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Legislation #: 140035 Introduction Date: 1/9/2014
Type: Ordinance Effective Date: none
Sponsor: None
Title: Amending Chapter 2, Article IX, Division 2, Code of Ordinances establishing the employees’ retirement system by is amended by repealing sections 2-1171, 2-1173, 2-1174, 2-1176, 2-1184, 2-1185, and 2-1186 and enacting new sections 2-1171, 2-1173, 2-1174, 2-1176, 2-1184, 2-1185, 2-1186, and 1202 to establish new Tier 2 retirement benefits for persons employed on or after April 20, 2014.

Legislation History
DateMinutesDescription
1/9/2014 Filed by the Clerk's office
1/9/2014 Referred to Finance, Governance & Ethics Committee
1/15/2014 Hold On Agenda (1/22/2014)
1/22/2014 Hold On Agenda (1/29/2014)
1/29/2014 Hold On Agenda (2/5/2014)
2/5/2014 Do Pass as a Committee Substitute
2/6/2014 Assigned Third Read Calendar as Substituted
2/20/2014 Passed as Substituted

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COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 140035

 

Amending Chapter 2, Article IX, Division 2, Code of Ordinances establishing the employees’ retirement system, and Division 6, establishing the elected officials retirement system, by repealing sections 2-1171, 2-1173, 2-1174, 2-1176, 2-1184, 2-1185, 2-1186 and 2-1335 and enacting new sections 2-1171, 2-1173, 2-1174, 2-1176, 2-1184, 2-1185, 2-1186, 2-1202 and 2-1335 to establish new Tier 2 retirement benefits for persons employed on or after April 20, 2014 and to continue equal contributions by employees and elected officials.

 

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

 

Section 1. That Chapter 2, Article IX, Division 2 and Division 6, Code of Ordinances are amended by repealing sections 2-1171, 2-1173, 2-1174, 2-1176, 2-1184, 2-1185, 2-1186 and 2-1335 and enacting new sections 2-1171, 2-1173, 2-1174, 2-1176, 2-1184, 2-1185, 2-1186, 2-1202 and 2-1335, to read as follows:

 

Sec. 2-1171. Definitions.

 

The following words and phrases as used in this division shall have the following meanings, unless a different meaning is plainly required by the context. The masculine pronoun shall include the pronoun of feminine gender, unless otherwise indicated by the context.

 

Actuarial equivalent means a benefit of equal value to another benefit when computed upon the basis of such mortality tables and interest rate as shall be adopted by the board of trustees upon recommendation of the actuarial consultant.

 

Adjustment for prior retirement benefit means 82 months of service with MAST or if the MAST employee has worked less than 82 months with MAST then the adjustment will be the entire amount of the employee's service with MAST.

 

Annuity means a monthly payment for life as established herein. The first payment shall be made at the end of the month after the effective date of the benefit as established by the board of trustees. The final payment of all annuities shall be made at the end of the month in which the event causing cessation of the payment occurs and shall be made for the full monthly amount without reduction.

 

Beneficiary means the person designated by a member to receive any benefits payable upon his death.

 

Compensation means the basic monthly wage or salary paid an employee excluding bonuses, overtime, expense allowance and other extraordinary compensation. Compensation shall include amounts contributed to any plan maintained by the employer pursuant to a salary reduction agreement where the member could have elected to receive such amount as case compensation.

 

Annual compensation means compensation defined in section 415(c)(3) of the Internal Revenue Code and section 1.415-2(d) of the Treasury Regulations, but in no event more than $200,000.00 per calendar year (as adjusted annually under section 401(a)(17) of the Internal Revenue Code). Annual compensation also includes amounts contributed by the employer pursuant to a salary reduction agreement which are excludable from a member's gross income under sections 125, 401(a)(8), 402(h), or 403(b) of the Internal Revenue Code.

 

Effective on and after January 1, 1996, in addition to other applicable limitations set forth in the plan, and notwithstanding any other provision of the plan to the contrary, for plan years beginning on or after January 1, 1996, and only for employees who were not members before January 1, 1996, the annual compensation of each member taken into account under the plan shall not exceed to OBRA '93 annual compensation limit. The OBRA '93 annual compensation limit is $150,000.00, as adjusted by the commissioner for increases in the cost of living in accordance with section 401(a)(17) of the Internal Revenue Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA '93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12.

 

For plan years beginning on or after January 1, 1996, and only for employees who were not members before January 1, 1996, any reference in this pension system plan to the limitation under section 401(a)(17) of the Internal Revenue Code shall mean the OBRA '93 annual compensation limit set forth in this provision.

 

If compensation for any prior determination period is taken into account in determining a member's benefits accruing in the current plan year, the compensation for that prior determination period is subject to the OBRA '93 annual compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the plan year beginning on or after January 1, 1996, or OBRA '93 annual compensation limit is $150,000.00.

 

Employer means the city or participating boards of control as defined in RSMo 95.540.

 

Employment and service means service for the employer as an employee.

 

Final average compensation – Tier 1. means the monthly average of the two highest years of compensation with the city of the member in the last ten years whether or not such years are consecutive. For former MAST employees, only compensation with the city will be used for this calculation.

 

Final average compensation – Tier 2. means the monthly average of the three highest years of compensation with the city of the member in the last ten years whether or not such years are consecutive.

 

Interest means the rate declared by the board of trustees compounded annually.

 

Last continuous employment means the most recent period of uninterrupted employment excluding all service previous to last reemployment date. For former MAST employees the most recent period of uninterrupted employment including service with MAST prior to April 25, 2010. In determining this number, part-time service with MAST will be used only to determine whether the MAST service was continuous.

 

Retirement system means the retirement system established herein to be known as "The Employees' Retirement System."

 

Surviving spouse means the legally married wife or husband of a member surviving the member's death.

 

Termination means resignation or discharge from service of the employer.

 

Tier 1 Member means a member of the retirement system whose membership began prior to April 20, 2014, including, for the entire period of their employment by the city, employees who terminated covered employment before said date, were vested as of the date of such termination under the rules then in effect or who have not withdrawn their contributions from such prior employment and are re-employed by the city on or after April 20, 2014.

 

Tier 2 Member means a member of the retirement system whose membership began on or after April 20, 2014.

 

Sec. 2-1173. Creditable service.

 

(a)    Computation of total mount. Total creditable service of a member of the retirement system shall be the sum of membership service from date of employment to last day on pay status and prior service as computed under this section.

 

(b)   Membership service. Membership service shall be the years and full calendar months of employment while a contributing member of this system.

 

(1)               Solely for the purpose of determining whether a member has incurred a break in service, any leave of absence granted by an employer, up to 12 weeks, that qualifies under the Family and Medical Leave Act (FMLA) shall not be counted as a break in service for purposes of determining eligibility and vesting.

 

(c)    Prior service. Prior service shall be the years and full calendar months of employment preceding December 1, 1962, if continuous with membership service.

 

(d)   Service after retirement date. No creditable service shall accrue to any member beyond his retirement date.

 

(e)    Reemployment generally.

 

(1)               Except for military leave and military creditable service, as set forth in subsection (g) of this section, provided an election is made within three years after reemployment, members who terminate and later return to membership may receive credit for such prior service and membership service, after they have been reemployed for at least two consecutive years, and have repaid withdrawn contributions plus interest at the rate then assumed for actuarial calculation.

 

(2)               This election shall not be available if employer contributions have been refunded to the federal government or any other granting agency or instrumentality.

 

(f)    Reemployment within 30 days of termination. A member rehired within 30 days of termination, and who does not withdraw or who re-deposits member contributions and interest, shall immediately begin membership.

 

(g)   Military leave and reemployment after military service.

 

(1)               To the extent by the Uniformed Services Employment and Reemployment Rights Act of 1994, a member shall be entitled to creditable service considering each month of military service as a month of employment with the city.

 

(2)               A termination refund of contributions and interest shall not be made to a member on military leave.

 

(3)               A member who terminates employment, receives a refund of contributions and interest, serves in the military service and then returns to city employment, not later than three years after reemployment, may receive credit for military service. He shall repay withdrawn contributions plus interest at the rate then assumed for actuarial calculation plus member contributions for the military creditable service years.

 

(h)   Leave of absence.

 

(1)               Upon determination by the director of human resources and his certification to the board of trustees that a member of this pension system has been granted, in the interest of the city, a leave of absence from city employment for a period of not less than one year and not to exceed two years, such person remains a member of this system and shall receive creditable service provided contributions are made as required for all members. The human resources director will make his determinations in an even-handed manner, treating all persons in the same circumstances, equally.

 

(2)               Persons on leave, who are not certified by the director of human resources, are deemed inactive members of this pension system.

 

(3)               No refund of contributions and interest shall be made to members on leave of absence.

 

(i)     Creditable service accrued under other city retirement plans.

 

(1)               An employee, including those of the police department, transferring to employment covered by this plan may elect to claim creditable service for creditable service in another retirement plan in which the employer contribution is wholly paid by the city. The member must deposit with the board of trustees any contributions and interest withdrawn from another plan. These shall be credited to his account as member's contributions.

 

(2)               Anything to the contrary herein notwithstanding, municipal judges having vested employment or service, as defined in this division, are entitled to have such creditable service accrued in the formulation of their retirement pay under section 395.9, article XIII of the city charter (1925) if receiving benefits under that provision.

 

(3)               If the employee has vested rights under another plan, no creditable service shall be allowed.

 

(4)               This election must be made within six months following date of employment. Membership service shall begin on the first day of the month following such election.

 

Sec. 2-1174. Conditions for retirement.

 

(a)    Application for retirement. Any member of the retirement system may retire as provided in this division, terminating employment upon written application to the board of trustees, who shall establish his retirement date as of the first day of the month.

 

(b)   Normal retirement.

 

(1) Tier 1. A member may elect normal retirement on or after attaining age 65 and five years of creditable service without reduction of benefit as calculated in section 2-1176.

 

(2) Tier 2. A member may elect normal retirement on or after attaining age 67 and ten years of creditable service without reduction of benefit as calculated in section 2-1176.

 

(c) Optional retirement.

 

(1) Tier 1 – age 60 or age plus service equals or exceeds 80. A member may elect to retire when the total of age and years of creditable service equal or exceed 80 or the later of age 60 and ten years' creditable service, without reductions of benefit as calculated in section 2-1176.

 

(2) Tier 2 – age 62 or age plus service equals or exceeds 85. A member may elect to retire when the total of age and years of creditable service equal or exceed 85 or the later of age 62 and ten years' creditable service, without reductions of benefit as calculated in section 2-1176.

 

(d) Early retirement. Members may elect early retirement:

 

(1)               Tier 1- age 55. Beginning at the later of age 55 or completion of ten years' creditable service. The benefit as computed in section 2-1176(a) shall be reduced by 0.5 percent for each month the effective date is prior to the first day of the month following attainment of age 60.

 

(2)               Tier 1 – age 60. Beginning at age 60, if the member has more than five but less than ten years of creditable service. The benefit as computed in section 2-1176(a) shall be reduced by 0.5 percent for each month the effective date is prior to the first day of the month following attainment of age 65.

 

(3)               Tier 2 – age 57. Beginning at the later of age 57 or completion of ten years' creditable service. The benefit as computed in section 2-1176(a) shall be reduced by 0.5 percent for each month the effective date is prior to the first day of the month following attainment of age 62.

 

(e) Required distributions. Distribution of a member's interest in the retirement system shall commence not later than April 1 of the calendar year following the later of the calendar year in which the member attains age 70½ or the calendar year in which the member retires under the plan.

 

(1)               If a death benefit is being paid to a designated beneficiary other than the member's spouse, payments shall either:

 

a.                   Be completed by December 31 of the fifth calendar year following the year of the member's death; or

 

b.                  If there if no designated beneficiary, payment of a death benefit shall commence no later than December 31 of the fifth calendar year following the year of the member's death.

 

(2)               If the designated beneficiary is the member's spouse, death benefit payments shall commence no later than December 31 of the year the member would have attained age 70½ paid over the life or life expectancy of the spouse, as determined under Table V of Treasury Regulations 1.72-9 as of the date the payments commence, and benefits shall be actuarially increased for the delay.

 

Sec. 2-1176. Retirement benefits.

 

(a)    Annuity. Upon retirement on or after November 1, 2000, as provided in section 2-1174, an annuity calculated as follows shall be payable:

 

(1)               If married at date of retirement, the annuity shall be two percent of the Tier 1 member's final average compensation and for a Tier 2 member shall be 1.75 percent of the member’s final average compensation multiplied by years and full months of creditable service not to exceed 70 percent, except as set forth in section 2-1196, Code of Ordinances.

 

(2)               At date of retirement, a member may elect to receive an actuarial equivalent annuity providing that, upon death following retirement, the same actuarial equivalent annuity shall be payable to the surviving spouse provided the marriage occurred on or before the date of retirement. This election shall not be effective if the member dies within 30 days after filing application for retirement or before the date of the first payment of the retirement annuity.

 

(3)               If unmarried at date of retirement, the annuity shall be 2.22 percent of the Tier 1 member's final average compensation and for a Tier 2 member shall be 1.75 percent of the member’s final average compensation multiplied by years and full months of creditable service not to exceed 70 percent, except as set forth in section 2-1196, Code of Ordinances.

 

(4)               With signed consent by the spouse, a married member may elect calculation as if unmarried, forfeiting a surviving spouse's annuity as provided in section 2-1185.

 

(b)   Withdrawal of contributions. A member retiring under provisions of section 2-1174, except disability retirements, may elect, with signed consent of spouse, to withdraw all or a portion of his accumulated contributions and interest, and receive a reduced annuity. The annuity calculated in subsection (a) of this section shall be reduced an actuarially equal amount by applying factors adopted by the board of trustees upon recommendation of the retirement system's consulting actuary.

 

(c)    Cost-of-living adjustment – Tier 1. An annual cost-of-living adjustment in retirement, disability and death benefits shall be paid under these conditions:

 

(1)               Effective date of adjustment and applicability. An annual cost-of-living adjustment shall be payable on pension checks to be dated May 1 of the current year and shall remain unchanged until the next effective date of adjustment. This adjustment shall apply to all beneficiaries receiving benefits, except no pension of any member or beneficiary retiring after January 1 of any year shall be adjusted until May 1 of the succeeding year.

 

(2)               Amount of adjustment. The adjustment shall be three percent, each year, noncompounded.

 

(d) Cost-of-living adjustment – Tier 2. A cost-of-living adjustment is authorized under these conditions:

 

(1) Effective date of adjustment and applicability. An annual cost-of-living adjustment shall be payable on pension checks to be dated May 1 of the current year and shall remain unchanged until the next effective date of adjustment. This adjustment shall apply to all beneficiaries receiving benefits, but no sooner than the May 1 following the Tier 2 member’s 62nd birthday, except no pension of any member or beneficiary retiring after January 1 of any year shall be adjusted until May 1 of the succeeding year.

 

(2) Amount of adjustment. The adjustment for a Tier 2 member shall be paid if the funding ratio of the pension fund, as shown by the system’s most recent actuarial report, is equal to or greater than 80%, and will be equal to the percentage increase in the prior 12 months of the final national consumer price index for all urban consumers published prior to December 31 in advance of the next year’s adjustment, but shall not exceed 2.5% and shall be noncompounded.

 

(e) Health insurance subsidy. A $200.00 monthly retiree health insurance subsidy shall be payable to all retired members effective November 1, 2000. If a member dies before retirement as the direct and proximate result of an accident sustained in the performance of assigned duties, the member's surviving spouse shall become eligible for the health insurance subsidy described in this subsection as long as the spouse receives an annuity. No other survivors will be eligible for this health insurance subsidy following the line-of-duty death of a qualifying member.

 

(d)   Minimum benefit. A minimum benefit of $400.00 per month is established for retirees with ten or more years of creditable service. Such minimum shall apply to current as well as future retirees, effective with pension checks dated July 1, 1999, calculated prior to any reductions applied due to sections 2-1176(a)(2) and 2-1176(b). Any annual cost-of- living adjustment shall be based on the original amount without reference to this minimum.

 

(e)    Limitations. Benefits with respect to a member may not exceed the maximum benefits specified under section 415 of the Federal Internal Revenue Code for governmental plans.

 

Sec. 2-1184. Termination benefits.

 

(a)    Generally. Upon termination of employment, a member of the retirement system shall be paid all his accumulated contributions and interest. He shall thereby forfeit for himself and for any possible beneficiaries all rights to any and all benefits under this retirement system.

 

(b)   Deferred annuity. A terminated Tier 1 member with at least five years or more of total employment and a Tier 2 member with at least ten years or more of total employment who does not withdraw employee contributions may elect to receive a deferred annuity computed as provided in section 2-1176. Should the member later choose to withdraw his contributions and interest before annuity payments begin, he shall forfeit all right to any and all benefits under this retirement system. The member may elect to withdraw employee contributions within the thirty-day period prior to the deferred annuity effective date, as outlined in section 2-1176(a)(4), (b).

 

Sec. 2-1185. Death benefits.

 

(a)    Death before retirement. Upon death of a member of the retirement system for any cause prior to retirement, these amounts shall be payable as full and final settlement of any and all claims for benefits under this retirement system:

 

(1)               If the Tier 1 member had less than five years of creditable service or a Tier 2 member had less than ten years of creditable service, the member's surviving spouse shall be paid in a lump sum the amount of accumulated contributions and interest. If there be no surviving spouse, payment shall be made to the member's designated beneficiary, or, if none, to the executor or administrator of the member's estate.

 

(2)               If the Tier 1 member had five but less than 20 years of creditable service or a Tier 2 member had 10 but less than 20 years of creditable service, the member's surviving spouse may elect, in lieu of the lump sum settlement provided for in subsection (a)(1) of this section, an annuity. Such annuity shall be one-half of the member's accrued annuity at date of death as computed in sections 2-1174 and 2-1176. The effective date shall be the latter of the first day of the month after the member's death or attainment of what would have been the member's early retirement date as provided in section 2-1174.

 

(3)               If the member had 20 or more years of creditable service, the member's surviving spouse may elect, in lieu of the lump sum settlement provided for in subsection (a)(1) of this section, the larger of the annuity as computed in subsection (a)(2) of this section or an annuity determined on a joint and survivor's basis from the actuarial value of the member's accrued annuity at date of death.

 

(4)               Any death of a retired member occurring before the date of first payment of the retirement annuity shall be deemed to be a death before retirement.

 

(b)   Death after retirement. Upon death of a member for any cause after retirement, these amounts shall be payable:

 

(1)               The member's surviving spouse, providing the marriage occurred on or before date of retirement, shall receive an annuity equal to one-half the member's accrued annuity as computed under section 2-1174 or section 2-1176 as of the member's actual retirement date.

 

(2)               If the member elected the actuarial equivalent annuity provided in section 2-1176(b), the same annuity shall be continued to the surviving spouse, provided the marriage occurred on or before date of retirement.

 

(3)               The current life insurance carrier for the city has established a single premium group term life program based upon the premium stabilization reserve at May 1, 1993. During the program's existence only, the carrier will issue paid term insurance to members who retire on or after May 1, 1993. Upon verification of death, the carrier will issue a $2,000.00 benefit to the member's designated beneficiary or estate.

 

(c)    Recovery of member contributions.

 

(1)               Should the total amount paid to a member and surviving spouse be less than the member's accumulated contributions and interest, the remaining balance shall be paid to the member's beneficiary, constituting full and final settlement of any and all claims for benefits under this retirement system.

 

(2)               If no beneficiary is designated or survives, payment shall be made to the executor or administrator of the member's estate; provided, however, if any benefit is payable to the estate of a member, or to a person who is not competent to give a valid release, the board of trustees is authorized to pay such benefit, not exceeding $2,000.00, to any relative by blood or affinity of the member, or a person managing the member's affairs, who is deemed by the board to be equitably entitled thereto.

 

(d)   Minimum surviving spouse pension. A minimum benefit of $200.00 per month is established for surviving spouses of members with ten or more years of creditable service. Such minimum shall apply to current as well as future surviving spouses, effective with pension checks dated July 1, 1999. Any annual cost-of-living adjustment shall be based on the original amount without reference to this minimum.

 

Sec. 2-1186. Member contributions generally.

 

(a)    Amount. All members of the retirement system shall contribute five percent of compensation until the first pay period following June 6, 1998, when thereafter the contribution shall be four percent of compensation. For the pay period beginning April 20, 2014, and thereafter the contribution shall be five percent of compensation.

 

(b)   Method. Such member contributions shall be by means of payroll deductions, promptly remitted to the board of trustees for deposit to the credit of this retirement system.

 

(c)    Effective date. Member contributions shall begin with the first pay period following date of membership and shall cease on the member's retirement date, termination of employment or death.

 

(d)   Interest. Member contributions shall be annually improved by interest computed on individual account balances as of the close of the preceding fiscal year.

 

(e)    Withdrawal. Member contributions may not be withdrawn except as provided in this division.

 

(f)    Trust. The assets of the retirement system shall be held in trust by the board of trustees. The trust is intended to be tax-exempt under section 501(a) of the Internal Revenue Code and the pension system plan is intended to be qualified under section 401(a) of the Internal Revenue Code.

 

All payments made by employers to the retirement system fund and such other payments that are made to the fund on behalf of employers and members, and all other money or property that lawfully becomes part of the trust, together with the income, gains and all other increments shall be held, managed and administered in trust. The trust shall be known as the Employees' Retirement System of the City of Kansas City, Missouri Trust. The trustees shall perform the duties, responsibilities and obligations and in accordance with section 2-1189.

 

It shall be impossible by operation of the trust or by its natural termination, by power of revocation or amendment, by the happening of any contingency, by collateral arrangement or by any other means, for any part of the corpus or income of the trust or any funds contributed to the trust to be used for, or diverted to purposes other than the exclusive benefit of members, for members, their beneficiaries or dependents prior to all obligations having been satisfied or provided for. No part of net earnings of the trust shall inure (other than benefit payments) to the benefit of any employer or individual; provided, however, a contribution made by an employer under a mistake of fact may be returned to the employer if the trustees so direct provided the repayment is not prohibited under applicable law and will not adversely affect the tax-exempt status of the trust.

 

Sec. 2-1202. Payment of ARC.

 

(a)    Notification by Board. The board of trustees shall, before October 1 of each year, certify to the city manager the amount of the ARC, as defined in this section, to be paid by the city under the Pension System for the succeeding fiscal year as required by this division.

 

(b)   Payment of the ARC. The City shall annually budget and pay the actuarially required contribution (ARC) to the Pension Fund. The ARC is defined as the actuarially required contribution, as determined by the Fund’s independent actuary, calculated on the basis of a thirty-year open amortization assuming a 7.5% investment return. The dollar amount used when calculating the ARC shall include all unfunded liability.

 

 

Sec. 2-1335. Deduction of member contributions from salaries; pickup of member contributions by employer.

(a)    Compensation means the basic monthly wage or salary paid an elected official excluding bonuses, overtime, expense allowance and other extraordinary compensation. Compensation shall include amounts contributed to any plan maintained by the employer pursuant to a salary reduction agreement where the member could have elected to receive such amount as case compensation.

 

Annual compensation means compensation defined in section 415(c)(3) of the Internal Revenue Code and section 1.415-2(d) of the Treasury Regulations, but in no event more than $200,000.00 per calendar year (as adjusted annually under section 401(a)(17) of the Internal Revenue Code). Annual compensation also includes amounts contributed by the employer pursuant to a salary reduction agreement which are excludable from a member's gross income under sections 125, 401(a)(8), 402(h), or 403(b) of the Internal Revenue Code.

 

Effective on and after January 1, 1996, in addition to other applicable limitations set forth in the plan, and notwithstanding any other provision of the plan to the contrary, for plan years beginning on or after January 1, 1996, and only for elected officials who were not members before January 1, 1996, the annual compensation of each member taken into account under the plan shall not exceed to OBRA '93 annual compensation limit. The OBRA '93 annual compensation limit is $150,000.00, as adjusted by the commissioner for increases in the cost of living in accordance with section 401(a)(17) of the Internal Revenue Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA '93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12.

 

For plan years beginning on or after January 1, 1996, and only for elected officials who were not members before January 1, 1996, any reference in this pension system plan to the limitation under section 401(a)(17) of the Internal Revenue Code shall mean the OBRA '93 annual compensation limit set forth in this provision.

 

If compensation for any prior determination period is taken into account in determining a member's benefits accruing in the current plan year, the compensation for that prior determination period is subject to the OBRA '93 annual compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the plan year beginning on or after January 1, 1996, or OBRA '93 annual compensation limit is $150,000.00.

 

(b)   Member contributions. Each elected official shall contribute, by means of payroll deductions, five percent of his base rate of compensation until the first pay period following June 6, 1998, when the contribution rate thereafter shall be four percent of compensation. For the pay period beginning April 20, 2014, and thereafter, each member of the plan shall contribute, by means of payroll deductions, five percent of compensation.

 

(c)    The employer, pursuant to the provisions of section 414(h)(2) of the United States Internal Revenue Code, shall pick up and pay the contributions which would otherwise be payable by members as prescribed in this division, commencing with the pay period ending May 11, 1986. The contributions so picked up shall be treated as employer contributions for purposes of determining the amounts of federal and state income taxes to withhold from the member's compensation.

 

(d)   Member contributions picked up by the employer shall be paid from the same source of funds used for the payment of compensation to a member. A deduction shall be made from each member's compensation equal to the amount of the member's contributions picked up by the employer, provided that such deduction shall not reduce the member's compensation for purposes of computing benefits under sections 2-1333, 2-1334 and 2-1339, including amendments thereto. Member contributions picked up by the employer shall be paid to the retirement system administrators as provided in section 2-1337. Such contributions shall be credited to a separate account within the member's individual account so that amounts contributed by the member before the pay period ending May 11, 1986, may be distinguished from the member contributions picked up by the employer. Interest shall be added annually to members' individual accounts.

 

(e)    Member contributions picked up by the employer shall be deemed earnings subject to the city earnings tax.

 

(f)    The official shall not have the option of choosing to receive the contributed amounts directly instead of having them paid by the employer to the retirement system.

 

(g)   Trust. The assets of the retirement system shall be held in trust by the board of trustees. The trust is intended to be tax-exempt under section 501(a) of the Internal Revenue Code and the pension system plan is intended to be qualified under section 401(a) of the Internal Revenue Code.

 

All payments made by elected officials to the retirement system fund and such other payments that are made to the fund on behalf of employers and members, and all other money or property that lawfully becomes part of the trust, together with the income, gains and all other increments shall be held, managed and administered in trust. The trust shall be known as the Employees' Retirement System of the City of Kansas City, Missouri Trust. The trustees shall perform the duties, responsibilities and obligations and in accordance with section 2-1137.

 

It shall be impossible by operation of the trust or by its natural termination, by power of revocation or amendment, by the happening of any contingency, by collateral arrangement or by any other means, for any part of the corpus or income of the trust or any funds contributed to the trust to be used for, or diverted to purposes other than the exclusive benefit of members, for members, their beneficiaries or dependents prior to all obligations having been satisfied or provided for. No part of net earnings of the trust shall inure (other than benefit payments) to the benefit of any employer or individual; provided, however, a contribution made by an employer under a mistake of fact may be returned to the employer if the trustees so direct provided the repayment is not prohibited under applicable law and will not adversely affect the tax-exempt status of the trust.

 

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Approved as to form and legality:

 

 

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William Geary

City Attorney