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R-3• • CITY OF CLERMONT FIREFIGHTERS PENSION BOARD OF TRUSTEES RESOLUTION NO.3 A RESOLUTION OF THE CITY OF CLERMONT FIREFIGHTERS PENSION BOARD OF TRUSTEES REQUESTING THE CITY COUNCIL OF THE CITY OF CLERMONT, FLORIDA TO ADOPT AN ORDINANCE TO AMEND THE CITY OF CLERMONT PENSION PLAN AS ADOPTED BY ORDINANCE NO. 304-C ON FEBRUARY 27, 2001; PROVIDE FOR CONFILICTING RESOLUTIONS; PROVIDE FOR PLAN BENEFIT IMPROVEMENT LIMITATIONS; AND PROVIDE FOR AN EFFECTIVE DATE. WHEREAS, the City of Clermont Firefighters are presently provided pension benefits under Ordinance No. 305-C adopted on February 27, 2001, WHEREAS, the City of Clermont Firefighters Pension Board of Trustees desires to amend the provisions of the City of Clermont Pension Plan; NOW, THEREFORE BE IT RESOLVED BY THE CITY OF CLERMONT FIREFIGHTERS PENSION BOARD OF TRUSTEES, THAT: SECTION 1: Section G.1. (Normal Retirement Date) of the Adoption Agreement shall be amended to read as follows: A Participant's Normal Retirement Date shall be the first day of the month coincident with or next following the completion of the following requirements: Attainment of age 52 and 25 years of service, or Attainment of age 55 and 10 years of service, or Completion of 20 years of service, regardless of age SECTION 2: Section G.2. (Normal Retirement Benefit) of the Adoption Agreement shall be amended to read as follows: The monthly normal retirement benefit for full-time firefighters shall be the sum of (1) the number of years service prior to October 1, 2001 multiplied by 2.25% and (2) the number of years of service after October 1, 2001, multiplied by 3% and multiplied by average final compensation. The monthly normal retirement benefit for volunteer firefighters shall be the greater of: (a) five dollars ($5.00) a year multiplied by the years of credited volunteer service, or • • (b) the sum of (1) the number of years of credited volunteer service prior to October 1, 2001 multiplied by 2.25% and (2) the number of years of credited volunteer service after October 1, 2001 multiplied by 3% and multiplied by average monthly compensation as a volunteer firefighter. The monthly normal retirement benefit of a firefighter that changes status from a volunteer firefighter to afull-time firefighter shall be the sum of (1) the accrued benefit as a volunteer firefighter and (2) the accrued benefit as a full-time firefighter. SECTION 3: Section J. (Termination of Employment and Vesting) of the Adoption Agreement shall be amended to read as follows: The sum volunteer firefighter years of service and full-time firefighter years of service will be counted in total for vesting purposes. If a member's employment is terminated either voluntarily or involuntarily the following benefits are payable. 1) If the member has less than five (5) years of credited service upon termination of employment, the member shall be entitled to a refund of his accumulated contributions or the member may leave the accumulated contributions deposited with the fund. 2) If a member has more than five (5) and less than ten (10) years of credited service upon termination of employment, the member shall be entitled to their accrued monthly benefit, starting at the member's otherwise normal or early retirement date, provided he does not elect to withdraw his contributions and provided he survives to his normal or early retirement date, in accordance with the following schedule: Years of Vesting Service 5 50% 6 60% 7 70% 8 80% 9 90% For purposes of this section only, a member may start drawing his vested accrued benefit at the age of 55. Early retirement reduction will be based on the years between the age of 55 and the early retirement date. 3) If the member has ten (10) or more years of credited service upon termination of employment, the member shall be entitled to their accrued monthly retirement benefits, starting at the member's otherwise normal or early retirement date, provided he does not elect to withdraw his contributions and provided he survives to this normal or early retirement date. Early and normal retirement dates are based on actual years of service. 2 • SECTION 4: Section K. (Employee Contributions) of the Adoption Agreement shall be amended to read as follows: Members of the Plan shall be required to make regular contributions to the Fund in accordance with the following: 3% of their salary (pre-tax) SECTION 5: Section M. (Deferred Retirement Option Program -"DROP") of the Adoption Agreement shall be amended to read as follows: ELIGIBILITY. A participant who reaches the normal retirement date as a firefighter for the City of Clermont and is a member of the City of Clermont Firefighters' Pension Plan may enter into a Deferred Retirement Option Plan ("DROP") on the first day of the month following the attainment of normal retirement date as defined in the Plan Adoption Agreement. Participants who attained their normal retirement date prior to the enactment of the "DROP" shall be afforded the option of participating immediately or retroactively to the date that they actually attained their normal retirement date. This option must be exercised no later than (60) days after the Board provides notice of this option to the affected employee. II. WRITTEN ELECTION. An eligible participant electing to participate in the "DROP" must complete and execute the proper forms supplied by the plan and a resignation of employment. Election into the "DROP" is irrevocable once a participant completes the application to enter the "DROP". III. LIMITATION AND DISQUALIFICATION FOR OTHER BENEFITS. A participant may participate in the "DROP" only once. After commencement of participation the employee shall no longer earn or accrue additional vesting credits or credited years of service toward retirement benefits and shall not be eligible for disability or pre-retirement death benefits in the City of Clermont Firefighters' Pension Plan. IV. CESSATION OR REDUCTION OF CONTRIBUTIONS. Upon the effective date of a participant's commencement of participation in the "DROP", the participant's contributions to the City of Clermont Firefighters' Pension Plan will be discontinued. 3 • • V. BENEFIT CALCULATIONS. For all City of Clermont Firefighters Pension Plan purposes, the credited service and vesting credits of a participant participating in the "DROP" shall remain as they existed on the effective date of commencement of participation in the "DROP". The participant shall not earn or be credited with any additional vesting credits or credited service after beginning "DROP" participation. Service thereafter shall not be recognized by the City of Clermont Firefighters Pension Plan or used for the calculation or determination of any benefits payable by such Plan. The average final compensation of the participant shall remain as it existed on the effective date of commencement of participation in the "DROP". Payment for accrued unused leave (vacation, holiday, etc.) shall be made, at the option of the participant, from one of the following choices: when commencing participation in the "DROP", or 2. as the leave is actually used during participation in the "DROP", or when the participant actually terminates employment with the City. Earnings thereafter shall not be recognized by the Plan or used for the calculation or determination of any benefits payable by the Plan. However, the value of any retirement gift provided by the City shall be based on the date that a participant actually leaves employment with the City including the "DROP" participation period. VI. PAYMENTS TO DROP ACCOUNT. The monthly retirement benefits that would have been payable had the member elected to cease employment and receive normal retirement benefits shall be deposited into the participant's "DROP" account. VII. DROP ACCOUNT EARNINGS. After each fiscal year quarter, the average daily balance in a participant's deferred retirement option account shall be credited at a rate of six and one-half percent (6.5%) annual interest compounded monthly. The Board of Trustees along with the City shall review the stated rate of return on an annual basis in order to determine the necessity of any adjustment for future "DROP" participants only. VIII. MAXIMUM PARTICIPATION. A participant may participate in the "DROP" for a maximum of sixty (60) months. At the conclusion of the sixty (60) months, the participants' covered city employment must terminate pursuant to the resignation submitted by the participant as part of the "DROP" application. The participant may terminate "DROP" participation by advancing their resignation form covered city employment to a date prior to that submitted by the participant as part of the "DROP" application. 4 • IX. PAYOUT • A. Upon the termination of a member's covered City employment (for any reason, whether by retirement, resignation, discharge or death), the retirement benefits payable to the participant or the participant's beneficiary (if the participant selected an optional form of retirement benefit which provides for payments to the beneficiary) shall be paid to the member or beneficiary and shall no longer be deposited into the participant's "DROP" account. B. Within thirty (30) days after the end of any calendar quarter following the termination of a participant's employment, the balance in the participant's "DROP" account shall be payable at the participant's option: In full in a single lump sum payment, all accrued "DROP" benefits, plus interest, less withholding taxes remitted to the Internal Revenue Service (IRS), paid to the "DROP" participant or surviving beneficiary, or; 2. As a direct rollover, all accrued "DROP" benefits, plus interest, paid directly from the "DROP" to the custodian of an eligible retirement plan as defined in Section 402(c)(8)(B), Internal Revenue Code (IRC). If benefit is to be paid to a surviving beneficiary, the transfer shall be to an individual retirement account or annuity as described in Section 402(c)(9), IRC. 3. Partial lump sum - A portion of the accrued "DROP" benefits shall be paid to the participant or surviving beneficiary, less IRS tax, and the remaining "DROP" benefits shall be transferred directly to the custodian of an eligible retirement plan as defined in Section 402(c)(8)(B), IRC. However, in the case of an eligible rollover distribution to the surviving beneficiary of a deceased participant, an eligible retirement plan is an individual retirement account or annuity as described in Section 402(c)(9), IRC. The "DROP" participant or surviving beneficiary shall specify the proportions. Regardless of the option selected by the participant, the Board of Trustees has the right to accelerate payments in order to comply with Section 401(A)(9) of the Internal Revenue Code and the right to defer payments to comply with Section 415 of the Internal Revenue Code. X. DEATH If a "DROP" participant dies before their account balances are paid out in full, the participant's designated beneficiary shall have the same rights as the participant to elect and receive the payout options set forth in paragraph ten (X) above. "DROP" payments to a beneficiary shall be in addition to any retirement benefits payable to the participant. Participants who are or have been "DROP" participants are not eligible for pre-retirement death or disability benefits. XI. FORMS The forms and notices approved by the City shall be used in the administration of The "DROP" Plan. 5 • • XII. AMENDMENT The Board of Trustees, upon approval by the City Council, can amend the "DROP" at any time. Such amendments shall be consistent with the provisions covering deferred retirement option plans set forth in any applicable collective bargaining agreement and shall be binding upon all future "DROP" participants and upon all "DROP" participant's who have balances in their accounts. Such amendments may increase the expense, decrease the account earnings, or limit or restrict the payout options. SECTION 6: All resolution or parts of resolutions in conflict herewith be and the same are hereby repealed. SECTION 7: Plan benefit improvements provided by this resolution shall apply prospectively and shall not apply to any Plan Member who has terminated employment or who has retired prior to the effective date of this resolution. SECTION 8: That this resolution shall be effective retroactive to October 1, 2001. DONE AND RESOLVED BY THE CITY OF CLERMONT FIREFIGHTERS PENSION BOARD OF TRUSTEES THIS 29th DAY OF NOVEMBER, 2001. C PAUL AN RSON CHAIRMAN ~~- RICHARD BELL SECRETARY 6