Box 6, Folder 1, Document 3

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Box 6, Folder 1, Document 3

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SECTION IV
RETIREMENT PLAN
The Retirement Plan for City of Atlanta employees was initially adopted in
192 7.
The Pension Act for the employees of the Fulton County Board of
Education first was passed in 1937.
Since both plans were originally adopted
they have undergone several changes, the most recent major revision
occurring in 1962 for both Plans.
The Plans have been contributory s i nce
their inc ept ion with th e policy tha t th e res p ectiv e Boa rds match the amount s
contributed by the employees ,
Hi s toric a lly, each incr ease in benefit s h as
gen e r at ed a co r resp on ding increase in t h e rat e of emp l oy ee contributions.
Furth er , in order to receive t he higher b enefit s ac tiv e employees have had the
option of " repaying " contributions they would h ave pa id had the curr ent contri bution l evel existed since the employee was hir ed,
Since active employees do not have to accept increased b enefits (and " make up "
back contributions ), the present Retirement Plan covers employees at several
different benefit levels with diff er·ent rates of employee contributions,
However,
since the majority of employees who w ere active in 1962 have opted to take the
increased benefits and all employees hir ed since 1962 automatically are covered
for those benefits, we will discuss the provisions of the Retirement Plan as
they currently exist.
-20-
'l.'OWERS, PERRIN, FORSTER & CROSBY
�Comparison of Plans
The provisions of the Retirement Plans of both Fulton County and the
City of Atlanta are almost identical.
The following description w ill p oint
out where differences exist in Plan provisions.
Normal Retireme nt
Date:
Employees are eligible to retir e on full
unr e du ce d p e n s ion afte r compl e ting 2 5 years of
service and attaining age 60.
Employe es
may w ork to a ge 65 at their option.
Early Retirement
Date:
E m ployees ar e e lig ible to r e tir e e arly o n a
r e du ced p e ns i o n a t a n y ti me aft er comp l e ting
2 5 y e ar s of s ervi c e and attaining a ge 55 .
Pensio n is reduce d 1 / 1 2 th of 2% for each month
th e empl oyee i s l ess t h an 60 .
Normal Retireme nt
B e nefit :
2 % of f i r s t $3 00 of monthly Ear nings , p lus
1 1/ 2% of m o nthl y Earni ngs in excess of $300
times years of
11
credita b l e 11 service.
Earnings
equal average of h i ghest five years of earnings
during employme nt.
-21-
TOWERS, PERRIN, FORS'l'ER & CROSBY
�-
- --
- - - - - - - --
In no event will normal b e nefit plus
Maximum Benefit:
Primary Social Security exceed 75% of
Earnings on which benefit is determined.
After 10 years service benefit accrued to
Disability Benefit:
date is payable.
Pre-Retirement Death
Benefit:
If employee is killed in the line of duty during
first five years of employment, his beneficiary
receives 1 / 5th of full 25 year service pens i on ;
after five years , p r o-rata portion of full serv ic e
pen s ion.
(Fulto n County• s Plan apparently
do es not co n t a i n t h is p r ovi s io n, )
Pos t- Reti r eme n t D eath
Benefit :
C ert ai n eligible depe n dents are entitled to 50%
of the b e n efit being r ec e i ve d b y the pensioner,
If the b eneficiary is more t h an five years younger
t h an the pensioner, such benefi ci ary• s pension
is reduced 1 /12th of 2% for each month that she
is m o re than five years younger than the pensioner .
No reduction if beneficiary is age 60 or over.
- 22 -
TOWERS, PERRIN, FOHS'.r'ER & CROSBY
�Employee Contributions:
5% of Earnings;
6% of Ear nings if desire
post-retirement death benefits.
Termination of
Employment:
Return of all employee contributions.
Minimum Benefit:
If a pensioner (or pensioner and beneficiary)
dies prior to receiving at least the total amount
of his contributions, the balance will be payable
to the pensioner's estate.
Make-up of II Back"
Contributions:
All active employees during 1962 could elect
the increa sed benefits by paying "back" contributions,
Once determined, such amounts could
be paid in a lump sum or in 60 monthly installments.
If not elected within six months from
Effective D a t e , 4% interest is charg ed from
Effective Date to the dat e the employee elects
to be cover e d und er the incr ease d b enefits .
In addition, both B o ards mat ch the amounts of empl oyee curr e nt a nd
contributions.
The matching of
11
11
back 11
ba c k 11 contr ibutions may be amortized
over a 2 0 year period.
- 23 -
TOWERS, PERRIN, FORSTER & CROS BY
�Suggested Plan
An examination of the above provisions demonstrates that both Plans are
identical with one minor exception.
We do recommend that a combined
Plan contain the provision to allow for the payment of benefits if an
employee is killed in the line of duty.
(The Fulton County Plan apparently
does not have this provision.)
We suggest that no changes of a major nature be considered during th e
period the merger is taken under consideration.
Comments on Suggested Plan
This paragraph w ill discuss that area w here both present Plan s do n ot
hav e complete identical provisions. W e s u g gest that the prov i s ion f o r pa yment of benefi t s in the e vent a n emplo yee i s killed in the lin e of duty be
maintained .
The probability of such an e v ent is remote , but does exist
f o r s chool bu s d r ive r s and t ea cher s w ho m u s t tr a v el be tween employment
locati on s.
Met hod of F inan cing
The Retirement Plan f o r the Fu l t o n C ounty Scho ol pers onnel is maintained
and accounted for separately from the retirement p l an for other Fulton
County employees.
The City of Atl anta maintains one overall Reti reme nt
Plan which covers both Board of Education employees and other City
- 24 -
TOWERS, PERRIN, FORSTER & CROSBY
�personnel.
(Policemen and Firemen are not included.) No separate
accounting policy is followed solely for employees of the Board of
Education.
The financial information and numbers of employees we
·will be ref erring to in this subsection were taken from interviews with
Miss Lula Carson of Fulton County and Mr. Gus Langford of the City of
Atlanta.
In addition, the most recently available audit reports of both
Funds were used, i.e. , December 31, 1967 as certified by H. G. Jackson
& Company for the City of Atlanta and June 30, 1968 as certified by
Respess and Respess for Fulton County.
It is important to note at this
point that .the City of Atlanta f ollow s a cash accounting s y s tem; w her e a s
Fulton County follows an accrual accounting s ystem ,
The fallowing financial information is pertinent to this study.
- 25 TOWERS, PERRIN, FORS'l'ER & CROSBY
�-- ---- - ---== =----==---====-===~
CITY OF ATLANTA
Number of
Active M e mbers:
Unavailable
Monthly Employee
Contributions :
$337, 070 (School)
99, 390 (Non - school)
Number of
Retired Mem bers:
Monthly Benefit
Payments:
Fund Assets:
FULTON COUNT Y
2,62 9
$77,543
2001 (No breakdown
available between school
and non-school)
279 (plus 5 4 pr e -1952
retirees w ho receive
benefits d i rectly from
County )
$292, 000 (School)
73, 000 (No n- sc h ool)
$68,592 (plus $ 7, 30 6
fr om County f o r
pre- 1 952 retiirees ). ·
$12,591,328 (Cash and
inves tments at co st)
$1 0 ,1 0 4,979 (Includes
$ 7 38,485 due as
matching funds)
An examination of the above information clearly shows that the City of Atlanta
Retirement P l an is sub s t antially l arger than that of Fulton County.
Further,
the majority of the City of Atlanta Plan ' s members, contributions and, the r efore, liabiliti e s and fund a s sets ar e a tt r ibuted to Boa r d of Education p er s onnel
For this reason, we feel that a combined Board of Education Plan should
include the non-school employ e es of the City of Atlanta.
Failure to do so
may b r ing s er ious financi a l disad vantage t o a pla n maintain e d so l e l y for t h e
City of Atlanta non-school p e rsonne l.
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TOWERS, PERRIN, FORSTER & CROS BY
�Should the Plans merge, the sur v i v ing political entity w ould ·i nh e rit th e
responsibility of paying all e x isting pensioners' benefits and making matching
contributions on all future employee contributions.
(The oblig ation for
' payment of benefits to the 54 pre-1952 retirees in the present Fulton County
Plan w ould in all likelihood rem.ain an oblig ation of th e County .) Furth e r, t he
contributions from the Teachers' Retirem (;! nt System of Georgia w ould continue
to be paid to· the combined Fund.
As the nature of this repo r t i s preliminary, it was deemed inadvisable a t this
time to perform cost proj e ctions or dete r minations of assets and liabilitie s of
the t w o present plans.
How e v er, should the merger come to fruition , it w ill
be necessary to p e rform a detail e d audit of both plans and , w e su gg e st, an
actua r ial v aluation to determine the r e lative financi a l strength of bot h p re s ent
plans and the su rvi v ing pla n.
I n add ition , t h e e x act amount of mat c hi n g con -
tri buti ons due (bo th current and " make- up") w ould h a v e t o be determi ned as of
t h e effe c tive date of th e c ombi ned p lan, and arr angements m a d e with t h e
existin g spon s o r ing political bodies fo r future payme nt t o t h e combined fund.
The cu rrent f u nds a re investe d i n U .S . Government Treas u ry Notes, Bills and
Bonds and Certificates of Deposit at most la c.al banks and savings and loan
a s sociations.
In addition, cash accounts are maintained .
ex isting arrangement would not be altered.
- 27 -
TOWERS, PERRIN, FORSTER & CROSBY
In all lik e lihood this
�Installation Procedure
As stated previously, the actual establishment and installation of a combined
plan would prudently be done only after an analysis of the present financial
situation of both Plans and the necessary legislative requirements hav e been
completed. ·· Once the new sponsoring political body accepts the financial
obligation and liabilities of a combined Plan, · the actual
11
transf er 11 and com-
bination of people and funds can be accomplished with relative ease throu g h
bookkeeping procedures.
It would be necessary to appoint a new combined Pension Board and to establish
an administrative team charged with the responsibilities of detailed r e cord
keeping, payment of benefits a nd othe r admin istrative requirements.
Further , the combined Plan w ould requi re re d r afting of the P e n s ion Act a nd
sponsor ship in the Legis l ature.
Shou ld the m erger b e acc ompl ished, i t is vitally imp or t a nt to communicate
t o employees ( especi a lly tho se n ~aring reti reme nt) t h e purpose of the combined
arrangement and to assure t hem tha t benefit s will n ot be affected .
-28 -
TOWERS, PERRIN , FORSTER & CROSBY
�SECTION V
CONCLUSIONS AND SUMMARY
An analysis of all benefits currently prov ided by both Systems show s that
they are quite compatible.
The medical plans are di££ erent from a conceptual
design standpoint, but the benefits provided -are similar.
From this we con-
clude that the' plans may be merged with relative ease.
The result of combining the plans should reduce the gross overall costs
from those of maintaining two separate systems.
Assuming that the employee
contribution rates currently applicable to the City of Atlanta medical plan
(employee pay all except for $1. 00 per month toward major medical) are
adopted, the present employees of Fulton County will pay l e ss than they are
currently paying for employee coverage but slightly more for dependents
coverage.
Howeve r , benefits will b e increased.
Next Steps
The responsibility for a decision to continue further rests wi th the respective
School Systems.
An ultimate decision will be contingent on many factors,
one of which should include an actuar ial valuation of both present retir e ment
plans to determine their respective l evel of fund ing and financial condition.
-29 TOWERS, PERRIN, FORSTER & CROSBY

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