An item to combine pension benefits for employees who have vested under the Miami Beach Employees Retirement Plan (MBERP) Tier B, but left City employment and returned under Tier C was heard at the September 24, 2021 FERC meeting.  The proposal was for five (5) employees who fall into this category (originally six) after being rehired into a different retirement tier.  At the 9/24/2021 meeting a motion was made for Administration to come back with a recommendation on employees not having to re-vest in the MBERP upon their return to the City.

The current MBERP Summary Plan Description has the following language with regards to Break in Service:

If you terminate employment after you are vested and later return to work for the Employer, the following rules apply.  The benefits you earn after your return to work are based on the provisions of the Plan in effect at your rehire date.  If you terminate again before you retire, only the Creditable Service after your rehire date is considered for vesting of a second benefit.  When you actually retire, you will receive the sum of the two (separately computed) benefits you have earned.  They are calculated separately using the Creditable Service and final Average Monthly Earnings applicable at each of your dates of termination.

The MBERP benefit provisions by Classification and Group (e.g. retirement date, vesting, benefit amount):

Tier B Plan Benefits include the following:

·       Age 55 with 5 years of Creditable Service

·       3% Multiplier

·       Annual Cost of Living 2.5%

·       50% Spouse/Domestic Partner Survivor benefit

·    Health benefits for retirees hired before 3/18/2006 determined each year as a part of the budget process, currently approximately       50% of premium

·     Health benefits for retirees hired on or after 3/18/2006 is a stipend of $10 for each Creditable Year of Service, up to a maximum       of $250 a month for under age 65; $5 for each Creditable Year of Service, up to a maximum of $125 a month for age 65 and older

Tier C Plan Benefits include the following:

·       The earlier of age 55 with 30 years of Creditable Service or Age 62 with 5 years of Creditable Service 2.5% Multiplier

·       Annual Cost of Living 1.5%

·       Life Annuity Survivor Benefit

·   Health benefits for retirees hired before 3/18/2006 determined each year as a part of the budget process, currently approximately     50% of premium

·    Health benefits for retirees hired on or after 3/18/2006 is a stipend of $10 for each Creditable Year of Service, up to a maximum of $250 a month for under age 65; $5 for each Creditable Year of Service, up to a maximum of $125 a month for age 65 and older If the City were to implement the change to the MBERP plan as previously discussed at the 9/24/2021 meeting, the change will have a financial impact to the City’s unfunded liability, as well as an unintended reward to those employees who left the City and were subsequently rehired.

If you terminate employment after you are vested and later return to work for the Employer, the following rules apply.  The benefits you earned prior to termination of employment will be deferred until such time that the employee reaches their Normal Retirement Age.  The benefits you earn after your return to work are based on the provisions of the Plan in effect at your rehire date.  If you terminate again before you retire, only the Creditable Service after your rehire date is considered for vesting of a second benefit.  When you actually retire, you will receive the sum of the two (separately computed) a retirement benefit combining your prior Creditable Years of Service with your new Creditable Years of Service at the rate of the Plan in effect at your rehire date, without revesting.   benefits you have earned.  They are calculated separately using the Creditable Service and final Average Monthly Earnings applicable at each of your dates of termination.

Below is a summary of what CMB employee, Mary Jane, (hypothetical example) would receive under three different scenarios: 1) current MBERP language; 2) FERC 9/24/2021 proposed language; 3) FERC 3/25/2022 proposed language:

In the 3/25/2022 proposed change, if Mary Jane starts her employment with the City under Tier B, leaves the City, and return under Tier C, and works until age 62, she will have an annual benefit of $57,500.  This proposal allows the employee to continue adding Creditable Years of Service to the seven (7) years without having to re-vest.  The proposed amended language will also allow for a slightly higher benefit then if we stayed with the current language in the MBERP plan.

Therefore, the current pension Ordinance may be amended to allow for employees who have worked for the City under Tier B, leave the City, and return under Tier C (or any future Tier), to collect their pension benefit under the Tier that they return to at their re-employment with the City.  Perhaps, the Administration can offer employees a choice in the matter by remaining with the current option (payouts in two separate tiers) or moving to the newly proposed option (combining both tiers into to “C”).  All other terms and conditions of the Tier that the employee(s) return in will apply (ie. Cost of living, etc.)