3.4. SR 12-13-2010~li
Elk REQUEST FOR ACTION
...~.:
River
TO ITEM NUMBER
Ci Council 3.4.
AGENDA SECTION MEETING DATE PREPARED BY
Consent December 13, 2010 Lauren Wipper, Human Resource
Re resentative
ITEM DESCRIPTION REVIEWED By
Resolution Authorizing PERA Phased Retirement Option Lori ohnson, Ci Administrator
REVIEWED BY
ACTION REQUESTED
Approve the attached resolution authorizing the Public Employees Retirement Association (PERA)
Phased Retirement Option and designating the Human Resource Representative to manage this program.
BACKGROUND/DISCUSSION
Legislation passed in 2009 allows certain eligible employees the opportunity to begin receiving a PERA
pension without formally retiring. Called the Phased Retirement Option, eligible employees include those
age 62 or older that meet all other requirements for a pension from PERA and have worked a minimum
of 1,044 hours in each of the prior five years. Street Superintendent Phil Hals has asked to begin Phased
Retirement in March 1, 2011.
Under Phased Retirement, an employee must agree to reduce their hours worked by at least 25 percent,
and not exceed 1,044 hours worked per year. The employee and employer must file a Phased Retirement
Option Agreement with PERA. This agreement is valid for one year and may be renewed annually for a
total of no more than five years.
The administration of benefits under Phased Retirement is left to the Ciry's discretion. Ciry
Administrator Lori Johnson and I have discussed this and feel that it is reasonable to allow employees
working 20 hours per week under the Phased Retirement Option to continue benefits on a prorated basis.
Benefits under this option include participation in the Flexible Benefits Plan and vacation, sick, and
holiday leave. I have confirmed with our insurance plan administrators that, where necessary, our plans
can be amended to allow employees participating in the Phased Retirement Option to be eligible for
coverage.
The City Council is being asked to approve the attached resolution which designates the Human
Resource Representative to enter into Phased Retirement Agreements with eligible staff and manage the
details of the Phased Retirement Option program.
FINANCIAL IMPACT
The Phased Retirement Option is a cost savings to the Ciry in both salary and benefits.
ATTACHMENTS
^ Resolution
^ PERA Phased Retirement Brochure
Action Motion by Second by Vote
Follow Up
RESOLUTION 10-
A RESOLUTION FOR THE CITY OF ELK RIVER
A RESOLUTION AUTHORIZING PHASED RETIREMENT OPTION,
DELEGATING AN OFFICIAL OR STAFF POSITION TO COORDINATE
WHEREAS, the City of Elk River recognizes that it may be to the city's benefit to offer a
phased retirement option to certain city staff either to enhance knowledge transfer to other
staff, retain a key staff person until a replacement can be found, or to reduce the hours of
some staff for budgetary savings,
WHEREAS, the City of Elk River recognizes that the Public Employees Retirement
Association (PERA) now offers a phased retirement option available to certain city staff who
meet criteria outlined in statute,
WHEREAS, the City of Elk River recognizes the need to designate a city official or staff
person to identify eligible staff, determine whether there is a benefit to the city to offering
the phased retirement option to those staff and coordinate communication and
implementation of the program to eligible staff,
NOW, THEREFORE, BE IT RESOLVED the City Council of Elk River hereby
appoints the Human Resource Representative as the designated coordinator for the PERA
phased retirement option program and authorizes the Human Resource Representative to
identify employees eligible to participate in the phased retirement option program, determine
whether there is a benefit to the city to offering the program to each of those employees and
to coordinate communication and implementation of the program to the persons
determined eligible and suitable fox the program.
Passed and adopted by the City Council of the Ciry of Elk River, Minnesota this 13`" day of
December 2010.
Stephanie Klinzing, Mayor
ATTEST:
Tina Allard, City Clerk
-: SAS E'~~~tE : An option for ~oord~nated members age b2 and over
If you, as a Coordinated mem-
ber, are age 62 or over, you may
be able to ease into retixement
under something called a Phased
Retirement. This option is entirely
at the discretion of your employer.
Under legislation passed this
year, PERA's normal termination
requirements and earnings limits
are waived if you meet the require-
ments of the special provision.
Requirements
~To qualify; you must be age 62
or over and a vested member
of PERS. You must also have
worked a minimum of 1,044
hours in each of the five years
immediately preceding the offer
of a phased retirement by your
employer or another PERA-cov-
ered employer.
wYou must agree that your hours
of work will be reduced by at
least 25 percent and will not
exceed 1,044 hours per year.
~+-The initial. phased retirement
agreement cannot exceed one
year. However, it may be
renewed for up to an addi-
tional year. The total period
of phased retirement may not
exceed five years.
You and your employer (or a
new PERA-covered employer}
must sign a Phased Retirement
Agreement form provided by
PERA. This is used in place
of PERAs normal Termination
Ueri fication form.
The benefits of the plan
Normally; in order to receive a
pension, members must formally
terminate employment and have
no prior agreement, either verbal
or ~rritten, that they will be reem-
ployed at a later .date. In addi-
tion, there must be a minimum
3 0-day break in public service
(paid or unpaid) if a member does
return to work for a PERA-cov-
ered employer. iYlembers who
return to PERA-covered employ-
ment are subject to earnings limits
if they are under Social Security's
normal retirement age-exceeding
the limits results in a reduction of
the PERA pension. These restric-
tions are eliminated under phased
retirement. You will receive
the full PERA pension you have
earned, based upon your years
of service, age at retirement, and
high-five average salary.
In addition, neither you nor
your employer are required to
make future contributions to
PERA. Since you are now receiv-
ing apension, all further accrual of
service credit or adjustment of the
high-five average salary ceases.
Employer's discretion
Your employer is under no obli-
gation to offer you a phased retire-
ment or to renew any agreement
that is made. You should also
investigate the impact a reduction
of hours may have on your other
employee benefits.
(Cosatiriued on reverse side)
The procedure
Phased retirement requires a
written agreement between you
and the PERA-covered employ-
er .offering you the option.
You must file both a Phased
Retirement Agreement form
and an Application for PERA
Retirement Berne fits with PERA.
All other PERA benefit and appli-
cation. requirements must be met.
If your phased retirement
agreement is not renewed, your
employer must report your ter-
mination of public employment
to PERA. You inay not return
to work for your employer or
another PERA-covered employer
far a minimum of 30 days. If
you later rejoin PERA-covered
employment and are under Social
Security's full retirement age, you
will be subject to PERA's annual
earnings limit.
Not for retirees
Phased retirement is not avail-
able to PERA members who are
already receiving a retirement
benefit. Retirees who return to
PERA-covered work remain sub-
ject to the Association's earnings
limits.
SU nSet
Currently, the phased retire-
ment option is set. to end on
June 30, 2014. Until then,
PERA will be evaluating the
program's effectiveness and its
impact on the pension fund.
Continuation of the option
would require legislative action.
This document is available in alternative
formats to individuals with disabilities by
calling 1 800 652-9026 or through the
Minnesota Relav Service at
1 800 G27-3529.
This brochure is meant to explain the
Public. Employees Retirement Association
of Minnesota law as simply and accurately
as passible. If there is any discrepancy
between this publication and the actual
law; the provisions of the law will govern.
Public Employees Retirement
Association of Minnesota
60 Empire Drive, Suite 200
St. Paul, Minnesota 55103-2088
800 632-9026 ~ (651) 296-7460
www, nanpera. org
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June 2010
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An option for Coordinated
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public Employees Retirement
l~ssocation of Minnesota