Agenda - Council Work Session - 05/23/2017

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CC Work Session 2. 1. Meeting Date: 05/23/2017 Information Title: Discussion Regarding Participation in the Public Employees Retirement Association Phased Retirement Option Purpose/Background: The purpose of this discussion is to provide the City Council with information regarding the Public Employees Retirement Association (PERA) Phased Retirement Option (PRO) and to consider whether or not to participate. Background In 2009, the Minnesota Legislature adopted a law that allows for phased retirements by eligible PERA members. The program is intended to provide employers with a workforce planning tool that can help transfer knowledge from long-time employees to new or less tenured employees and to facilitate a transition into retirement for a PERA member. If the PRO is approved by the City Council, the decision to submit a PRO Agreement to PERA would be made on a case -by -case basis by the HR Manager, Department Head and the City Administrator, as deemed beneficial to the City in meeting the goals of the strategic plan. Then, in the event the PRO was not satisfactorily meeting the expectations of either the City or the employee, the agreement can be terminated at any time. Quick Facts • An employer is under no obligation to offer the phased retirement option. • If participation is offered, the employer must reduce the employee's hours of work, when compared to the individual's previous work schedule, by at least 25 percent and limit the hours per year to 1,044 or fewer. • The initial offer of employment under the PRO program is limited to one year. • An employer may extend the individual's employment for periods of up to one year, for a maximum of five years, if the employee is under his or her Full Retirement Age (FRA) on the date of renewal. • No employee deductions or employer contributions are payable to the retirement plan on the earnings of the phased retirement position. • Participation in PERA's phased retirement program stops at the conclusion of the employee's initial or renewed agreement, whichever is later. If the City would like to have the option of offering this program as an alternative to full retirement of its retirees and as a means to achieving its staffing needs, the following is a summary of next steps: 1) A resolution would be brought forward at the next regular meeting approving participation in the Phased Retirement Option 2) When an eligible employee requested the PRO, the City Administrator, in cooperation with the HR Manager and Department Head, would determine if the PRO is beneficial to City business. 3) If so, a Phased Retirement Agreement would be submitted PERA. 4) The employee would begin working a reduced work schedule not greater than 1044 hours in a 12-month period. 5) The employee who begins the PRO terminates PERA membership, begins collecting a pension and continues to work with a reduction of hours, reviewed on an annual basis, for a maximum of five years. 6) The employee would participate in the City's benefit plan based on the current eligibility guidelines of the Personnel Policy. Offering the Phased Retirement Option can be beneficial in the City's succession planning efforts, the ability to effectively evaluate the structure of certain positions, the opportunity for staff growth and development and retention of talent. With regard to Strategic Imperative III: Smart, Citizen -Focused Government, the Phased