shall thereupon cease to be a member.
However, a person retired from the system may "buy back" prior service credits to increase his or her pension:
When the retirant would have been eligible to buy back prior service time credit(s), if the retirant were an active (contributing, nonretired) member of the system; and
When such credit(s) was(were) not available for buy back prior to the date of his or her retirement; and
When election, payment and completion shall be as follows:
Said retirant shall elect to buy back such prior service credit(s) within one year of the date the retirant is or becomes eligible to buy back such time credit(s);
Calculation of prior service credits:
Per Subsection D(3)(a) above for refunded prior service credit; and/or
Such retroactive contributions shall be made together with "regular interest" or a Board-approved actuarial formula calculated to the date of repayment; and
Applications for repurchase of prior City service credit(s) shall be made within one year from the date on which the retirant first becomes eligible to exercise the option to "buy back" prior City service credit(s);
From the date on which the retirant's application to repurchase prior City service is approved by the Board, the retirant will have one additional year to actually repurchase such prior service by lump sum repayment, unless an extended period is approved by the Board;
An increased pension will not be put into effect for any retirant until the repayment of previously refunded employee pension contributions, and regular interest, is complete.
The service rendered by a member shall be credited him or her by the Board in accordance with such rules and regulations as the Board shall from time to time adopt, consistent with the provisions of this article. In no case shall fewer than 10 days of service rendered by a member in any calendar month be credited him or her as a month of service, nor shall fewer than nine months of service rendered by him or her in any calendar year be credited as a year of service, nor shall more than one year of service be credited any member for all service rendered by him or her in any calendar year.
In the event a member withdrew his or her contributions from the retirement annuity and pension fund of the retirement system established by Ordinance No. 188, or his or her accumulated contributions from the annuity savings fund of the retirement system provided for in this article, and has not returned same to the applicable fund, he or she shall not be credited with service rendered prior to the date he or she last withdrew his or her contributions or accumulated contributions until he or she returns to the annuity savings fund, together with regular interest from the date of withdrawal to the date of repayment, as provided in § 2-228 of this article.
In the event a member has rendered service both as a general member and as a Public Safety member, the age and service requirements applicable to that member at the time of retirement shall be determined by the age and service requirements of the unit from which the member is retiring. The member's total service shall be used to determine whether or not the member meets the age and service requirements of the unit from which he is retiring.
For purposes of computing the retirement allowance of a member who has rendered service in both of the above units, § 2-236 shall apply only to the member's actual service as a Public Safety member; and § 2-237 shall apply only to the member's actual service as a general member. The retirement allowance shall be the sum of the two separate computations. The computations for each unit shall be based on the member's actual final average compensation.
Notwithstanding the above, a member employed by Public Safety who is a member of the Kalamazoo Police Officers' Association prior to 1999 may elect to convert his or her prior non-Public Safety time into Public Safety time (for purposes of credited service) so long as he or she first pays the difference between the contribution rate that was paid and the contribution rate that would have been paid had the non-Public Safety time actually been for Public Safety.
In the event any member, while employed by the City, was called to or entered any armed service of the United States and has been or shall be on active duty in such armed service, said member shall have such armed service actually required credited as City service; provided that:
He or she is reemployed by the City within one year from and after the date of termination of such armed service actually required of him or her.
He or she returns to the annuity savings fund the amount he or she might have withdrawn therefrom at the time he or she entered or while in such armed service together with regular interest from the date of withdrawal to the date of repayment. Said payments shall commence within one year of reemployment and shall be completed within five years from the date of rehiring. If repayment is not completed within the five-year period, any amounts paid are to be refunded, and credit for pension benefits will be computed from the most current date of employment.
In no case shall more than six years of City service be credited for all such armed service rendered by said member. In any case of doubt as to the period to be so credited any member, the Board shall have the final power to determine such period. During the period of such armed service and until reemployment by the City, said member's contributions to the retirement system shall be suspended; and any balance standing to his or her credit in the annuity savings fund shall be accumulated at regular interest.
In the event any member, prior to being employed by the City, was called to or entered any armed service of the United States and who has been on active duty in such armed service, said member may have his or her service credit increased for not more than three years' active military service; provided that:
The member pays to the retirement system a percent of the member's annual rate of pay in effect at the time the member applies for this option, multiplied by the years, or fraction thereof, of service that the member elects to purchase pursuant to this section. The percent to be used in said calculation shall be the same as the percent in effect used to determine that member's contribution to the annuity fund, as described in § 2-248 and elsewhere.
Time of payment. Said payment shall commence within one year from the date of hire and shall be completed within five years. If payment is not completed within the five-year period, any amounts paid are to be refunded, and no credit for military service pension benefits will be given.
The fact that payment is made into the retirement system during a given year for the purposes of Subsection B(1) above shall have no effect in determining final average compensation.
In the event any member making payments under Subsection B(1) above should retire or die prior to making the full payments required, the member or member's beneficiary under the pension ordinance shall have the option of either making a lump-sum payment in full prior to receiving any pension benefits in order to obtain the additional benefits under this section, or receiving military service credit prorated based upon the amount of payments made until death or retirement.
At any time prior to retirement, a member may withdraw all or part of his or her military service credit payments from the retirement system. If a member makes such a withdrawal, the military service credit will be reduced pro rata, based upon the amount of payments withdrawn.
Active duty shall include all service and training while on active duty but shall not include National Guard or Reserve monthly or annual training.
Current employees must commence payment no later than January 2, 1987, to obtain credit for military service under this section of the Kalamazoo City Code. However, the preceding sentence shall not apply to any military service covered by USERRA. Payment shall be completed within five years of commencement of payment.
In no event shall credit be given for a period of active duty if the member otherwise receives credit for that period as City service.
Effective December 12, 1994, the provisions herein shall be interpreted and applied as required by USERRA in accordance with Code Section 414(u) and the regulations and other guidance thereunder.
Effective with respect to deaths occurring on or after January 1, 2007, while a member is performing qualified military service (as defined in Chapter 43 of Title 38, United States Code), to the extent required by Section 401(a)(37) of the Internal Revenue Code, survivors of a member in a state or local retirement or pension system are entitled to any additional benefits that the system would provide if the member had resumed employment and then died, such as accelerated vesting or survivor benefits that are contingent on the member's death while employed. In any event, a deceased member's period of qualified military service must be counted for vesting purposes. Beginning January 1, 2009, to the extent required by Section 414(u)(12) of the Internal Revenue Code, an individual receiving differential wage payments (as defined under Section 3401(h)(2) of the Internal Revenue Code) from an employer shall be treated as employed by that employer, and the differential wage payment shall be treated as compensation for purposes of applying the limits on annual additions under Section 415(c) of the Internal Revenue Code. This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.
[Added 11-19-2012 by Ord. No. 1905]
A Public Safety member who, on or after January 1, 1999, is absent from work for an entire pay period during which no pay from the City is paid from which pension contributions are deducted, may buy back all or a portion of said time so that it becomes credited service. In the absence of said buyback, said time shall not become credited service. If the member elects to buy back such time, the amount to be paid by the member shall be equal to that which the member would have had deducted from his or her pay had he or she been receiving pay. Said payment shall commence within one year of the member's return and shall be completed within five years of said return. If repayment for the amount of time sought to be credited is not fully paid within said five years, the amount paid shall be refunded and no credited service shall be given.
The Board shall credit each member's service account with the number of years and months of service to which he or she is entitled.
Any member who has attained or attains his or her voluntary retirement age may retire upon his or her written application filed with the Board setting at what time, not less than 30 days nor more than 90 days subsequent to the execution and filing thereof, he or she desires to be retired.
Upon his or her retirement, a Public Safety member shall receive a retirement allowance as provided in § 2-236, and a general member shall receive a retirement allowance as provided in § 2-237.
Effective January 1, 2003, upon the retirement of a Public Safety member who has 25 years or more of credited service or who is at least 50 years of age with 10 years of credited service, a voluntary retirement benefit shall be provided which shall consist of a straight life retirement allowance (or the comparable option as provided in § 2-240 in lieu of said straight life retirement allowance) consisting of an annuity which shall be the actuarial equivalent of the member's accumulated contributions and a pension which, when added to the annuity, will provide a straight life retirement allowance equal to the sum of 2.7% times final average compensation times years and fraction thereof of credited service with a maximum benefit equal to 70.2% of final average compensation. For those Public Safety members who are less than 50 years old with at least 20 years but fewer than 25 years of credited service, the retirement allowance shall be based upon 2% of final average compensation times years of service. Those Public Safety members whose employment ends after they are vested but prior to achieving 20 years of credited service may receive a retirement allowance based upon a two-percent multiplier; such allowance shall be deferred and shall not be payable until such time as the member qualifies for a voluntary retirement benefit had he or she remained employed as a Public Safety member.
Effective January 1, 1995, a post-retirement adjustment of 2% in January of each year, compounded annually, shall be provided for those Public Safety members who retire on or after January 1, 1995. Said adjustment shall be implemented the first January following actual retirement date but will be available only to those Public Safety members who retire with at least 25 years of credited service.
Upon the death of a Public Safety retirant who retired after June 30, 1972, and elected to receive his or her retirement allowance as a straight life retirement allowance, his or her surviving spouse, to whom he or she was married at both the date of his or her retirement and the date of his or her death, shall receive a retirement allowance equal to one-half of the retirant's straight life retirement allowance. A spouse's retirement allowance shall terminate upon the spouse's remarriage or death.
The foregoing benefit levels are subject to the limits set forth in § 2-263.
Upon his or her retirement as provided in this article, a general member shall receive a straight life retirement allowance, and he or she shall have the right to elect to receive his or her retirement allowance under an option provided in § 2-240 in lieu of a straight life retirement allowance. His or her straight life retirement allowance shall consist of the following benefits:
An annuity which shall be the actuarial equivalent of his or her accumulated contributions standing to his or her credit in the annuity savings fund at the time of his or her retirement; and
A pension that, when added to his or her annuity, will provide a straight life retirement allowance equal to the number of years and fraction of a year of his or her credited service multiplied by the percents set forth below of his or her final average compensation:
For a general member represented by the Kalamazoo Municipal Employees Association who retires in 2006, the multiplier shall be 1.9% of his or her final average compensation, but on or after January 1, 2007, the multiplier shall be 2% of his or her final average compensation; further, a post-retirement adjustment of 1.5%, compounded annually, shall be provided to those KMEA members who retire on or after March 13, 2000, so long as said retirant has been retired for one year (if he or she retires at or after age 63) or upon the retirant's 64th birthday (if he or she retires prior to age 63); said post-retirement adjustment shall not apply to deferred retirements.
For an exempt employee who retires on or after January 1, 1999, the multiplier shall be increased to 2.3% of his or her final average compensation;
For a member represented by AFSCME who retires on or after October 2, 2005, the multiplier shall be 1.9% of his or her final average compensation, but if on or after October 2, 2006, the multiplier shall be 2% of his or her final average compensation, but if on or after October 2, 2007, the multiplier shall be 2.1% of his or her final average compensation; further, a post-retirement allowance of one percent, commencing one year after the member's date of retirement and compounded annually thereafter, shall be provided to those AFSCME members who retire on or after March 1, 2000; after the retirant reaches age 75, said annual adjustment shall be two percent, compounded annually. The retirement adjustment shall not, however, apply to those who retire pursuant to a deferred and / or a reduced retirement;
For a member represented by the ATU, the multiplier shall be 2.1% of his or her final average compensation; further, a post-retirement allowance of 1%, commencing one year after the member's date of retirement and compounded annually thereafter, shall be provided to those ATU members who retire on or after March 1, 2000; after the retirant reaches age 75, said annual adjustment shall be 2%, compounded annually. The retirement adjustment shall not, however, apply to those who retire pursuant to a deferred retirement; and
For a member employed in a civilian, nonsworn capacity at the Kalamazoo Department of Public Safety, and who is in a bargaining unit represented by the Kalamazoo Police Officers Association, who retires in 2006 the multiplier shall be 1.7%, but on and after January 1, 2007, the multiplier shall be 2.1%.
Except as provided in Subsection C below, in the event a general member who has fewer than 25 years of credited service retires before his or her attainment of the age of 62, the pension portion of his or her retirement allowance provided in Subsection A of this section shall be reduced 0.4% multiplied by the number of months and fraction of a month contained in the period from the date of his or her retirement to the date he or she would attain the age of 62. In the event a general member who has 25 or more years of credited service retires on or after January 1, 1974, and before his or her attainment of the age of 57, the pension portion of his or her retirement allowance provided in Subsection A of this section shall be reduced 0.4% multiplied by the number of months and fraction of a month contained in the period from the date of his or her retirement to the date he or she would have attained the age of 57. A general member who retires on or after July 26, 2017, with credited service with a state unit or municipal unit that has elected to adopt the provisions of the Reciprocal Retirement Act, being Public Act 88 of 1961, as amended, is permitted to apply previous credited service with a reciprocal unit so as to permit the member to achieve 25 years of credited service to avoid the reduction in retirement allowance as otherwise required by this section.
[Amended 12-18-2017 by Ord. No. 1952]
The pension of a general member represented by AFSCME who retires on or after October 1, 1990, shall not be subject to reduction under Subsection B if the member at the time of retirement is at least 60 years of age and has at least 20 years of credited service in a position or positions represented by AFSCME.
The retirement allowance received by an exempt member who retires on or after June 1, 2006, shall be increased by 1.5% post-retirement allowance, compounded annually, commencing January 1 after the member has been retired for one full year, and on every January 1 thereafter; this increase shall be available, however, only to those members whose retirement allowance has not been, nor will be, deferred and who execute and submit, no later than May 30, 2006, the required form in which the member agrees to have his or her contribution to the annuity fund increased, for the balance of the member's employment with the City, by 2%, above and beyond that otherwise required by § 2-248, including as it may be amended from time to time.
[Added 10-31-2011 by Ord. No. 1886]
For the purpose of this section, "eligible members" is defined as being those members:
Who by December 31, 2015, would either:
Satisfy the age and credited service requirements so as to be then eligible to retire with a full (unreduced) retirement allowance; or
Have 25 years of credited service, regardless of age; and
In the case of Public Safety members only, be entitled to receive the 2.7% multiplier; and
Who, before 5:00 p.m. January 3, 2012, declare an irrevocable intent to retire no later than January 2, 2014, pursuant to this section by signing the enhanced retirement election form and waiver of claims form to be created hereafter by the Human Resources Department.
Eligible members shall receive the following:
A retirement allowance, the calculation for which shall assume credited service through December 31, 2015; if, however, the City determines that the last day of work for an eligible member who elects to participate is to be after December 31, 2012, the calculation shall assume credited service three years after that member's last day of work;
A one-time retirement system lump sum payment equal to 1% of the member's final average compensation times his or her credited service (as such is determined by Subsection B(1) immediately above); and
Payment, at the time of retirement, of any sums due to the member by virtue of existing collective bargaining agreements and/or existing City policy for accrued vacation and/or sick time, accrued as of the last day of work; in the case of Amalgamated Transit Union members, any sums due to a member by virtue of existing collective bargaining agreements for accrued leave time accrued as of the last day of work.
The City shall determine the last day of work for each eligible member who elects to participate, which shall be no later than January 2, 2014.
According to such rules and regulations as the Board shall from time to time adopt, a general member who retires prior to his or her attainment of age 62 years may elect to have his or her straight life retirement allowance actuarially equated to provide an increased retirement allowance payable to his or her attainment of age 62 years and a reduced retirement allowance payable thereafter. His or her increased retirement allowance payable to his or her attainment of age 62 years shall approximate the sum of his or her estimated social security primary insurance amount. This section shall not apply to a member who elects Option A, B or C provided in § 2-240, or who retires under § 2-242.
In the event a Public Safety member who has 10 or more years of credited service leaves the employ of the City prior to his or her voluntary retirement age, for any reason except his or her retirement or death, he or she shall be entitled to a retirement allowance provided for in § 2-236A. In the event a general member has acquired the minimum number of years of credited service to satisfy the voluntary retirement age requirement and leaves the employ of the City prior to his or her voluntary retirement age, for any reason except his or her retirement or death, he or she shall be entitled to a retirement allowance provided for in § 2-237. In either case, his or her retirement allowance shall be computed according to § 2-236 or 2-237, as applicable, as the section was in effect at the time the member left City employment. The member's retirement allowance shall begin the first day of the calendar month next following the date his or her application for same is filed with the Board on or after his or her attainment of age 60 years if a general member, 55 years if a general member with 15 years of service, or 50 years if a Public Safety member; provided, however, effective January 1, 1984, any Public Safety member shall be eligible after 25 years of credited service or age 50 with 10 years of credited service, whichever occurs first. If he or she withdraws his or her accumulated contributions, he or she shall thereupon forfeit his or her right to a deferred retirement allowance. A member shall also forfeit his or her right to a deferred retirement allowance if said member dies before filing said application or, if such an application is filed, before the date designated as his or her retirement date. In the event of such a death, the member's accumulated contributions shall be paid to his or her beneficiary or estate. Except as otherwise provided in this article, the member shall not be given service credit for the period or his or her absence from City employment.
[Amended 10-4-2010 by Ord. No. 1874]
Should any member, with five or more years of credited service, who has not qualified for a deferred retirement allowance provided in Subsection A of this section, be transferred by the City to the payroll of the State of Michigan or any of its political subdivisions, service rendered by him or her in the employ of the state or any of its political subdivisions subsequent to his or her transfer shall be regarded as City service for the sole and exclusive purpose only of qualifying for a deferred retirement allowance provided in Subsection A of this section and in determining final average compensation. The member's retirement allowance shall be computed according to § 2-236 or 2-237, as applicable at the time of his or her last termination of membership, based upon his or her credited service rendered in the employ of the City. The member's retirement allowance shall begin 30 days after the date his or her application for same is filed with the Board on or after the date he or she leaves the employ of the state or any of its political subdivisions to whose payroll he or she was transferred, or attains age 60 years, whichever is later. In the event the member withdraws his or her accumulated contributions, he or she shall thereupon forfeit his or her entitlement to a retirement allowance provided in this subsection. If the member withdrew his or her accumulated contributions prior to February 1, 1958, he or she shall have the right to repay the amount withdrawn, together with regular interest from the date of withdrawal to the date of repayment, subject to the approval of the Board.
Any deferred retirement allowance payable hereunder shall satisfy the minimum distribution requirements set forth in § 2-240C.
Election to enter DROP.
[Added 4-2-2018 by Ord. No. 1959]
Effective April 12, 2018, a Public Safety Administrator who meets the relevant provisions for an unreduced retirement allowance under Subsection A or B of this section, and who is authorized by the City Manager, with the approval of the City Commission, to participate in this deferred retirement option plan ("DROP"), may elect to enter the DROP.
A member who elects to enter the DROP must irrevocably agree to the following:
The member will remain in active service with the City until his or her specified DROP retirement date.
While in DROP, the member will not make the required member contributions to the plan.
The member must elect a DROP retirement date not less than 12 months and not more than 96 months after the member's DROP entry date.
The member may make an election to enter DROP only once in the member's lifetime.
The member may not remain in DROP after the date the member reaches any mandatory retirement age that may apply to the member.
Termination of employment; determination of benefit.
The retirement benefit for a member who enters the DROP and retires on the member's DROP retirement date is determined under this Subsection E rather than under the provisions of Subsections A, B, C or D of this section.
Upon termination of employment, including, but not limited to, early DROP termination with cause, early DROP termination without cause, or disability, a member will receive the following retirement benefit:
The member's DROP account benefit, which is the member's DROP account balance composed of a) an amount equal to 100% of the monthly retirement allowance the member would have received if he or she had retired as of the date of entry into the DROP and any applicable post-retirement allowance, and b) an annual two-percent interest credit; plus
The member's monthly retirement benefit, based on the basic monthly retirement benefit, computed as of the date of entry into the DROP.
A member who enters DROP shall be fully vested at all times in the member's DROP account balance.
Exit from plan.
A member who enters the DROP established by this § 2-239 shall exit the DROP at the earliest of:
The member's DROP retirement date;
Ninety-six months after the member's DROP entry date;
The mandatory retirement age applicable to the member, if any; or
The date the member retires because of a disability as provided under § 2-242.
Upon the member's DROP exit for any reason, the member shall not be entitled to receive additional compensation for any unused holiday pay, sick time pay, or vacation pay accrued while in the DROP.
If a member dies prior to the member's DROP exit, the member's beneficiary shall be entitled to the member's DROP account benefit as of the date of the member's death. This lump sum benefit shall be in addition to any benefit provided under §§ 2-241 and 2-244 of the Kalamazoo City Code.
Prior to the date of his or her retirement, but not thereafter, a member may elect to receive his or her retirement allowance as a straight life retirement allowance payable throughout his or her life, or may elect to receive the actuarial equivalent, determined as of the date of his or her retirement, of his or her straight life retirement allowance in a reduced retirement allowance payable throughout his or her life, and nominate a beneficiary, in accordance with the provisions of the options set forth below. If a member does not elect an option prior to the date of his or her retirement, the member will be presumed to have elected to receive his or her retirement allowance as a straight life retirement allowance. A member electing or retirant receiving a straight life retirement allowance may designate a beneficiary. If the retirant dies before the aggregate amount of payments to him or her equals his or her accumulated contributions, the remainder produced by subtracting said payments from said contributions shall be paid to said beneficiary. If the beneficiary survives the retirant but dies before receiving payment, that payment shall be made to the beneficiary's estate. If the beneficiary does not so survive or if there is none designated, the above remainder shall be paid to the retirant's estate:
Option A: Cash Refund Annuity. Under Option A, formerly Option 2, if a retirant dies before he or she has received, in the annuity portions of his or her reduced retirement allowance, an aggregate amount equal to his or her accumulated contributions standing to his or her credit at the time of his or her retirement, the difference between his or her accumulated contributions and the aggregate amount of annuity payments received by him or her shall be paid to such person or persons as he or she shall have nominated by written designation duly executed and filed with the Board. If there is no such designated person surviving the retirant, such difference, if any, shall be paid to the retirant's estate; or
Option B: 100% Survivor Allowance. Under Option B, formerly Option 3, upon the death of a retirant, his or her reduced allowance shall be continued throughout the life of and paid to such person or persons having an insurable interest in his or her life, as he or she shall have nominated by written designation duly executed and filed with the Board prior to the date of his or her retirement. Notwithstanding the foregoing, effective January 1, 2002, if the retirant's beneficiary is not his or her spouse, the survivor allowance percentage shall be adjusted as required to satisfy the limit under Treasury Regulation Section 1.401(a)(9)-6, Q&A-2(c), based on the age differential between the retirant and the beneficiary.
Option C: 50% Survivor Allowance.
Under Option C, formerly Option 4, upon the death of a retirant, one-half of his or her reduced retirement allowance shall be continued throughout the life of and paid to such person, having an insurable interest in his or her life, as he or she shall have nominated by written designation duly executed and filed with the Board prior to the date of his or her retirement.
If a retirant who has elected Option B or Option C and his or her beneficiary under this § 2-240 die before the aggregate amount of payments under said option equals the retirant's accumulated contributions, the remainder, produced by subtracting said payments from said contributions, shall be paid as follows: If the beneficiary survived the retirant, the remainder shall be paid to the beneficiary's estate. If the beneficiary did not survive the retirant, the above remainder shall be paid to the retirant's estate.
Option D: ten-year (120 months) Certain and Life Retirement Allowance. Under Option D, the retirant shall be paid a reduced retirement allowance for life with the provision that if the retirant's death occurs before 120 monthly payments have been made, the full reduced retirement allowance shall continue to be paid for the remainder of the 120 months to such person or persons having an insurable interest in his or her life, and in such shares as the retirant shall have designated in writing and filed with the Board. Notwithstanding the foregoing provisions of Option D, effective January 1, 2002, Option D will not be available if the retirant is older than 92 when the benefit commences.
Option E. Fifteen-year (180 months) Certain and Life Retirement Allowance.
Under Option E, the retirant shall be paid a reduced retirement allowance for life with the provision that if the retirant's death occurs before 180 monthly payments have been made, the full, reduced retirement allowance shall continue to be paid for the remainder of 180 months to such person or persons having an insurable interest in his or her life, and in such shares as the retirant shall have designated in writing and filed with the Board. Notwithstanding the foregoing provisions of Option E, effective January 1, 2002, Option E will not be available if the retirant is older than 84 when the benefit commences.
Under Option D or Option E, if there is no designated person surviving the retirant, the then-present value of the remaining unpaid monthly payments shall be computed and paid to the estate of the retirant. If a designated person survives the retirant and dies before receiving all the installments payable under the option plan, there shall be paid to the estate of such person the then-present value of the remaining unpaid installments which would otherwise have been paid to such person.
Option F. Under Option F, the retirement allowance shall be the same as under Option B for both the retirant and the beneficiary, except that:
The retirement allowance shall be reduced by an additional amount, as required by actuarial considerations, so that in the event the retirant were to survive the beneficiary, the retirant would then be able to receive a straight life retirement allowance at no added cost to the system, based upon actuarial equivalence; and
In the event that the beneficiary predeceases the retirant, the retirant's retirement allowance becomes a straight life retirement allowance.
Option G. Under Option G, the retirement allowance shall be the same as under Option C for both the retirant and the beneficiary, except that:
The retirement allowance shall be reduced by an additional amount, as required by actuarial considerations, so that in the event the retirant were to survive the beneficiary the retirant would then be able to receive a straight life retirement allowance at no added cost to the system, based upon actuarial equivalence; and
For the purposes of § 2-240 of the Kalamazoo City Code, the term "upon the death of the retirant" shall mean the first day of the month immediately following the month in which the retirant died.
Minimum distribution requirements. General rules. Notwithstanding any provision of the retirement system to the contrary, effective January 1, 2002, any distribution under the retirement system shall be made in accordance with Code Section 401(a)(9) and the regulations established thereunder as they are amended and shall comply with the following rules:
Time and manner of distribution. To the extent required by Code Section 401(a)(9) and the regulations promulgated thereunder, payment of the benefits of a member shall begin not later than the required beginning date, which, for purposes of this section, means April 1 of the calendar year following the later of (i) the calendar year in which the member reaches age 70 1/2, or (ii) the calendar year in which the member retires.
Death of member before distributions begin.
If the member dies before distributions begin, the member's entire interest will be distributed, or begin to be distributed, no later than as follows:
If the member's surviving spouse is the member's sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the member died, or by December 31 of the calendar year in which the member would have attained age 70 1/2, if later.
If the member's surviving spouse is not the member's sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the member died.
If the member's surviving spouse is the member's sole designated beneficiary and the surviving spouse dies after the member but before distributions to the surviving spouse begin, this Subsection C(1)(a), other than Subsection C(1)(a)[1], will apply as if the surviving spouse were the member.
For purposes of this Subsection C(1)(a) and Subsection C(5), distributions are considered to begin on the member's required beginning date {or, if Subsection C(1)(a)[1][d] applies, the date distributions are required to begin to the surviving spouse under Subsection C(1)(a)}. If annuity payments irrevocably commence to the member before the member's required beginning date {or to the member's surviving spouse before the date distributions are required to begin to the surviving spouse under Subsection C(1)(a)[1][a]}, the date distributions are considered to begin is the date distributions actually commence.
Form of distribution. No payment option may be selected by a member unless the amounts payable to the member are expected to be at least equal to the minimum distribution required under Code Section 401(a)(9). The amounts payable must satisfy the minimum distribution incidental benefit requirements of Code Section 401(a)(9)(G).
General annuity requirements. If the member's interest is paid in the form of annuity distributions under the retirement system, payments under the annuity will satisfy the following requirements:
Distributions will be paid in periodic payments made at intervals not longer than one year;
The distribution period will be over a life (or lives) or over a period certain not longer than the period described in Subsection C(3) or (4); and
Once payments have begun over a period certain, the period certain will not be changed even if the period certain is shorter than the maximum permitted.
Amount required to be distributed by required beginning date. The amount that must be distributed on or before the member's required beginning date {or, if the member dies before distributions begin, the date distributions are required to begin under Subsection C(1)(a)[1][a] or [b]} is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi-monthly, monthly, semi-annually, or annually. All of the member's benefit accruals as of the last day of the first distribution calendar year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the member's required beginning date.
Requirements for annuity distributions. If the member had begun receiving periodic payments from the plan that were not annuitized, the balance shall be paid to the beneficiary at least as rapidly as under the payment option selected by the member. If the member had begun receiving payments in the form of a pension or annuity, the beneficiary shall be bound by all restrictions applicable to the pension or annuity, and the form of payment selected thereunder, and remaining payments, if any, shall be paid to the beneficiary in the same manner.
Requirements for minimum distributions where member dies before date distributions begin.
Member survived by designated beneficiary. If the member dies before the date distribution of his or her interest begins and there is a designated beneficiary, the member's entire interest will be distributed, beginning no later than the time described in Subsection C(1)(a)[1][a] or [b], over the life of the designated beneficiary or over a period certain not exceeding:
Unless the annuity starting date is before the first distribution calendar year, the life expectancy of the designated beneficiary determined using the beneficiary's age as of the beneficiary's birthday in the calendar year immediately following the calendar year of the member's death; or
If the annuity starting date is before the first distribution calendar year, the life expectancy of the designated beneficiary determined using the beneficiary's age as of the beneficiary's birthday in the calendar year that contains the annuity starting date.
No designated beneficiary. If the member dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the member's death, distribution of the member's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the member's death.
Death of surviving spouse before distributions to surviving spouse begin. If the member dies before the date distribution of his or her interest begins, the member's surviving spouse is the member's sole designated beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this Subsection C(4) will apply as if the surviving spouse were the member, except that the time by which distributions must begin will be determined without regard to Subsection C(1).
Definitions. The following definitions shall apply for purposes of this Subsection C:
The individual who is designated as the beneficiary under the retirement system and is the designated beneficiary under Code Section 401(a)(9) and Treasury Regulation Section 1-401(a)(9)-4.
A calendar year for which a minimum distribution is required. For distributions beginning before the member's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the member's required beginning date. For distributions beginning after the member's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Subsection C(1)(a).
Life expectancy as computed by use of the Single Life Table in Treasury Regulation Section 1.401(a)(9)-9. This definition of "life expectancy" shall apply only for purposes of calculating minimum required distributions under Code Section 401(a)(9) and the Treasury Regulations thereunder and shall not apply for purposes of calculating any pension or any benefit assigned under an EDRO otherwise payable under the retirement system.
Any member who has acquired the minimum number of years of credited service to satisfy the voluntary retirement age requirement, may, at any time prior to the date of his or her retirement, elect Option B provided in § 2-240, and nominate a beneficiary whom the Board finds to be dependent upon the member for at least 50% of his or her financial support. Prior to the date of his or her retirement, a member may revoke his or her election of Option B and nomination of beneficiary and, prior to the date of his or her retirement, he or she may again elect Option B and nominate a beneficiary as provided in this subsection. Upon the death of a member who has an Option B election in force, his or her beneficiary, if living, shall immediately receive a retirement allowance, which is the actuarial equivalent of a straight life retirement allowance computed according to § 2-236, in the case of a Public Safety member, or according to § 2-237, exclusive of Subsection B, in the case of a general member, computed in the same manner in all respects as if the member had retired the day preceding the date of his or her death, notwithstanding that he or she might not have attained his or her voluntary retirement age. If a member has an Option B election in force at the time of his or her retirement, his or her election of Option B and nomination of beneficiary shall thereafter continue in force unless, prior to the date of his or her retirement, he or she elects a straight life retirement allowance or another option provided in § 2-240. No retirement allowance shall be paid under this subsection on account of the death of a member if any benefits are paid or are to be payable under § 2-241B or 2-244 on account of his or her death.
Any member who has acquired the minimum number of years of credited service to satisfy the voluntary age requirement, but does not have an Option B election provided in Subsection A of this section in force, and dies while in the employ of the City and leaves a spouse, the spouse shall immediately receive a retirement allowance computed according to § 2-237, exclusive of Subsection B, in the same manner and all respects as if the member had retired the day preceding the date of his or her death, notwithstanding that he or she might not have attained his or her voluntary retirement age, elected Option B provided in § 2-240 and nominated his or her spouse as beneficiary. No retirement allowance shall be paid under this subsection on account of the death of a member, if any benefits are paid or are to be payable under §§ 2-241A and 2-244 on account of his or her death.
If any Public Safety member continues in the employ of the City on or after the date he or she acquires 10 years of credited service, and does not have an Option B election provided in Subsection A of this section in force, and dies while in the employ of the City, the applicable benefits provided in Subsection C(1), (2) and (3) shall be paid:
The accumulated contributions standing to the member's credit in the annuity savings fund at the time of his or her death shall be paid in accordance with the provisions of § 2-247.
The surviving spouse of the deceased person shall receive a pension of 33 1/3% of his or her final compensation. A surviving spouse's pension shall terminate upon his or her remarriage or death, and shall be subject to § 2-245 and to Subsection B of this section.
If the deceased person leaves an unmarried child or children under age 18 years, 15% of the final compensation shall be paid for one child or 25% of the final compensation for two or more children. Upon a child's adoption, marriage, death or attainment of age 18 years, whichever occurs first, his or her pension shall terminate and the Board shall recalculate and make payment of the deceased person's final compensation to his remaining eligible children under 18 years of age, if any, in the percentages set forth in this section. Any pension payable under this subsection shall be subject to § 2-245.
If a beneficiary elects to take benefits under § 2-240 or 2-241A, then no benefits shall be paid under § 2-241C on account of his or her death.
A member who has acquired the minimum number of years of credited service to satisfy the voluntary retirement age requirement and becomes totally and permanently incapacitated for duty in the employ of the City may be retired by the Board upon application of the member or his/her department head, provided that, after medical examination of the member made or by under the direction of the medical director, the medical director certifies to the Board that the member is mentally or physically totally incapacitated for duty in the employ of the City, will probably be permanently incapacitated and should be retired. Upon his retirement, the member shall receive a disability retirement allowance provided in § 2-243.
A decision by the Board to grant either a duty or non-duty disability retirement to any employee, including Public Safety officers, shall be a final decision on that employee's fitness to work. A decision by the Board to retire any employee, including a Public Safety officer, for reasons of disability shall completely terminate that individual's right to continue to work for the City, and shall be effective immediately, regardless of whether that individual subsequently remains on the payroll or is otherwise compensated by the City after the date of the Board's decision by virtue of accumulated sick pay, vacation pay, worker's compensation, or any other type of payment of wages, salary or any other type of compensation.
A member need not have acquired the minimum number of years of credited service to satisfy the voluntary retirement age requirement if the Board finds the member to be totally and permanently disabled for duty in the employ of the City as the natural and proximate result of the personal injury or disease arising out of and in the course of his/her City employment.
Beginning January 1, 1984, if a Public Safety member is totally incapacitated for duty as a police officer, fire fighter or Public Safety officer and the Board finds that his or her disability is the natural and proximate result of causes arising out of and in the course of his or her employment as a police officer or fire fighter with the City and that the employee will likely be permanently so incapacitated, the member shall be entitled to a duty disability retirement allowance calculated in the same manner as a voluntary retirement benefit, except that, during the member's worker's compensation period, his or her duty disability retirement allowance under this subsection shall not exceed the difference between his or her final compensation and his or her weekly worker's compensation award converted to an annual basis.
If the member disagrees with the finding of the medical director, he or she shall have the right to submit reports from his or her medical doctor. In the event a dispute continues to exist, the medical director and the member's doctor shall select a third doctor who shall provide the Board with an opinion concerning the disputed matters before the Board renders its decision.
If a dispute continues to exist concerning the meaning or application of the retirement system after a decision by the Board, such dispute shall not be grievable under labor agreements, but subject to review, as provided by applicable law, in the Kalamazoo County Circuit Court or other court as may be appropriate.
The Public Safety member may elect to waive the provisions of the duty disability retirement he or she is entitled to and accept such retraining, rehabilitation and/or other employment as the City may choose to offer. The Public Safety member shall retain any benefits he or she has earned in the police/fire portion of the retirement system.
The Board of Trustees shall have the right and opportunity to have a medical examination conducted of the person whose injury or sickness is the basis of a disability benefit during the pendency of a claim or period of payment, subject to the following:
Examination may be made no more often than once during every twelve-month period, except that the Board may require examination at any time there is specific reason to believe that the disability or condition giving rise thereto no longer exists;
The examination shall be limited to the condition upon which the disability is based.
The expense of the examination and all other reasonable incidental costs, such as travel, meals and lodging at standard rates for City employee travel, will be borne by the retirement system under § 2-251 of the Kalamazoo City Code.
If the Board at any time believes that the facts of the case do not require further examination, the Board may waive examination for any time the Board deems appropriate based upon the facts of the case, but such waiver may be rescinded by the Board at any time.
Notification of the time, date and place of the examination shall be mailed to the retirant at the address to which his or her benefits are mailed, and said notice shall be mailed at least 30 days prior to the date of the examination.
If the retirant fails or refuses examination, or if upon reviewing the medical information received, the Board is not satisfied that the disability still exists, the Board shall so inform the retirant. If, within 30 days of such notice being sent, the retirant has not requested a hearing on the mailer, the Board may terminate the disability benefits. The termination of benefits under this section shall not affect eligibility for nondisability benefits. If a hearing is timely requested, the retirant shall be permitted to present evidence, question witnesses, and make argument for nontermination. The Board may obtain and consider any relevant evidence. If it finds that the disability no longer exists, benefits shall be terminated. The time, date, and place of the hearing shall be set by the Board. Notices shall be to the retirant at the address to which his or her benefits are sent.
If a member retires on account of his or her total and permanent disability, as provided in § 2-242, and the Board finds that his or her disability did not occur as the result of causes arising out of and in the course of his or her actual performance of duty in the employ of the City, he or she shall receive a disability retirement allowance computed according to § 2-236, if he or she is a Public Safety member, or according to § 2-237, exclusive of Subsection B, if he or she is a general member. His or her disability retirement allowance shall be subject to §§ 2-245 and 2-246. Prior to the date of his or her retirement, he or she shall have the right to elect to receive his or her retirement allowance under an option provided in § 2-240 in lieu of a straight life retirement allowance.
If a member retires before his or her voluntary retirement age on account of his or her total and permanent disability, as provided in § 2-242, and the Board finds that his or her disability is the natural and proximate result of cause arising out of and in the course of his or her actual performance of duty in the employ of the City, he or she shall receive a disability retirement allowance computed according to § 2-236, if he or she is a Public Safety member or according to § 2-237, exclusive of Subsection B, if he or she is a general member. In computing his or her disability retirement allowance, the credited service to be used shall be the sum of his or her credited service in force at the time of his or her retirement and the number of years, and fraction of a year, in the period from the date of his or her retirement to the date he or she would attain his voluntary retirement age had he or she continued in City employment. During his or her worker's compensation period, his or her disability retirement allowance shall not exceed the difference between his or her final compensation and his or her weekly worker's compensation award converted to an annual basis. His or her disability retirement allowance shall be subject to § 2-246. Prior to the date of his or her retirement, he or she shall have the right to elect to receive his or her retirement allowance under an option provided in § 2-240 in lieu of a straight life retirement allowance.
In the event a member dies as the result of a personal injury or disease arising solely out of and in the course of his or her employment by the City, or a disability retirant dies within a period of five years from and after the effective date of his or her retirement, and prior to attainment of age 60 years, as the result of the same injury or disease for which he or she was retired, and in either case such death, injury or disease resulting in death is found by the Board to have been the result of his or her actual performance of duty in the employ of the City, the applicable benefits provided in Subsection A(1), (2), (3), (4) and (5) of this subsection shall be paid.
The accumulated contributions standing to the member's credit in the annuity savings fund at the time of his or her death shall be paid in accordance with the provisions of § 2-247; or
The surviving spouse of the deceased person shall receive a pension of 33 1/3% of his or her final compensation, provided that, in the case of a disability retirant, he or she was the spouse of the member at the time of the member's retirement. A surviving spouse's pension shall terminate upon his or her remarriage or death, and shall be subject to § 2-245 and to Subsection B of this section; and
If, in addition to a surviving spouse, the deceased person leaves an unmarried child or children under age 18 years, each such child shall receive a pension of an equal share of 25% of his or her final compensation. Upon a child's adoption, marriage, death or attainment of age 18 years, whichever occurs first, his or her pension shall terminate and the Board shall redistribute the shares of 25% of the deceased person's final compensation to his or her remaining eligible children under age 18 years. Any pension payable under this subsection shall be subject to § 2-245 and to Subsection B of this section; but
If there is no spouse surviving the deceased person, or if his or her surviving spouse dies or remarries before his or her youngest unmarried child attains age 18 years, his or her unmarried child or children under age 18 years shall each receive a pension of 25% of his or her final compensation; provided that, if there are more than two such surviving children, each such child shall receive a pension of an equal share of 50% of his or her final compensation. Upon a child's adoption, marriage, death or attainment of age 18 years, whichever occurs first, his or her pension shall terminate and the Board shall redistribute the shares of 50% of the deceased person's final compensation to his or her remaining eligible children under age 18 years. In no case shall any such child's pension exceed 25% of the deceased person's final compensation. Any pension payable under this subsection shall be subject to § 2-245 and to Subsection B of this section; or
If there is neither a surviving spouse nor children eligible to receive a pension provided in this section surviving the deceased person, there shall be paid to each his or her dependent father and dependent mother, whom the Board, after investigation, finds to have been actually dependent upon the deceased person for financial support, a pension of 16 2/3% of his or her final compensation. Any pension payable under this subsection shall be subject to § 2-245 and to Subsection B of this section, and shall in no case exceed $720 a year.
If a beneficiary becomes entitled to a retirement allowance provided in § 2-240 or 2-241 on account of the death of a retirant or member, and he or she elects to take under § 2-240 or 2-241, then no benefits shall be paid under this section on account of his or her death. Any pension due any child under Subsection A of this section may, in the discretion of the Board, be paid to the parent or person who stands in loco parentis to such child; provided that, if the Board finds that such child is not being properly cared for, the Board may require the appointment of a guardian for the purpose of receiving such pension.
In the event a person becomes entitled to a pension or other benefits, payable by the retirement system, as the result of an accident or injury caused by the act of a third party, the City shall be subrogated to the rights of such person against such third party to the extent of the benefits which the City pays or becomes liable to pay.
A disability retirant who has been or who shall be returned to the employ of the City shall again become a member of the retirement system. His or her credited service in force at the time of his or her retirement shall be restored to his or her credit. He or she shall be given service credit for the period he or she was receiving a disability retirement allowance if, within such period, he or she was in receipt of worker's compensation on account of his or her total and permanent disability arising out of and in the course of his or her City employment; otherwise, he or she shall not be given the service credit for the period he or she was in receipt of a disability retirement allowance.
Commencing in the year 2001, and thereafter occurring every third year, subject to the limitations set forth below, a nonguaranteed payment shall be paid from the system assets to certain retirees; for each such person, the amount to be paid shall be the product of $43.67 (subject to the increases allowed below) times the sum of the retiree's years and fraction thereof of credited service plus the number of years and fraction thereof which have elapsed between the retirant's date of retirement and December 31 of the year preceding the payment to be made.
[Amended 4-21-2008 by Ord. No. 1838]
The retirees eligible to receive said periodic payment shall be those who:
Retired prior to January 1, 2000; and
Have been retired at least five years prior to December 31 of the year preceding the periodic payment to be made; and
Have attained the age of 70 years prior to June 1 of the year preceding the periodic payment to be made; and
Had at least 25 years of service with the City of Kalamazoo; and
Whose annual retirement allowance is less than $20,000, but who are not eligible for a post-retirement adjustment.
In those instances where a retirement allowance is divided by an EDRO, the "retired prior to" language above applies to the actual retiree, not the alternate payee; the "less than $20,000" requirement shall apply to the combined amounts being received by the retiree and the alternate payee.
If the periodic payment provided for above, when added to the existing retirement allowance, exceeds $20,000, the periodic payment shall be reduced by the amount said sum exceeds $20,000. In those instances where a retirement allowance is divided by an EDRO, if the periodic payment(s), when added to the existing retirement allowances, exceed $20,000, the periodic payment(s) shall be reduced by the amount said sum exceeds $20,000.
A beneficiary currently receiving a retirement allowance, or an individual who in the future becomes a beneficiary and who thereafter receives such an allowance, shall be entitled to receive the periodic payment based upon the same calculations (that is, the beneficiary's retirant's years of credited service and years since retirement) and subject to the same limitations, as described herein.
In computing future retirement allowance payments, or any other payment due to a retirant or beneficiary, the payments provided herein shall not be considered.
The periodic payment described herein shall be made in June every third year, commencing 2001; however, no payment shall be made in any year in which the fund's actuary projects (based upon a valuation of the fund as of December 31 of the prior year) the need for City contributions to the fund (for one or more actuarial grouping) within 10 years of the projection nor if the actuary recommends a contribution by the City (for one or more actuarial grouping) for that year. In the event a periodic payment is not made in a year in which it would otherwise occur (because of the actuary's projection or recommendation), then the payment shall be made in the next year in which no such actuarial projection or recommendation is made. In the event that a periodic payment is so delayed, future periodic payments shall be made every third year thereafter (so long as not prohibited by an actuarial projection or recommendation).
When calculating the amount of the periodic payment for each individual after 2001, the $43.67 amount referenced above shall increase by the lesser of 2% per year or the C.P.I. (i.e., the Consumer Price Index, U.S. City Average, all urban consumers) which exists for the period of time between December 31 of the year preceding the last payment and December 31 of the year preceding the payment to be made.
In no event, however, shall the total of all of the periodic payments in one year exceed the amount of $750,000; in the event the total payments are in excess of that amount, each individual's payment shall be reduced proportionately to reduce the total payment to said $750,000. Any periodic payment due to a retiree who is alive on December 31 of the year prior to the payment, but who dies before the payment is made, shall be made (one time only) to that retiree's estate or beneficiary, as the case may be.
Notwithstanding any of the above, the City administration shall be entitled to recommend to the City Commission at any time that the periodic payments be reduced or eliminated, and the City Commission shall, at any time, be entitled, with or without such a recommendation, to reduce or eliminate said periodic payments.
Should any member cease to be employed by the City before he or she attains his voluntary retirement age, for any reason except his or her retirement or death, he shall be paid his accumulated contributions standing to his or her credit in the annuity savings funds, as he or she shall demand in writing on forms furnished by the Board.
Should a member die and no retirement allowance or pension will become payable by the retirement system on account of his or her death, except as provided in § 2-244, his or her accumulated contributions standing to his or her credit in the annuity savings fund at the time of his or her death shall be paid to such person or persons as he or she shall have nominated by written designation duly executed and filed with the Board. If there is no such designated person surviving the member, his or her accumulated contributions shall be paid to his or her legal representative.
If a member dies without heirs, and without a designated beneficiary surviving him or her, accumulated contributions standing to his or her credit in the annuity savings fund at the time of his or her death may be used to pay his or her burial expenses, not to exceed a reasonable sum to be determined by the Board, provided he or she leaves no other estate sufficient for such purpose.
Payments of accumulated contributions, as provided in this section, may be made in installments according to such rules and regulations as the Board may from time to time adopt.
Code Section 401(a)(31), Direct rollovers. Notwithstanding any provision of the plan to the contrary, for distributions made on or after January 1, 1993, a distributee may elect, at the time and in the manner prescribed by the Board of Trustees, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
The annuity savings fund is hereby created. It shall be the fund in which shall be accumulated at regular interest, the contributions deducted from the compensation of members (or "picked up" by the City pursuant to Subsection F to provide for their annuities, and from which shall be made refunds and transfers of accumulated contributions as provided in this article.
Each member shall contribute a percentage of his or her annual compensation to the annuity fund, which percentage shall be as follows:
For Public Safety members, 8% throughout 1998, 7 1/4% throughout 1999, and 6 1/2% on and after January 1, 2000, except that on and after January 1, 1999, those Public Safety members who are members of the Kalamazoo Police Supervisors' Association with at least 26 years but fewer than 29 years of credited service need make no contributions.
For members represented by the Kalamazoo Municipal Employees Association, 3%, except that on and after March 13, 2000, the percentage shall be 2%, and except that on and after January 1, 2001, the percentage shall be 1%, unless increased as provided by the collective bargaining agreement.
For members represented by the ATU, 2%, except that commencing March 1, 2000, the amount shall be 1%.
For civilian, non-sworn employees of Public Safety represented by the Kalamazoo Police Officers Association, 4% except that on and after January 12, 2007, it shall be 1%.
For a member who is represented by the AFSCME effective October 2, 2006, 1%, but that will increase to 2% if the funding level of the pension fund drops below 120%.
For members who are exempt, 1.5%, except for those exempt members hired on or after June 1, 2006, it shall be 3%; and except for those exempt members who pay an additional 2% pursuant to § 2-237E above.
The officer or officers responsible for making the payroll shall cause the applicable contribution provided for in Subsection B of this section to be deducted from the compensation of each member (or "picked up" by the City pursuant to Subsection F with respect to each and every payroll, for each and every payroll period, so long as he or she remains a member in the employ of the City. Such contribution, when thus deducted or "picked up," shall be paid to the retirement system and shall be credited to his or her individual account in the annuity savings fund. Every member shall be deemed to consent and agree to the deductions or salary reductions made and provided for herein. Payment of his or her compensation, less such deductions or reductions, shall be a full and complete discharge and acquittance of all claims and demands whatsoever for services rendered by him or her during the period covered by such payment, except as to benefits provided under this article. The member's contributions provided for herein shall be made notwithstanding that the minimum compensation provided by law for any member shall be thereby changed.
In addition to the contributions deducted from the compensation of a member, as hereinbefore provided, he or she shall deposit in the annuity savings fund, by a single contribution or by an increased rate of contribution, as approved by the Board, the amount, if any, he or she withdrew from the annuity savings fund, together with regular interest from the date of withdrawal to the date of repayment. In no case shall any member be given credit for service rendered prior to the date he or she withdrew his or her accumulated contributions until he or she repays the annuity savings fund all amounts due the fund by him or her.
Upon the retirement of a member, his or her accumulated contributions shall be transferred from the annuity savings fund to the retirement reserve fund. At the expiration of a period of three years from the date an employee ceases to be a member, any balance standing to his or her credit in the annuity savings fund, unclaimed by the member or his or her legal representative, shall remain a part of the monies of the retirement system, provided he or she does not have entitlement to a retirement allowance payable by the retirement system.
The City Commission may, from time to time by resolution, designate one or more classes, groups or categories of City employees who shall have their employee contributions "picked up" as hereinafter described, provided that:
The City Commission may, by appropriate resolution, likewise withdraw such designation from one or more classes, groups or categories of City employees.
All designations or withdrawals of designations shall be done so as not to discriminate in favor of employees who are officers or highly compensated individuals, within the meaning of Section 401(a)(4) of the Internal Revenue Code.
Effective as provided in the following subsection, the contributions, required by Subsection B in respect of those employees who are included within a class, group or category so designated by the City Commission, shall be "picked up" by the City in lieu of their employee contributions, as permitted by Section 414(h) of the Internal Revenue Code, and shall be treated as employer contributions in determining tax treatment under said Code. The City shall "pick up" these employee contributions from funds made available as a result of each such employee's authorization to reduce his or her salary or wages in an amount corresponding to the contribution required by Subsection B. Employee contributions "picked up" by the City pursuant to this subsection shall be treated for all other purposes in the same manner and to the same extent as employee contributions made prior to the effective date of this subsection. No employee in any such class, category or group shall have the option of choosing to receive contributed amounts directly, instead of having them paid by the City to the retirement system.
The retirement reserve fund is hereby created. It shall be the fund from which shall be paid all annuities and pensions payable as provided in this article. Should a disability retirant return to the employ of the City, his annuity reserve at the date of his or her return shall be transferred from the retirement reserve fund to the annuity savings fund and shall be credited to his or her individual account therein; and his or her pension reserve shall be transferred to the pension reserve fund.
The reserve for employer contributions shall be the account to which shall be credited contributions made by the City to the retirement system and from which shall be made transfers as provided in this section.
Each year following receipt of the report of the annual actuarial valuation, the excess, if any, of the reported value of retirement allowance being paid and likely to be paid retirants and beneficiaries over the balance in the reserve for retired benefit payments shall be transferred from the reserve for employer contributions to the reserve for retired benefit payments.
The financial objective of this section is to require City contributions to the retirement system each fiscal year which, together with the contributions made by members during the fiscal year, shall be sufficient to (i) fully fund the cost of benefits likely to be paid on account of service rendered by members during the year, and (ii) finance unfunded costs of benefits likely to be paid on account of service rendered by members prior to the current year over a period of not more than 40 years. Such contributions shall be computed by the actuary as level percentages of member payroll in accordance with generally accepted actuarial principles on the basis of such rates of interest and tables of experience as the Investment Committee recommends and the City Commission shall from time to time adopt. The City may also contribute the anticipated cost of any insurance coverage provided retirants and beneficiaries through the retirement system. The Investment Committee shall annually certify to the Commission the contributions determined according to this section.
Forfeited amounts, if any, resulting from the operation of the retirement system shall be applied to reduce the next succeeding contribution or contributions required to be made to the reserve by the City under this section and shall not be applied to increase any pensions and/or annuities payable to any member under the retirement system.
Expenses for the administration of the retirement system shall be paid from investment income.
There is hereby created an Investment Committee which shall manage the assets of the system and have full power to invest and reinvest such assets, subject to the provisions of Act 314 of the Public Acts of 1965 (MCLA § 38.1132 et seq.), as amended, and any other applicable law or regulation. The Committee shall have the power to purchase notes, bonds, or other obligations of the City before or after the same are offered to the public and with or without advertising for bids. The Committee shall have power to hold, purchase, sell, assign, transfer, and dispose of any securities and investments in which any of the funds of the retirement system have been invested, as well as the proceeds of such investments and any monies belonging to the system. The provisions of this section shall be subject to such conditions and restrictions as the City Commission may from time to time impose by resolution.
Membership, appointment.
The Investment Committee shall be composed of no fewer than three members nor more than seven members, all of whom shall have a financial background and none of whom shall be participants in the system. Additionally, to avoid a conflict of interest, or the appearance thereof, no member shall be employed by or associated with (except in the capacity of outside director) any organization that provides services similar to those retained or used by the Committee. One member may be a member of the Board of Trustees of the system.
The Investment Committee members shall serve without compensation, and if any member fails to attend three consecutive regularly scheduled meetings of the Committee, unless in each case excused for cause by the remaining members, his or her office will be deemed vacated. Within 60 days of any time that the number of Committee members becomes fewer than three, the Mayor, with the consent of the City Commission, shall appoint enough new members so that the Committee consists of three members. At any time the Committee consists of fewer than seven members but more than two members, and a majority of the Committee desires the addition of one or more new members, the Mayor, with the consent of the City Commission, shall appoint new members in such number as requested by the then-existing Committee. All members shall serve three-year terms, with the exception of those who are appointed to replace those with unexpired portions of their terms; said replacement members shall serve the unexpired portion of the term, in the same manner as the office was previously filled.
The Committee shall hold meetings regularly, at least quarterly, and shall designate the time and place thereof. A majority of the Committee's membership shall constitute a quorum at any meeting of the Committee. Each member shall be entitled to one vote on each question before the Committee; at any meeting with a quorum, decisions shall be made by affirmative vote of a majority of those present; except that should the Committee's membership become three, the entire membership shall constitute a quorum and all decisions shall be made by a unanimous vote of the entire membership. The Committee shall adopt its own rules of procedure and shall keep a record of its proceedings. All meetings of the Committee shall be open to the public. The City Commission may appoint a Commissioner as liaison to the Committee.
The Committee shall elect a chairperson and chairperson pro tem.
The Director of Finance shall serve as secretary to the Committee and provide staff support.
The City Attorney shall be the legal advisor to the Committee.
Duties. The duties of the Investment Committee shall be as follows:
To formulate and recommend to the City Commission investment policies, strategies, and guidelines for approval by the City Commission.
To carry out such investment policies, strategies, and guidelines as approved by the City Commission.
To establish investment performance monitoring systems and report the results of said system quarterly to the City Commission.
To investigate and recommend investment managers, advisors, actuaries, and other necessary services to the City Commission for its approval.
To recommend to the City Commission for approval the allocation of annual contributions and redistribution of funds, including investment income, to investment managers, reserves and accounts.
To ensure that investment records are properly maintained.
To serve as the primary contact with investment managers, actuaries and advisors.
To ensure that the plan is properly audited.
To provide the actuary with data to make the annual valuation, which shall show the financial condition of the system by means of an actuarial valuation of its assets and liabilities and be rendered annually to the City Commission.
To recommend actuarial assumptions to the City Commission.
To perform such other duties as the City Commission may from time to time direct.
There shall be kept on deposit available cash not to exceed 5% of the total assets of the retirement system. The trust fund shall be held for the sole purpose of meeting disbursements for pensions, annuities and other payments authorized by this article and shall be used for no other purpose. It shall not be possible, at any time prior to satisfaction of all liabilities to members and their beneficiaries under the retirement system, for any part of said assets to be used for, or diverted to, purposes other than for the exclusive benefit of members and their beneficiaries and for paying reasonable expenses of the retirement system and the trust fund. The description of the various funds of the retirement system, as contained in this article, shall be interpreted to refer to the accounting records of the system.
All payments from monies of the retirement system shall be made according to Charter and ordinance provisions. No check shall be issued unless it shall have been previously authorized by a specific or continuing resolution adopted by the Board or Investment Committee.
The income fund is hereby created. It shall be the fund to which shall be credited all interest, dividends and other income from investments of the retirement system; all gifts and bequests received by the system; all unclaimed accumulated contributions as provided in this article; and all other monies received by the system, the disposition of which is not specifically provided in this article. There shall be paid or transferred from the income fund all amounts required to credit regular interest to the annuity savings fund, retirement reserve fund and the pension reserve fund, as provided in this article. Wherever the Investment Committee determines the balance in the income fund is more than sufficient to cover current charges to the fund, such excess amount, or any part thereof, may be used to provide contingency reserves or to meet special requirements of the other funds of the system, except the expense fund, as the Investment Committee shall determine. However, any amounts left in the income fund after meeting the requirements contained herein shall at the end of each year be automatically credited to the employer's reserve. Whenever the balance in the income fund is insufficient to meet the charges to the fund, the amount of such insufficiency shall be transferred from the pension reserve fund to the income fund.
The Investment Committee shall, at the end of each fiscal year, allow regular interest on the members' individual balances in the annuity savings fund at the beginning of the fiscal year, and on the mean balances in the retirement reserve fund and the pension reserve fund. The amounts of interest so allowed and credited shall be charged to the income fund.
The Investment Committee may, unless restricted by law, transfer assets of the income fund to a collective or common group trust, as permitted under Revenue Ruling 81-100 and Revenue Ruling 2011-1 (or subsequent guidance), that is operated or maintained exclusively for the commingling and collective investment of monies, provided that the funds in the group trust consist exclusively of trust assets held under plans qualified under Section 401(a) of the Internal Revenue Code, individual retirement accounts that are exempt under Section 408(e) of the Internal Revenue Code, eligible governmental plans that meet the requirements of Section 457(b) of the Internal Revenue Code, and government plans under Section 401(a)(24) of the Internal Revenue Code. For this purpose, a trust includes a custodial account that is treated as a trust under Section 401(f) or under Section 457(g)(3) of the Internal Revenue Code. For purposes of valuation, the value of the interest maintained by the system in such group trust shall be the fair market value of the portion of the group trust held for the system, determined in accordance with generally recognized valuation procedures. The Investment Committee may adopt one or more group trust(s) as part of the system, by executing appropriate participation and/or adoption agreements with the group trust's trustee.
[Added 11-3-2014 by Ord. No. 1927]
All assets held as of the effective date of Ordinance No. 378 for the purpose of financing the retirement system established by Ordinance No. 188 shall be credited to the retirement system as amended by Ordinance No. 378. Such credits shall be made as follows:
Assets credited to the prior service pension fund and all other assets held for the purpose of financing prior service pensions shall be credited to the pension reserve fund.
Assets credited to the retirement annuity and pension fund arising from City contributions shall be credited to the pension reserve fund.
Assets credited to the individual accounts of members in the retirement annuity and pension fund arising from their contributions, together with regular interest credited thereon, shall be credited to their individual accounts in the annuity savings fund.
Assets credited to the retirement annuity and pension fund held for the purpose of paying annuities and pensions to individuals who have retired shall be credited to the retirement reserve fund.
All other assets held for the purpose of financing the retirement system established by Ordinance No. 188, not accounted for above, shall be credited to the pension reserve fund.
The retirement benefits allowed under Ordinance No. 188 prior to the effective date of Ordinance No. 378 shall be continued without adjustment of amounts. The 1966 amendments of Ordinance No. 378, as amended, shall not apply to pensions and retirement allowances being paid as of the day preceding the effective date of the 1966 amendments.
Should any change in the records result in any person receiving from the retirement system more or less than he or she would have been entitled to receive had the records been correct, the Board shall correct such error and, as far as is practicable, shall adjust the payment in such manner that the actuarial equivalent of the benefit to which such person was correctly entitled shall be paid.
The right of a person to an annuity, a pension, a retirement allowance, to the return of accumulated contributions, the annuity, the pension, or the retirement allowance itself, any optional benefits, any other right accrued or accruing to any person under the provisions of this article, and any moneys belonging to the retirement system, shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency law, or any other process of law whatsoever, and shall be unassignable except as is specifically provided in this article. If a member is covered by a group insurance or prepayment plan participated in by the City, and should he be permitted to, and elect to, continue such coverage as a retirant, he or she may authorize the Board to have deducted from his or her retirement allowance the payments required of him or her to continue coverage under such group insurance or prepayment plan. The City shall have the right of setoff for any claim arising from embezzlement by or fraud of a member, retirant or beneficiary.
The City shall comply with a court order directing that all or a portion of a member's pension rights be forfeited, pursuant to the Public Employee Retirement Benefits Forfeiture Act, MCLA § 38.2701 et seq.
Whoever, with intent to deceive, shall make any statement or report required under this article which is untrue, or shall falsify or permit to be falsified any record or records of the retirement system, or who shall otherwise violate, with intent to deceive, any provision of this article shall be guilty of a misdemeanor and punishable as provided in § 1-7 of this Code.
Upon the death of any retirant, the retirement system shall pay to the person previously designated by the retirant, or if none to the estate of the deceased, the sum of $1,000.
This City, being a "municipal unit" which covers its employees under a retirement system, does hereby, by a majority vote of its governing body, elect to adopt the provisions of the Reciprocal Retirement Act, No. 88 of 1961 (MSA § 4.1601; MCLA § 38.1101) for its employees covered under such retirement system. The City Clerk shall file written certification of this action with the Secretary of State for the State of Michigan.
The description of various funds of the retirement system shall be interpreted to refer to the accounting records of the retirement system and not to the segregation of monies in the various funds of the system.
Maximum retirement allowances. Notwithstanding any other provision of the retirement system to the contrary, the maximum annual retirement allowance derived from City contributions to the system, payable on a straight life basis in respect to a member, at the time of retirement shall not exceed the lesser of:
Effective January 1, 2002, the dollar amount established in Code Section 415(b)(1)(A), which is adjusted for inflation based on Section 215(i)(2)(A) of the Social Security Act; or
One hundred percent of the member's average compensation from the City during the three consecutive calendar years during which he or she was an active member and had the greatest aggregate compensation from the City, except that for those persons who are members on or before March 1, 1999, and who are then, or thereafter become, exempt members and who retire on or after January 1, 1999, the percentage shall be 92%; and further except that for those persons who first become members after March 1, 1999, and who then or thereafter become exempt employees, the percentage shall be 70%; provided, however, that:
If retirement allowances are payable in any form other than on a straight life basis, the determinations as to whether the foregoing limitation has been satisfied shall be made in accordance with applicable treasury regulations by adjusting such retirement allowances so they are equivalent to retirement allowances payable on a straight life basis.
If the member has less than 10 years of credited service, the maximum annual retirement allowance payable on a straight life basis in respect of a member shall be the applicable maximum annual amount described above multiplied by a fraction, the numerator of which is the number of years of his or her credited service and the denominator of which is 10.
For purposes of this section, there shall not be taken into account any ancillary benefit which is not directly related to retirement income benefits, nor any other benefit not required by Section 415(b)(2) of the Internal Revenue Code, as amended, to be taken into account for purposes of the limitation on retirement allowances described in this section.
If a member should become a member in, or become entitled to benefits under, another tax-qualified pension, profit-sharing or savings plan of the City, the Board of Trustees may reduce the retirement allowance payable in respect of such member under this retirement system to the extent necessary to prevent disqualification of this retirement system. In such event, the Board of Trustees shall notify the member of such reduction and furnish him or her with an explanation of the same.
For limitation years beginning on or after July 1, 2007, a member's average compensation shall take into account the annual limit on compensation under Code Section 401(a)(17) for each of the member's three calendar years of compensation used in determining such average compensation.
An eligible domestic relations order ("EDRO") is a signed domestic relations order issued by a state court which assigns to an alternate payee(s) the right to receive all or part of a member's retirement system benefit that is or will become payable to the member. An alternate payee is a spouse, former spouse, child or other dependent of a member who is treated as a beneficiary under the retirement system as a result of the EDRO. The Board of Trustees may establish EDRO procedures, but in the absence of such procedures, the Board will determine if a domestic relations order is an EDRO in accordance with the following:
Board of Trustees' determination. Promptly upon the receipt of a domestic relations order, the Board will notify the member and any alternate payee named in the order of such receipt and will include a copy of this section. Within a reasonable time after receipt of the order, the Board will make a determination as to whether the order is an EDRO as defined in MCLA § 38.1701 et seq. and will notify the member and the alternate payee(s) in writing of the determination. Notwithstanding any other provision of the retirement system, the retirement system may make a distribution to an alternate payee pursuant to an order that the Board of Trustees has determined to be an EDRO prior to the date the member attains his or her earliest retirement age, as defined in Code Section 414(p)(4)(B), only if the EDRO specifically requires the retirement system to make a distribution prior to such date.
Specific requirements of an EDRO. In order for a domestic relations order to be an EDRO, it must specifically state all of the following: (1) the name, last known mailing address (if any) and the social security number of the member and each alternate payee(s) covered by the order; (2) the dollar amount or percentage of the benefit to be paid to each alternate payee, or the manner in which the amount or percentage is to be determined; (3) the number of payments or period to which such order applies; and (4) the name of the plan to which the order applies. The domestic relations order will not be deemed an EDRO if it requires the retirement system to provide any type or form of benefit, or any option not already provided for in the system, or increased benefits determined on the basis of the actuarial value, or benefits in excess of the member's retirement system benefit, or payment of benefits to an alternate payee(s) required to be paid to another alternate payee under another EDRO.
Disputed orders. If there is a question as to whether or not a domestic relations order is an EDRO, there will be a delay in any payout to any payee(s), including the member, until the status is resolved. If the retirement system determines that the order is not an EDRO, the retirement system shall notify the employee and the alternate payee(s) of this determination. The notification shall specify the reasons the order was not determined to be an EDRO. This determination does not prohibit the employee or the alternate payee(s) or the court from filing an amended order with the retirement system for redetermination.
Death of alternate payee(s). If an alternate payee(s) dies before receiving any payment of a benefit pursuant to an EDRO, that interest reverts to the member.
The City, at any time, can terminate the retirement system and trust fund in whole or in part in accordance with, and subject to, state and federal law, this plan, applicable collective bargaining agreements, consideration of concerns submitted in writing by a designated representative of a non-bargaining unit of employees, and the following provisions:
Termination of retirement system. The City can terminate the retirement system and trust fund by filing written notice of any such termination with the Board of Trustees and members. If required by law, such written notice will be provided at least 60 days (or any other period as may be required by law or regulation) prior to the date of termination.
Vesting requirement. Upon termination of the retirement system, or upon termination of the system with respect to a group of members which constitutes a partial termination of the system, the accrued benefits of all members with respect to whom the system is terminated shall, as of the date of termination or partial termination, as the case may be, become fully vested and nonforfeitable to the extent then funded.
Continued administration of retirement system pending distribution. Upon complete termination of the retirement system, the Board of Trustees will continue to administer the retirement system until distribution has been made to the members (which distribution must occur within a reasonable time after the termination of the system) with full settlement of all such benefits made by lump sum payments of the actuarial equivalent of benefits and/or through the purchase of a group annuity contract or individual annuity contracts to the extent of trust fund assets.
Allocation of trust fund assets to members, spouses and beneficiaries. If the retirement system is terminated, the trust fund will be first used to fund the costs of benefits due members.
Retirement system merger or consolidation. The retirement system and trust fund may not be merged or consolidated with, nor may any of its assets or liabilities be transferred to, any other plan, unless the benefits payable to each member if the retirement system was terminated immediately after such merger, consolidation or transfer would be equal to or greater than the benefits to which such member would have been entitled if this retirement system had been terminated immediately before such merger, consolidation or transfer.