HomeMy WebLinkAboutX-E-01 Fire Relief Association - Resoution Opting to Join the Statewide Volunteer Firefighter Plan
City Council Memorandum
To: Mayor Fasbender & City Councilmembers
From: Dan Wietecha, City Administrator
Date: November 7, 2022
Item: Fire Relief Association Pension
Council Action Requested:
Set the benefit level at $11,000 per year of service and approve the Resolution Opting to Join the Statewide
Volunteer Firefighter Plan.
Background Information:
Pension Benefit Level - Members of the Hastings Fire Department Relief Association are eligible for a pension
upon retirement. At 10 years of service, the pension vests at 60%. At 20 years of service, the pension vests at 100%.
The current benefit level is $7,000 per year of service; this was last increased in 2020.
There is a best practice of setting the benefit level to align the Annual Financial Requirement (blue line in
attachment) with the amount of State Fire Aid (top green line). This way, the State Aid is utilized to directly offset
benefit costs rather than building the retirement fund’s assets. The recommendation is to increase the benefit level to
$11,000 per year of service, which would align the Annual Requirement with the State Aid.
Additionally, transferring administration of the pension to the State plan requires other changes in the pension
design, notably 40% vesting at 5 years of service and increasing to 100% at 20 years. It also calculates on a per year
of service rather than prorating months for partial year of service.
Pension Administration - The Fire Relief Association’s financial advisor will be retiring and has recommended the
Association join the Statewide Volunteer Firefighter Plan administered by the Public Employees Retirement
Association (PERA). This would have less expensive management fees and a reduction in reporting paperwork.
Financial Impact:
N/A
Committee Discussion:
Finance Committee (Vaughan*, Folch, Fox) met October 19 and November 1 and voted unanimously in favor of the
recommendations.
Attachments:
• SVFP Financial Analysis
• Resolution Opting to Join the Statewide Volunteer Firefighter Plan
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Public Employees Retirement Association of Minnesota
60 Empire Drive, Suite 200
St. Paul, MN 55103-2088
Phone: 651-296-7460 or 1-800-652-9026
Website: www.mnpera.org
November 2, 2022 PERA ID
NUMBER
Governing Body and Fire Chief
Hastings Fire Department
TLikes@hastingsmn.gov; dwietecha@hastingsmn.gov
Vesting Schedule: 40% at 5 yrs, increasing 4% until 100% at 20 yrs
A. Benefit Level (per year of service):11,000$ 9,000$ 10,000$ 15,000$
B. Projected Present Assets 12/31/2022 [Attached]4,520,460 4,520,460 4,520,460 4,520,460
C. Accrued Liability 12/31/2022 [Attached]3,435,421 2,956,561 3,195,991 4,393,141
D. Surplus/ (Deficit) [B-C]1,085,039 1,563,900 1,324,470 127,319
E. Funding Ratio at 12/31/2022 [B/C]132%153%141%103%
F. Accrued Liability 12/31/2023 [Attached]3,763,444 3,231,138 3,497,291 4,828,057
G. Annual Financial Requirement: Increase in Liability [F -C]328,023 274,577 301,300 434,916
H. Annual Financial Requirement: PERA Fees [$30/member]1,410 1,410 1,410 1,410
I. Annual Financial Requirement: 1/10th of Deficit/(Surplus) [D/10](108,504)(156,390)(132,447)(12,732)
J. Annual Financial Requirement: Total [G+H+I]220,929 119,597 170,263 423,594
K. Reductions to Annual Financial Requirement:
Projected Annual Fire State Aid [2022 Amount @1.035]225,982 225,982 225,982 225,982
Projected Investment Earnings [6% on Projected Assets 12/31/2022]271,228 271,228 271,228 271,228
L. Estimated Required Contribution [J - K]None None None None
If you have questions, please contact me by email at gemma.miltich@mnpera.org or by phone at 651-201-2645.
Sincerely,
Gemma Miltich
Accounting Officer, PERA
We received your request for a cost analysis to estimate the cost of joining the Statewide Volunteer Firefighter Plan administered by PERA. We have prepared this
cost analysis for the benefit levels you requested. The results are shown below.
Please note that these are estimates only. Should you choose to join the Statewide Volunteer Firefighter Plan on January 1, 2023, we will calculate the required
contribution for December 31, 2023 in accordance with Minnesota Statutes Section 353G.08, Subdivision 1, and provide that information to the governing body
soon after we receive the resolution to join. The figures shown above on Line L are estimates of required contributions that would be due on December 31, 2023.
These estimates are based on the member information provided on your SC-22 form. Please review the membership information and provide us with any
corrections to that information. If applicable, we will prepare an updated cost estimate based on the corrected membership information provided.
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CITY OF HASTINGS
RESOLUTION NO.
A RESOLUTION OPTING TO JOIN THE
STATEWIDE VOLUNTEER FIREFIGHTER PLAN
The City Council of the City of Hastings Minnesota, does ordain:
WHEREAS: The City is authorized to join the Statewide Volunteer Firefighter Plan administered by
the Public Employees Retirement Association (PERA); and
WHEREAS: The City and the City’s Fire Department Relief Association (if one exists) have jointly
consented to and obtained a cost analysis for joining the Statewide Volunteer Firefighter
Plan from PERA not more than 120 days ago; and
WHEREAS: The City highly values the contributions of City Fire Department members to the safety
and well being of our community and wishes to safeguard their pension investments in a
prudent manner; and
WHEREAS: The existing service pension level for the City Fire Department is currently at the $7,000
pension level per year of service pursuant to current relief association bylaws.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HASTINGS, MINNESOTA:
1) The City hereby approves coverage by and requests participation in the Statewide Volunteer
Firefighter Plan administered by PERA under the terms provided in the PERA cost analysis at the
$11,000 pension level per year of service, effective January 1, 2023; and
2) The City hereby approves coverage by and requests participation in the Statewide Volunteer
Firefighter Plan administered by PERA under the terms provided in the PERA cost analysis with
the vesting schedule beginning at 40% after 5 years of service, increasing by 4% each year until
100% vesting is reached after 20 years of service; and
3) The City Clerk/Administrator and Mayor are hereby authorized to execute all documents
necessary to effectuate the intent of this resolution.
The motion for the adoption of the foregoing resolution was proposed by Councilmember
_______________ and was duly seconded by Councilmember _________________ and upon vote being
taken thereon, the following voted in favor:
And the following voted against the same:
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Whereupon said resolution was declared duly passed and adopted by the City Council of the City of
Hastings, on November 7, 2022.
BY: ATTEST:
Mary Fasbender, Mayor Kelly Murtaugh, City Clerk
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