• TABLE OF CONTENTS
HIDE
 Cover
 Acknowledgement
 Preface
 Table of Contents
 List of Tables
 Social and institutional forces...
 A model pension plan ordinance...
 Definitions, explanation of related...
 Membership and service
 Contributions and funding
 Retirement and retirement...
 Choice of funding medium
 Legal provisions
 Summary and conclusions
 Appendix A: Actuarial data for...
 Appendix B: Actuarial data for...
 Bibliography
 Biographical sketch






Group Title: model pension plan ordinance for Florida municipalities
Title: A Model pension plan ordinance for Florida municipalities
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Permanent Link: http://ufdc.ufl.edu/UF00097369/00001
 Material Information
Title: A Model pension plan ordinance for Florida municipalities
Physical Description: ix, 205 leaves : ; 28 cm.
Language: English
Creator: Monath, Donald R., 1930-
Publisher: University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: 1968
Copyright Date: 1968
 Subjects
Subject: Municipal officials and employees -- Pensions -- Florida   ( lcsh )
Finance, Insurance, and Real Estate thesis Ph. D
Dissertations, Academic -- Finance, Insurance, and Real Estate -- UF
Genre: bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Thesis: Thesis - University of Florida.
Bibliography: Bibliography: leaves 204-205.
Additional Physical Form: Also Available on World Wide Web
General Note: Manuscript copy.
General Note: Vita.
 Record Information
Bibliographic ID: UF00097369
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: alephbibnum - 000554231
oclc - 13369275
notis - ACX9065

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Table of Contents
    Cover
        Page i
        Page i-a
    Acknowledgement
        Page ii
    Preface
        Page iii
        Page iv
        Page v
    Table of Contents
        Page vi
        Page vii
        Page viii
    List of Tables
        Page ix
        Page 1
    Social and institutional forces that influence pension plans
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
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        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
    A model pension plan ordinance for Florida municipalities
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
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        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
    Definitions, explanation of related provisions and establishment of the pension system
        Page 57
        Page 58
        Page 59
        Page 60
        Page 61
        Page 62
        Page 63
        Page 64
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        Page 93
        Page 94
        Page 95
        Page 96
        Page 97
        Page 98
        Page 99
        Page 100
    Membership and service
        Page 101
        Page 102
        Page 103
        Page 104
        Page 105
        Page 106
        Page 107
        Page 108
    Contributions and funding
        Page 109
        Page 110
        Page 111
        Page 112
        Page 113
        Page 114
        Page 115
        Page 116
        Page 117
        Page 118
        Page 119
        Page 120
    Retirement and retirement benefits
        Page 121
        Page 122
        Page 123
        Page 124
        Page 125
        Page 126
        Page 127
        Page 128
        Page 129
        Page 130
        Page 131
        Page 132
        Page 133
        Page 134
        Page 135
    Choice of funding medium
        Page 136
        Page 137
        Page 138
        Page 139
        Page 140
        Page 141
        Page 142
        Page 143
        Page 144
        Page 145
        Page 146
        Page 147
        Page 148
        Page 149
        Page 150
        Page 151
        Page 152
    Legal provisions
        Page 153
        Page 154
        Page 155
        Page 156
        Page 157
        Page 158
        Page 159
    Summary and conclusions
        Page 160
        Page 161
        Page 162
        Page 163
        Page 164
        Page 165
        Page 166
        Page 167
        Page 168
        Page 169
        Page 170
    Appendix A: Actuarial data for Chapter 175 funds at January 1, 1966
        Page 171
        Page 172
        Page 173
        Page 174
        Page 175
        Page 176
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        Page 181
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        Page 183
        Page 184
        Page 185
        Page 186
        Page 187
    Appendix B: Actuarial data for Chapter 185 funds at January 1, 1966
        Page 188
        Page 189
        Page 190
        Page 191
        Page 192
        Page 193
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        Page 197
        Page 198
        Page 199
        Page 200
        Page 201
        Page 202
        Page 203
    Bibliography
        Page 204
        Page 205
    Biographical sketch
        Page 206
        Page 207
        Page 208
Full Text













A MODEL PENSION PLAN ORDINANCE
FOR FLORIDA MUNICIPALITIES













By

DONALD R. MONTH













A DISSERTATION PRESENTED TO THE GRADUATE COUNCIL OF
THE UNIVERSITY OF FLORIDA
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE OF DOCTOR OF PHILOSOPHY











UNIVERSITY OF FLORIDA
1968



























































UNIVERSITY OF FLORIDA


3 1262 08552 3719












ACKNOWLEDGMENTS


I appreciate the encouragement of my committee chairman,

William M. Howard. Without his efforts this dissertation would

not have been possible. I also want to thank Irving J. Goffman,

Arnold C. Matthews, and Ralph H. Blodgett for the help and un-

derstanding that they have shown me in my work towards the doc-

torate. My sincere appreciation to John B. McFerrin and Clement

H. Donovan who helped direct me towards this goal and to the

other members of the faculty at Matherly Hall.












' PREFACE


The purpose of this dissertation is to present a model

pension plan ordinance for Florida municipalities and to ex-

plain the purpose of the various provisions of the suggested

ordinance.

At this writing, many Florida retirement plans are in

financial difficulties because of too liberal pension bene-

fits and inadequate financing. On April 21, 1965, this writer

received a letter from Ralph Turlington, Chairman of the Pen-

sions and Retirements Committee of the Florida House of Rep-

resentatives. Mr. Turlington wrote, "I am satisfied that

municipalities throughout the state are in serious difficul-

ties with their plans."

A real need exists in Florida for a model guide for pub-

lic employee retirement system administrators. This need be-

comes increasingly important with the growth of retirement

programs in the State as the benefits and financial security

of these pension plans are of concern to increasing numbers

of Florida municipal employees. On January 29, 1966, the

State Chamber of Commerce reported the combined financial

assets of retirement programs for state and local government

employees in Florida. By mid-1965 total assets held by these

programs reached $549 million--an increase of 93 percent over

1960. Payments and earnings for the various retirement accounts


iii






during the fiscal year 1964-65 totalled $107 million, while

benefits-and withdrawals to public employees during the year

amounted to $37 million.

Many of the problems faced by municipalities require

tailor-made solutions, but there are many facets of municipal

pension plans which are subject to model guidelines. While

the Model Ordinance illustrates a complete pension ordinance,

it is not intended as an absolute guide for pension planning.

The model should be carefully appraised, because many decisions

enter into the design of a pension program and every pension

plan must be constructed in the light of its own particular

situation. Hence, the explanations of the individual provi-

sions of the Model Ordinance will help to meet the specific

needs of a municipality and its employees.

One purpose of this dissertation is to present a pension

plan that could be adopted by a city. It is also the hope of

this writer to enlighten all public officials who are respon-

sible for the formulation of the provisions of a new plan or

the revision of an existing plan. With these readers in mind,

the dissertation has avoided the highly technical actuarial

aspects of pensions in favor of the elementary approach. The

general approach is to analyze--not to advocate; therefore,

attention is focused on the factors which should be considered,

not on absolute answers.

It is anticipated that this dissertation will merit the

support of responsible officials and'bring about a better un-

derstanding of sound pension planning by providing all public






officials-with a model guide to accomplish the desired re-

sults without placing undue burdens upon the financial resources

of taxpayers.












TABLE OF CONTENTS


Page

ACKNOWLEDGMENTS 1i

.PREFACE i1i

LIST OF TABLES ix


CHAPTER I

SOCIAL AND INSTITUTIONAL FORCES THAT INFLUENCE PENSION
PLANS 1 2

Introduction Social Forces Institutional
Forces Florida Statutes Local Law Cities -
Old Age, Survivor's, and Disability Insurance -
Federal Tax Policy Summary.


CHAPTER II

A MODEL PENSION PLAN ORDINANCE FOR FLORIDA MUNICI-
PALITIES 32

Index Definitions Establishment of the System -
Membership and Service Contributions and Funding -
Retirement and Retirement Benefits Leaves of
Absence and Military Service Administration of
the Plan Future Changes in the Operation of the
Plan Protection Against Fraud and Deceit Amend-
ment Separability and Construction Repeal of
Conflicting Ordinances Effective Date.


CHAPTER III

DEFINITIONS, EXPLANATION OF RELATED PROVISIONS AND
ESTABLISHMENT OF THE PENSION SYSTEM 57

Definitions Establishment of the Pension System









CHAPTER IV

MEMBERSHIP AND SERVICE

Membership Service.


CHAPTER V

CONTRIBUTIONS AND FUNDING

Funding Cost of the Plan Contributions.


CHAPTER VI

RETIREMENT AND RETIREMENT BENEFITS

Retirement Benefits Retirement Termination
Benefits.


CHAPTER VII

CHOICE OF FUNDING MEDIUM

Uninsured, Self-Administered Pension Trust -
Insured Pension Program Conclusion.


CHAPTER VIII

LEGAL PROVISIONS

Exemption of Funds from Assignment and Tax -
Protection Against Fraud Interpretation of
the Plan Supervision Administration -
Future Changes.


CHAPTER IX

SUMMARY AND CONCLUSIONS

Summary Conclusions.

APPENDIX "A"


Actuarial Data for Chapter
January 1, 1966.


175 Funds at


vii


Page


101


109


121


136


153


160


171







Page


APPENDIX "B"

Actuarial Data for Chapter 185 Funds at 188
January 1, 1966.

BIBLIOGRAPHY 204


viii











LIST OF TABLES


Tables Page

1 Contribution Rate Schedule 19
(Percent of Covered Earnings)

2 Illustrative Retirement Benefits 21
Chapters 175 and 185, Florida Statutes

-3 Illustrative Retirement Benefits 22
Model Pension Plan

4 Aggregate Termination Rates 107
(Raw Data) Florida Municipal Police
Pension Funds

5 Proportion of Normal Retirement Income 129
Available in Event of Early Retirement
at Various Ages

6 Actuarial Data for Chapter 175 Funds at 172
January 1, 1966

7 Actuarial Data for Chapter 185 Funds at 189
January 1, 1966

8 Progress Report to the 1967 Legislature on 203
the Municipal Police Officers' Retirement
Trust Fund


























We had better look to these problems and provide for
the aged as promptly, rationally, and as compassionately
as we can. Today, "they" are the aged; tomorrow, we shall
be they.1













CHAPTER I


SOCIAL AND INSTITUTIONAL FORCES THAT
INFLUENCE PENSION PLANS



The forces that move economic man are various and
often difficult to predict, but no motive in man's
history has been more constant or more obvious than
his quest for security. Pension trusts are but the
most recent attack human society has made upon its
age-old problem.2


Introduction

Much evidence exists to support the need for and advan-

tages of a pension program for municipalities. Of the various

methods of dealing with the problems of aged employees, the

pension plan is the best. This chapter will first of all

discuss the various alternatives for dealing with the aged,

and second, discuss the various economic advantages of a

pension plan. Last, the chapter will discuss the provisions

of the various institutional regulations, Florida Statutes

175 and 185, OASDI (Social Security) and the Federal Income

Tax Policy, which influence the establishment of a comprehen-

sive pension plan for municipalities in Florida. Since this

dissertation is directed toward Florida municipalities ex-

clusively, except where otherwise stated, the term employer

will be used synonymously with municipalities or a municipal

employer.






Social Forces

Any employer (municipal or private) must face the problem

of aged employees at some time. When this time arrives, the

employer can elect only one of the following alternatives re-

garding these employees:

1. He can discharge the employees--with or without a

gold watch and a farewell dinner.

2. He can keep them employed by leaving them on the

payroll.

3. He can supply them with a retirement income.

We may assume that acceptance of the first alternative, dis-

charge, would result in a group of needy aged whose existence

would be a denial of the philosophy that the elderly should

live with dignity and in a decent manner. Few would deny that

for those who have worked all their adult lives, an ample stan-

dard of living should be not a gift of charity, but a right.

Of course, employers desire to do "the right thing" for their

employees, and for humanitarian reasons discharging an em-

ployee is not acceptable.

Another more practical reason for eliminating the first

alternative is the unique nature of a municipality. The com-

munity is not a thing apart from its individual groups--it

is a summation of all the members. The municipality consists

not only of its aged employees, but also of their sons, daugh-

ters, nieces, nephews, grandchildren and friends who have a

meaningful stake in the financial well-being of the elderly

and the power through their votes to influence public officials




4

may be strong enough to eliminate the first alternative. The

indigent aged will live either through welfare receipts.or

support from their children. It is difficult enough to bring

up a family properly today without also supporting one's

parents. How long would these children vote for the local

elective officials while their income was overly stretched

in an attempt to support two families--one of whom gave many

years working for the municipality?

An abundance of economic reasons for eliminating this

first choice also exists. Any fancied savings by stinting

on funds to finance an adequate pension system will be spent

for public assistance programs--financed by tax revenues.

The deficiencies of the needy aged will have to be met one

way or the other, and because of the mild Florida weather,

these former employees are very likely to remain in the same

community where they have spent their working lives. No,

these men cannot be discharged and forgotten! Likely they

will reappear on the welfare roles, receiving the money that

was "saved" by not initiating a pension program.

The second alternative--to keep them employed by leaving

them on the payroll--can be very expensive. To retain em-

ployees beyond the time when their efficiency has begun to

decline would constitute a drag on the smooth operation of

the entire municipal organization. An employee whose effec-

tiveness has definitely deteriorated constitutes, at best, a

part-time worker at full-time pay. While some employees may

retain their abilities and effectiveness through the years






and others may continue to be effective in administrative

positions, these are a minority, and special provisions can

be made for them. The overwhelming majority of employees--

most of whom could not have filled administrative posts in

their younger years cannot be expected to do so later. An

employee retained in a supervisory position when he ceases

to pull his share of the load will harm efficient operations

and stultify the incentive of younger employees to do their

best work.

Again, there is nothing saved with this method, as re-

tirement costs are merely hidden in the current payroll.

There is little doubt that the third alternative of

supplying aged employees with a retirement income is the only

economic and efficient way to take care of the superannuated

worker.

A pension plan is a necessity for most employees. High

tax rates and living costs eat up most of their earnings.

Only through a retirement pension can he be assured that after

a lifetime of productive work he will not be forced into a

retirement period of poverty. Since most people have been

unable to save the funds necessary for the retirement needs

of themselves and their dependents, it is the pension plan

that will insure funds for retirement. Because our economy

would benefit from ample purchasing power in the hands and

pockets of the elderly, it would be profitable to the community

to insure that this is made possible. The advantages which

can accrue to an employer with a well-planned retirement





program run a lengthy gamut. It would be naive to think

that municipalities install a pension program for humanitar-

ian reasons alone.

As previously stated, a planned retirement program per-

mits employees, who are disabled or aged to leave employment

at no further cost to the municipality. Little doubt exists

among experts in this area that a planned retirement program

is the most.efficient way to take care of superannuated em-

ployees. Undoubtedly, a pension enables employers to replace

elderly employees with greater ease, as there is much less

resentment from employees and from the public. "Employers

today often look upon pensions as an orderly means of financ-

ing the removal of'the inefficient and permitting their re-

placement by those with greater capabilities."3 The employer's

reputation in the community will be enhanced by having def-

inite provisions for the retirement of aged employees with

long periods of service. Discussion with municipal pension

officials have convinced this writer that most employers sin-

cerely desire that their employees have adequate retirement

incomes. Many employees, who realize that their job perform-

ance is inadequate, would be favorably inclined to retire if

they were assured of an adequate income after retirement.

This is the basic purpose of pension plans--to provide in-

come to employees who have worked for a stated period and who

retire either from choice or necessity. As the older workers

are retired, they are systematically replaced by more vigorous

and more efficient workers. Thus, by keeping avenues of ad-

vancement open, the efficiency and morale of all employees






are improved. Younger employees would perform their best

work knowing that all avenues of advancement were continually

kept open. The case of Benjamin F. Fairless illustrates

this principle. When Benjamin F.*Fairless reached the age

of 65 and announced his retirement as chairman of the board

of the United States Steel Corporation, he clearly stated

the function of a pension plan in clearing promotional ave-

nues for younger men. Mr. Fairless said:

0. .1 am firmly convinced that there must always be
.room at the top of our management team for young men
with young ideas and a fresh, new outlook upon the
problems that our company must face if it is to keep
pace with its growing responsibilities toward a young
and growing nation.

Unless this chance for advancement is constantly
kept alive, at every level of management, it would
only be a matter of time until the most able of our
younger executives would seek opportunities elsewhere.

Thus our entire organization would soon become
stagnant--set in its ways, and dangerously unprogres-
sive in its views. And that, of course must never
never happen at U.S. Steel.4

This prospect of advancement would also encourage talented

and ambitious personnel to seek their opportunities within

the municipality. Undoubtedly, a pension plan not only will

hold employees, but also will help to attract others. An

adequate pension plan has still another distinct advantage.

Through the pension plan, a municipality induces long periods

of service. This gives the municipality a hold on progressively

more experienced, hence, more valuable employees. The reduc-

tion of employee turnover is important in minimizing expected

costs.






A study by the United States Department of Labor clearly

showed that private companies with pension plans had a more

stable work force than those without pension plans. The annual

separation rate per 100 employees-was only 34 for companies

with pension plans, compared to 62 for companies without pen-

sion plans.5 While these figures are based on data from pri-

vate firms and are eleven years old, this writer's unsub-

stantiated opinion is that they are proportionately typical

for present day municipal employers. As of this writing, no

comprehensive studies have been made in this area of munici-

pal pension plans in Florida; however, the State of Florida

is planning studies within these areas, and probably around

1969 will have sufficient data for pertinent conclusions.

Today-most pension experts recognize that management derives

definite advantages from a.pension program. Among the many

benefits a municipality derives from a pension program is

the advantage that it will help attract and hold competent

employees. The development and retention of an experienced

work-force must of itself decrease municipal costs while

promoting loyalty to the community and its administrators.

The municipality, and particularly the smaller govern-

mental units, cannot absorb the inefficiency resulting from

a rapid turnover of personnel. As the economy has moved up-

ward toward a situation in which skilled labor is at a premium

and efficiency is in great demand, employers feel that they

must provide inducements to keep their trained employees on

the job. The pension plan with its promise of reward for




9

long service is an excellent device to insure the continued

services of valued employees.6 In the competitive labor

market, the more an employer can offer prospective employees,

the more successful he will be in hiring proper help. A

pension plan will help the municipality to compete In the

labor market with other governmental units and with private

corporations. As one expert stated: "Probably one of the

most important arguments advanced for a planned pension pro-

gram is that it keeps the organization virile and able to

meet active competition."?

While economic reasons are most often the reason for

establishing pension plans, some municipalities may be ful-

filling a genuine desire to contribute to the welfare and

retirement security of their employees. Therefore, philan-

thropy may be another motivation for many pension plans.

However, philanthropic motivation is difficult to evaluate.

Likewise, systematic retirement, lower turnover and the re-

sulting improvement of employee morale are difficult to eval-

uate precisely. There are just too many secondary and ter-

tiary benefits to arrive at any reliable financial answers.

But when we add these benefits to the political stability

accruing from the improved community good will, it seems al-

most absurd for any Florida municipality not to have a proper

retirement program for its employees.


Institutional Forces

Many laws influence the establishment of a municipal

pension plan in Florida. Of these, probably the ones that







would influence the most are Chapters 175 and 185 of the

Florida Statutes which concern pension plans for firemen

and policemen. The federal plan for "Old Age, Survivor's,

and Disability Insurance" commonly known as "Social Security"

would also influence the pension plan. Last, the Federal

Tax Policy strongly encourages the pension plan.


Florida Statutes

The members of the Legislature of the State of Florida

showed an interest in pension plans for firemen with the pas-

sage of Chapter 175 of the Florida Statutes in 1939. Legis-

lation for a police officers' pension plan was passed in 1953

with the enactment of Chapter 185 of the Florida Statutes.

There are no statutory pension plans for city employees who

are not firemen or police officers. These statutes have had

a substantial impetus in the implication of retirement plans

for policemen and firemen. Some city charters enable the in-

dividual municipality to establish a pension program for its

employees without approval of the Florida Legislature. A

municipality without such charter authority must have its

local legislative delegation put through a special legisla-

tive act to establish the pension plan. In brief, if there

is no charter authority, a city may have the Florida Legisla-

ture pass an Act establishing a pension plan in that city.

The Statutes are set up in the following manner. Chap-

ter 175 provides that municipal pension plans for firemen may

receive one-half of the premium tax revenues on certain fire

and windstorm insurance risks within the municipality's







geographic-area. Chapter 185 provides one-half of the premium

tax revenues for police officers; this tax source, however,

derives only from automobile, fidelity bonding, burglary,

and plate glass insurance. Chapters 175 and 185 do not re-

quire any municipality to institute a pension plan. These

Statutes merely provide that if the municipality desires to

have a retirement program, and if this program meets certain

minimum requirements, the State will then turn over the stated

tax receipts to the individual pension funds. Those cities

that follow the e:,act provisions of the statutes are called

"175 Cities" or "185 Cities." The individually enacted pen-

sion plans are frequently called "local law" plans. Both

local law plans provide varying benefits to their covered

employees. "In general, local law plans provide benefits

that are somewhat more liberal than those written into Chap-

ters 175 and 185, though this need not be the case.,8 Under

provision of these statutes, the Municipal Firemen's Pension

Trust Fund was established in 1939 and amended at various

intervals by the State Legislature. The most recent amend-

ment was enacted in 1963. Of the 101 participating cities

in 1964, forty-seven follow Chapter 175 and fifty-four operate

their own plans. Generally, the larger cities have local law

plans and the smaller cities follow Chapter 175.9 Likewise,

the Municipal Police Officers' Retirement Trust Fund was es-

tablished in 1953 and amended in 1959. In 1964, of the

ninety-one participating cities, forty-five follow Chapter

185 and forty-six operate their own plans. Generally, the






larger cities have their own plan and the smaller cities

follow Chapter 185.10

Any incorporated city or town that owns and uses approved

and serviceable fire fighting equipment and apparatus valued

at more than $10,000 may have a Municipal Firemen's Pension

Trust Fund while an incorporated city or town may have a Po-

*lice Officers' Retirement Trust Fund if it owns 8500 of serv-

iceable police equipment. Once a municipality establishes a

Firemen's Pension Trust Fund, participation in the plan is

mandatory for all firemen (full-time and volunteer), however,

only full-time members of the police department are covered

under a Municipal Police Officers' Retirement Trust Fund and

it is not compulsory that all police officers be members of

the Fund as they may elect out of the Fund by a non-reversible

written request anytime during their first year of service.

As a result of these policies, the following regulations

determine benefits. A fireman or police officer is eligible

to receive the normal retirement benefits as outlined in the

Statutes when he has reached the age of sixty and has contri-

buted to the Fund for ten years. These employees contribute

5 percent of their salary to the Fund. If Social Security

coverage is provided, the contribution may be reduced to 3

percent of the employee's annual compensation for which he

receives reduced benefits. For those who contributed 5 per-

cent of their salary, the benefit formula is 1.67 percent of

the average cash salary of the ten best contributing years of

the last fifteen years prior to retirement. For those who







only contributed 3 percent of their salary, the benefit formula

is reduced to 1 percent. This percentage is multiplied by

the total number of years of service to arrive at the employee's

retirement pension. The pension is payable for the retiree's

life with a minimum guarantee of ten years should he die prior

to receiving 120 monthly checks. Optional forms of retirement

income at an equivalent actuarial value are available if the

police officer or fireman is in good health, or has prese-

lected an optional form of income at least three year's be-

fore retirement. There are varied benefit provisions to cover

early retirement at age fifty after ten years of contributing

service, and to cover disability retirement. Police officers

are not required to make contributions beyond the normal re-

tirement date and benefits do not increase for service per-

formed beyond this age.

The responsibility for the proper administration of the

Statutory Fund is vested in the local municipal Board of

Trustees. This board collects all receipts, invests the

Fund's assets, and makes all payments for legitimate claims.

The State of Florida conducts quinquennial actuarial valua-

tions for all "175, 185 Cities" and distributes premium tax

monies due these participating cities.


Local Law Cities

Municipalities with plans operating under their own

statutes administer their Funds in accordance with the provi-

sions of the local ordinance establishing the plans. In order






to receive their share of premium tax money, they must have

the following minimum standards under Section 175.351 of

Chapter 175, and Section 185.35 of Chapter 185:

A) Normal retirement age, if any, must be no more than

age 65.

B) Period of eligible service must not be more than

35 years.

C) The monthly benefit formula must be equal or greater

than one-twelfth of 1 percent of the fireman's or police offi-

cer's total earnings during his entire period of credited

service.

D) The monthly pension payment may have a maximum limi-

tation, but this cannot be lower than $.100.

E) Actuarial valuations must be conducted at least

quinquennially. These are-submitted and reviewed by the State

Treasurer's Office.

The.only requirement for a municipality to begin sharing

Sthe premium tax money with the State of Florida is the passage

of a local ordinance to establish the retirement fund which

will abide by State law. Usually, the same ordinance levies

the appropriate premium tax. Once a Fund is established,

notice should immediately be sent to the State Treasurer.

Only when this notification is received by the State can the

municipality participate in the distribution of its share of

premium taxes;

Even though local law cities establish their pension

plans in conformity with the minimum State requirements each




15

individual .ordinance may be different than the ordinance of

other municipalities. The many divergent types of plans in

operation in Florida produce no uniformity, because there

is no standardization of basic pension benefits. The variety

and complexity of these plans require special actuarial re-

ports for each local law city.

Of the many problems found in these divergent types of

plans, one of the most serious is proper funding. For pen-

sion plans covering firemen, the State of Florida has set

July 1, 1968, as the final date when all municipalities must

prove minimum funding as required by the statutes. If these

plans are not properly funded, they will stop receiving their

share of the premium tax money. Police Officers' Funds had

to comply by July 1, 1964.

The State of Florida uses compulsory disclosure, inspec-

tion, and inquiry to police the operation of municipal pension

plans. However, the Stetutes do not guarantee the effective-

ness of these plans. The State has only the power to cease

sharing the premium tax receipts when the plans do not main-

tain minimum standards. Since there is no legal requirement

to force municipalities to pay their contributions promptly,

the power of the State in this respect is weak. These plans

involve large sums of money and entail long-term municipal

obligations. The technicalities and complexities of pension

plans should be regularly studied by qualified actuaries and

other specialists. Only through sound funding can employees






be insured of the proper growth of reserves to a sufficient

amount that will adequately finance their pension benefits.

The pension movement is relatively young in this country,

but the State of Florida is one of several states which have

taken the lead in enacting legislation to provide a measure

of supervisory control and information about municipal plans

and their financial operations. Perhaps the greatest forma-

tive influence on municipal pension trusts has come from the

effect of Chapters 175 and 185 of the Florida Statutes.


Old Age. Survivor's, and Disability Insurance

While the State of Florida has aided the growth of muni-

cipal pension plans, "the chief impetus to pension fund growth,

however, was the establishment of Old Age and Survivor's In-

surance in the middle thirties. . ,)L The old age insurance

program which comprises only Title II of the Social Security

Act has become so popular that today it is commonly referred

to as "Social Security." This is a social insurance program.

There is no means test--benefits are received in proportion

to payroll taxes paid equally by the employer and employee.

Municipal employees in Florida may be covered by Social

Security under voluntary agreements between their employer

and the Federal.Government. The State Legislature has passed

laws enabling Florida municipalities to participate in OASDI.

Details on how to arrange Social Security coverage may be ob-

tained from the Florida League of Municipalities in Jackson-

ville.






Retirement benefits.-Under provisions of the program,

a fully insured worker and his wife- will receive monthly bene-

fits upon becoming 65 or over. Actuarially reduced benefits

can be received from age 62 to 64 if desired. A man (or woman)

can still work while receiving benefits. There is no limita-

tion on earnings after age 72. Generally, those younger than

72 may earn up to $1680 in a year and still receive their

full benefits. A municipal retirement pension is considered

income, and there is no limitation on the amount of income

received while collecting Social Security benefits.

The amount of the Social Security pension is figured

from average earnings under covered employment. The maximum

amount of Social Security earnings that can now be counted

for Social Security is $7,800. The monthly retirement bene-

fit at 65 will be somewhere between ?55 (the minimum) and

:218 (the maximum). A retiree's wife receives one-half the

amount of her husband's primary benefit.

Other benefits.-Disability benefits begin after a six-

month waiting period. The amount of the disability payment

is the same as the amount of benefits that would be received

at age 65 (62 if a woman). Just as with regular retirement

benefits, additional payments are made to certain dependents

of the disabled worker. An employee is genuinely concerned

for the welfare of his wife and children should he become

disabled. This, of course, can be adequately provided through

private insurance companies, but any meaningful disability pro-

tection is quite expensive and Workmen's Compensation is







hardly adequate for occupational disabilities. According to

Merton C. Bernstein, ". .over half the disabling injuries

that occur every year are not covered by Lorkmen's Compen-

sation."12 This is a national average, and it may be that

the average would be much higher for Florida municipal employ-

ees--since many of them are policemen and firemen who are

subject to energetic and fatiguing work for many hours during

each working day.

After the death of a worker, a lump sum death payment

is paid. This is three times his monthly retirement benefit

with a maximum of ".255. Any dependent unmarried child under

age 18 will receive a monthly income of three-fourths of

the worker's normal retirement benefit. A widow under 62

also will receive a similar benefit while caring for these

children. A widow over age 62 with no dependent children

will receive 871 percent of her husband's normal retirement

benefit. There is a maximum family payment of $434.40.

Usually, benefits for a widow and two eligible children will

reach this maximum. Additionally, benefits are available to

unmarried children over 18 who were permanently disabled be-

fore becoming 18. Dependent parents who are at least 62 are

also entitled to survivor's benefits.

Contributions.-In order to receive benefits, it is manda-

tory for every worker in covered employment to pay a tax based

on his earnings. This contribution is paid regardless of his

age and even when receiving Social Security benefits. Payments,

as shown in Table 1, are deducted from the employee's salary.







TABLE 1

CONTRIBUTION RATE SCHEDULE
(Percent of Covered Earnings)

_EmDloyees and Employers (Each)

For Retirement, For
Survivors, and Hospital
Years Disability Insurance Insurance TOTAL

1963-65 3.625 None 3.625
1966 3.850 .35 4.200
1967-68 3.900 .50 4.400
1969-72 4.400 .50 4.900
1973-75 4.850 .55 5.400
1976-79 4.850 .60 5.450
1980-86 4.850 .70 5.550
1987 and after 4.850 .80 5.650

Source: Social Security, U.S. Department of Health, Education
and Welfare, Social Security Administration, November,
1966, p. 34.

The Social Security System provides a form of savings

with free transferability of pension eligibility from job to

job--something not found in most private or municipal pension

plans. Except for a worker's early death with no survivors,

contributions are never lost.

Because of current financial problems or misunderstanding,

some municipal employees do not want to participate in Social

Security. With no Social Security, Chapters 175 and 185 of

the Florida Statutes require an employee to contribute 5 per-

cent of his salary to the pension fund. A policeman with a

gross salary of $6,000 will pay an annual contribution of

$300. But when Social Security coverage is added, the annual

contribution may be reduced to 3 percent plus 4.4 percent of

the employee's 1968 salary--a total annual contribution of






$L444-a much higher contribution. On the other hand, some

employees do not want Social Security because they do not re-

late their additional contributions to increased benefits.

Also, in many cases firemen prefer not to participate in

Social Security as firemen because they "moonlight" and are

thus covered by Social Security as self-employed persons.

They feel that if they were covered by Social Security as

firemen then their firemen's pensions would be reduced. By

keeping Social Security out of the city program, firemen (and

to a lesser extent policemen) expect to have a more liberal

pension and at the same time receive the benefits of Social

Security with full retirement pension benefits under the

statutes is illustrated in Table 2. For example, if an em-

ployee retires with average yearly earnings of '6,000 and no

Social Security coverage, his pension after thirty years will

be 1.67 percent per year or $250. Table 3 illustrates the

combination of Social Security benefits with pension bene-

fits of the model pension plan (Chapter 2). This same em-

ployee with Social Security coverage will receive a pension

of 1 percent per year of his average monthly earnings or

$150, plus $182 from Social Security--a total retirement pen-

sion of $332. This is why it may be reasonable for municipal

employees who are under Social Security to receive 1 percent

of earnings per year of service as a pension, while those

employees who do not participate in Social Security to receive

1.67 percent of earnings per year of service.























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While the dual benefits of Social Security insurance

argues strongly in its favor, OASDI does not provide a suffi-

cient retirement income to meet today's rising costs. Federal

Government efforts have been directed to provide some minimum

basic benefit through OASDI legislation. Between 1950 and

1968, OASDI coverage has been expanded. Children's benefits

have been improved and benefits for widows have been liberal-

ized. A cascade of amendments has improved the actual and

potential benefits for full-time, year-round workers. The

Medicare Bill has added hospital benefits and low-cost medical

insurance to the provisions of OASDI. As one pension expert

states: "With assurance of a minimum benefit, the employee,

through his own individual effort and supplemented by any

benefits his employer may provide, can seek to raise his old-

age income to an 'adequate' level."13

The labor unions which have been strong advocates of

Social Security seem to summarize their opinion of OASDI in

the following quote:

The Social Security system accomplished the aims
of vesting, continuity of coverage, adequate guarantees,
and equity of treatment much more economically, effec-
tively, and efficiently than is possible through a system
of scattered, fragmentary, limited and unrelated private
pension systems. A private plan should be regarded only
as a supplement to the Social Security program. It is
not, and never can be, a substitute for it.1'

A desirable allocation of resources varies from person

to person and from group to group. This variety of needs

would argue in favor of the present OASDI system being uti-

lized as a base on which to build municipal pension plans.




25

"From the point of view of the municipality--or the employee--

it is a bargain."15 Social Security will provide a basic

disability and retirement income that is weighted in favor

of lower income groups. Simultaneously, OASDI provides income

to survivors and dependents--at least during their young and

older ages. Medicare has added hospital and medical insurance

to protect the retiree from overburdening health costs. As

Professor William Howard stated: ". .it is a system that

may ultimately have to be subsidized by all taxpayers and

since residents of our municipalities pay taxes to the Federal

Government, they may as well share in the benefits.,"16


Federal Tax Policy

With the country's Social Security program providing the

basic impetus for the growth of pension plans, the Federal

Income Tax Law has played a major part in stimulating the

growth of municipal pension plans by permitting the tax free

earnings of pension trusts. The Federal Government has en-

couraged the growth of pension trusts through special pro-

visions of the Internal Revenue Code.

Since municipal governments do not pay federal income taxes,

it is only those provisions relating to the income of employees

and the pension trust itself that are of importance to this

paper.

As far as an employee is concerned, the main purpose of

his pension plan is to provide him an income when he retires

from employment'because of age. The Federal Government agrees

with this fundamental purpose. Probably, this agreement is







the reason for favorable tax treatment and protective legis-

lation.

Under the provisions of the Tax Law the municipality's

contributions to its pension plan are considered wages, but

they are not currently taxed to the employees as part of their

income for the year. Section 402 of the Internal Revenue

Code of 1954 specifically exempts the employee from taxation

on contributions made for him by the municipality. We might

say that employer contributions are the equivalent of a long-

term, tax-free loan to the pension fund. These contributions

are treated for income tax purposes as deferred income. The

benefits of the pension are taxable to the employees only

when actually received. Although all of the income resulting

from a pension is ultimately subject to taxation, the delay

in taxing pension income works very favorably for the employee.17

There can be a definite advantage in paying the tax on

this portion of his income after retirement--when he will be

taxed at a lower personal rate and may claim two exemptions

as a personal deduction. In certain cases, this can be a

much lower long-term capital gains rate. This exception oc-

curs when the employee or his estate receives the total amount

of his pension benefits in one calendar year.

On his death, an employee's beneficiary can receive up

to $5,000 in a lump sum from the deceased employee's pension

account (attributable to municipal contributions) free of in-

come tax.

In summary, only pension income derived from employer

contributions is taxable--and then only on benefits as they







are actually received or made available. These taxes are

paid as if the pension income were an annuity. Under Section

72(d) of the Internal Revenue Code, the employee may spread

his cost over the periodic payments of the annuity and the

difference between the annual prorated costs. Only the dif-

ference actually received is taxed as income. The one excep-

tion to this procedure occurs when the employee's total cost

is less than the annuity receipts of the first three years.

In this case, the initial payments are charged off against

his costs until the total cost is completely recovered. The

full amount of subsequent payments are then taxed as income.

In addition to municipal contributions, many pension

plans are financed through a combination of employer and em-

ployee contributions. Income tax is not payable on the por-

tion of pension plan benefits that were financed by the re-

tiree's contributions. In a plan which the employee contri-

butes to the cost, he is currently taxed for the amount of

his contribution. The reader should fully realize that even

though this contribution is withheld from the employee's

wages and paid directly into the pension fund, it still is

taxable to the employee. Pension experts agree that the net

effect of this tax system is that an employer can provide

a larger pension by contributing directly to the pension

fund from his own pocket and bypassing the employee. As

one expert states: "Since the total sum required to purchase

pension benefits comes ultimately from the employer anyway,

in most cases the tax advantages to the employee in a non-

contributory plan will outweigh the advantages of a contribu-







The advantages of a pension plan are further enhanced

by the fact that earnings and gains' on the trust funds are

completely exempt from all taxes until such time as the pen-

sion trust pays out benefits to the employees. Thus, the

funds compound tax-free during the accumulation period and

increase at a much greater rate than if they were subject

to tax.

The tax exemption allowed on the earnings of the
monies in the plan permits the employer, per dollar of
outlay, to buy a much larger benefit for his employees
-than would otherwise be possible. And the tax defer-
ment granted to the employee on the funds being accumu-
lated for him enables him to reap far larger benefits
than he could if the employer were to pay extra compensa-
tion directly to him rather than put it into the plan
for him.

The Internal Revenue Code permits tax-free earnings for

.the pension reserves of municipalities. This is approved

by the Florida Legislature which has exempted pension trusts

from the rule against perpetuities and the rule against ac-

cumulations.20 Employer contributions are not taxable to

.employees until they are received, and then usually under

favorable tax treatment. Employee contributions are deducted

from benefits in arriving at taxable pension income.


Summary

As has clearly been demonstrated, the best way to take

care of aged employees is to establish a pension plan. The

pension plan is the most practical, humanitarian and economic

plan to retire municipal employees who have devoted long

periods of service to their employer. Likewise, existing

Florida and Federal Legislation encourages this establishment.






The Florida Statutes concerning police officers and firemen

have provided a basic impetus toward establishment of a

plan to take care of all municipal employees. Moreover,

Federal OASDI legislation adds still further advantages for

the establishment of such a plan. Equally important is the

Federal Tax Policy which encourages the employer to finance

pension plans to the advantage of both employer and employee.

The need for a pension plan has been clearly shown, so we

will turn next to the actual pension ordinance suggested for

municipal implementation in Florida.











NOTES


Merton C. Bernstein, The Future of Private Pensions (The
Free Press of Glencoe, New York, 1964), p. 194.

2Paul P. Harbrecht, Pension Funds and Economic Power (The
Twentieth Century Fund, New York, 1959), P. 3.

3Bernstein, op. cit., p. 10.

Pension Plans and Trusts (Prentice-Hall, Inc., Englewood
Cliffs, New Jersey, March 5, 1965), Vol. XXI, No. 4, pp.
1572-1573.

5john I. Saks, "The Older Worker-II; Status in the Labor
Market," Monthly Labor Review (January, 1957), p. 20.

6Harbrecht, op. cit., pp. 9-10.

7S. S. Huebner and Kenneth Black, Jr., Life Inurance (Apple-
ton-Century-Crofts, New York, 1964), 6th Edition, p. 514.

8William M. Howard, "Retirement Plans for Police Officers
and Firemen in Florida," Economic Leaflets (University of
Florida, Gainesville, August, 1960), Vol. XIX, No. 8.

Interested readers will find an excellent summation of this
entire area in the above booklet and also in:

William M. Howard, "Retirement Plans for Small Municipali-
ties," Economic Leaflets (University of Florida, Gainesville,
June, 1958), Vol. XVII, No. 6.

9Broward Williams, "Report to the 1965 Legislature," The
Municipal Fireman's Pension Trust Fund (State Treasurer's
Office, Tallahassee), First Biennial Report 1963-1964, p. 1..

10Broward Williams, "Report to the 1965 Legislature," The
Municipal Police Officers' Retirement Trust Fund (State
Treasurer's Office, Tallahassee), Third Biennial Report
1963-1964, p. 1.







11Securities and Exchange Commission, Survey of Corporate
pension Funds, 1951-1954 (October, 1956), p. 1.

12
Bernstein, op, _it., p. 178.

13Huebner and Black, op. cit., p. 515.

14Harbrecht, np_._c.Lt., P. 95. Citing: AFL, "Pension Plans
Under Collective Bargaining, A Reference Guide for Trade
Unions," (no date), p. 86.

15Howard, Vol. XVII, op, cit.

16Howard, Vol. XVII, op. cit.

7Harbrecht, op. cit., p. 132.
18Dan M. McGill, Penslons: Problems and Tr_.As (Richard D.
Irwin, Inc., Homewood, Illinois, 1955), P. 76.

19Pension Plans and Trusts (January 22, 1965), loc. cit.,
p. 1511.

20Pension and Profit Sharinr Service (Prentice-Hall, Inc.,
Englewood Cliffs, New Jersey, 1957), Paragraph 6206.












CHAPTER II


A MODEL PENSION PLAN ORDINANCE FOR
FLORIDA MUNICIPALITIES

AN ORDINANCE ESTABLISHING A RETIREMENT AND PENSION
PLAN FOR EMPLOYEES OF THE CITY OF ANYTOWN, ANY COUNTY,
FLORIDA; PROVIDING FOR ITS ADMINISTRATION AND OTHER MATTERS
RELATING THERETO.


I INDEX

Page
Article 1. Definitions. . . . . . . . 34

Article 2. Establishment of the System. . . . 39

Article 3. Membership and Service . . . . . 39

3.1: Original Members . . . . . . 39
3.2: New Members. . . . . . . 39
3.3: Creditable Service . . . . . .. 39
3.4: Service Before the Effective Date of
the Plan . . . . . . . 39
3.5: Service of Policemen and Firemen Before
the Effective Date of the Plan . . . 40

Article 4: Contributions and Funding. . . . . 40

4.1: Cost of the Plan . . . . . . 40
4.2: City's Contribution. . . . . . 40
4.3: Gifts to the Fund. . . . . . . 40
4.4: Treasurer. . . . . . . . 40
4.5: Investment of the Fund . . . . . 41

Article 5. Retirement and Retirement Benefits . . 41

5.1: Normal Retirement. . . . . . 41
5.1(a): General Employees . . . . 41
5.1(b): Policemen and Firemen . . . 41
5.2: Pension Payments . . . . . . 42
5.3: Delayed Retirement . . . . . . 42
5.4: Retirement Prior to Normal Retirement
Date . . . . . . . . 43









5.5: Termination of Service Prior to Normal
Retirement. . . . . . . .
5.6: Death Before Retirement Date. . .
5.7: Death After Letirement Date . . .
5.8: hetirenent Annuity Option . . .
5.9: Social Security Option. . . . .
5.10: Member Records; Status Statements .
5.11: Benefits Unassignable and not Subject
Process . . . . . . . .
5.12: Errors, Corrections and Adjustments .
5.13: No Interest in the Fund . . . .
5.14: Payments in Case of Legal or Other
Disability. . . . . . . .


Article 6.

6.1:
6.2:
6.3:


Article 7:

7.1:
7.2:
7.3:
7.4:
7.5:
7.6:
7.7:
7.8:
7.9:
7.10:
7.11:
7.12:

7.13:
7.14:
7.15:

7.16:
7.17:
7.18:
7.19:

Article 8.


8.1:
8.2:


Leaves of Absence and Military Service.

Leaves of Absence . . . . . .
Military and Belated Service. . . .
Re-Employment; No Leave of Absence or
Military Service. . . . . . .


Administration of the Plan. . .

General Supervision . . . .
Compensation of the Commission. .
Meetings of the Commission. . .
Administrative Regulations. . .
Interpretation of the Plan. . .
Agents and Employees. . . .
Other Powers and Duties . . .
Secretary of the Council. . .
Duties of the Secretary . . .
Written Records . . . . .
Authority of Commission . . .
Annual Reports by the Trustee or
Insurance Company . . . .
Actuary . . . . . . .
Adoption of Tables. . . . .
Responsibility of Members and
Beneficiaries . . . ..
Interest on Delayed Payments. .
Personal Liability. . . . .


. . . 48


Small Annuities Lump Sum Payments .
Filing Defined. . . . . . .

Future Changes in the Operation of
the Plan. . . . . . . . .

General . . . . . . . .
Termination of Plan and Distribution of
Fund . . . . . . .. .


Page


. .





to
* .
. .
. .


. 46


* 0


* .
* .
* .







Page
Article 9. Protection Against Fraud and Deceit .. ... 54

9.1: Violations and Punishment. . . . . 54

Article 10. Amendment. . . . . . . . 55

10.1: Power to Amend . . . . . . . 55

Article 11. Separability and Construction. . . . 55

Article 12. Repeal of Conflicting Ordinances . . . 55

Article 13. Effective Date . . . . . 55



WHEREAS, The City Commission of the City of Anytown,

Florida, acknowledges that there are municipal employees who

have faithfully served the City, will reach the age of re-

tirement because of advanced age, and are deserving of re-

tirement pay:

WHEREAS, The Commission has determined that the City

will be better able, at prevailing wage scale to retain the

services of day laborers, as well as office and field em-

ployees and firemen and policemen if some provision is made

for a pension upon retirement at stated ages; and

WEHERAS, It is believed to be in the best interests of

the City to create a retirement and pension plan for all em-

ployees of the City; now, therefore,


THE CITY OF ANYTOWN DOES ORDAIN:


ARTICLE 1. DEFINITIONS

The following words and phrases, as used in this Ordi-

nance, unless a different meaning is plainly required by the

context, shall have the following meanings, and the same and







similar terms when used in connection with any Civil Service

System or any other ordinance of the City of Anytown shall

not necessarily apply to the members of the retirement system

hereby created except when specifically adopted.

1.1 Actuarial Equivalent: A benefit of equal value or

equal cost when computed on the basis of such interest rates,

mortality, and other actuarial tables as are in effect under

the Plan.

1.2 Annuity: Annual payments for life to be paid in

equal monthly installments on the last day of the month in

which the same accrue. Such payments shall be made on a calen-

dar month basis and the payment for any month may be prorated

if appropriate.

1.3 Annual Earnings: Gross earnings received by the

employee as compensation for services to the City, including

overtime pay. Bonuses shall be excluded.

1.4 Beneficiary: Any person in receipt of, or entitled

to, an annuity, retirement allowance, or other benefit as

provided by this Ordinance.

1.4 (a) Board of Trustees: For the purpose of this

Ordinance, Boa:rd of Trustees shall be construed to mean the

City Commission.

1.5 Charter: The Charter of the City of Anytown,

Florida, as amended.

1.6 City,: The City of Anytown, Florida.

1.7 City's Contribution: The annual contribution needed

to fund actuarially the liability for annuities credited to






employees on the basis of actuarial methods and assumptions

approved by the Commission.

1.8 Commission: City Commission of the City of Anytown.

1.9 Creditable Service: Service in the employment of

the City of Anytown for which credit is allowed under the terms

of this Ordinance. Such service shall be computed to the nearest

whole month of completed service but not including any frac-

tional parts of a month.

1.10 Effective Date of the Plan: The date on which the

operation of the Plan is to commence for the purpose of de-

termining eligibility, benefits and related matters, which

is hereby fixed as the first day of January, 1968.

1.11 Employee: All persons employed by the City and

so classified under rules and regulations and personnel re-

cords of the City, including probationall" or permanent em-

ployees. Any appointed officer shall only be qualified under

this Plan under one office and that office being the one from

which he receives the largest annual salary, compensation or

remuneration. Independent contractors are excluded. Part-

time employees are excluded.

1.12 Fund or Pension Fund: All sums of money paid into

the Plan by the City, and all gifts and contributions to the

Fund, accepted from other sources, together with earnings and

appreciation of the same, less disbursements made from said

money, in accordance with the Plan, or less any losses or de-

preciation, of asset value.

1.13 Gender: The masculine pronoun shall include the

feminine pronoun.







1.14 General Employee: A general employee shall in-

clude all employees as defined in 1.11 herein, other than

policemen and firemen.

1.15 Member: Any person employed by the City who is

included in the membership of the Plan as either an original

member or a new member. However, a member shall bc limited

and restricted to the definition of employee.

1.16 MJembershin Service: Service rendered as a full-

time permanent employee since last becoming a member of the

Plan. Such service shall be computed to the nearest full

month of completed service but not including any additional

fractional parts of a month.

1.17 LJew Member: Any permanent employee who becomes

a member of the Plan after the effective date of the Plan.

1.18 Normal Retirement Date: The normal retirement

date of a member shall be his normal retirement date as

determined in accordance with the terms of the Plan.

1.19 Original Member: Any permanent employee of the

City who becomes a member as of the effective date of the

Plan.

1.20 Past Service: Service rendered as a full-time

permanent employee from January 1, 1960 to the effective date

of the Plan.

1.21 Permanent Employee: An employee who has com-

pleted his probationary period, been approved for permanent

status by the department head under whom he is employed, or

the City Commission, if approved by it, and has been certified







by the City Clerk or City Manager as a permanent employee,

or according to the personnel records of the City pertaining

to such employee. Certification or approval for permanent

status shall be subject to the rules of the career service

system of the City of Anytown.

1.22 Plan, Pension Plan or Emoloyees' Pension Plan:

The system of retirement benefits provided under this Ordi-

nance.

1.23 Plan Year: A period of twelve consecutive months

measured from the effective date of the Plan, or from any

anniversary thereof.

1.24 Retirement: Withdrawal from active employment

by the City with retirement income granted under the pro-

visions of this Plan.

1.25 Retirement Annuity Option: An optional form of

retirement annuity as described in Section 5.8.

1.26 Retirement Income: Annual payments for life

payable in monthly installments, or the actuarial equivalent

paid in lieu thereof, in accordance with the Plan. It is

contemplated that separate actuarial tables may be used for

male and female employees to reflect the different life

expectancies.

1.27 Social Security Option: An optional forrf of re-

tirement annuity as described in Section 5.9.

1.28 Treasurer: The Treasurer of the Plan is the City

Finance Officer.







1.29 Truste.: Any Bank having trust powers which has

been designated as Trustee of the Pension Fund by the Com-

mission.

ARTICLE 2. ESTABLISHM- ET OF THE SYSTEM

2.1 A pension and retirement system for full-time per-

manent employees in the service of the City of Anytown,

Florida, is hereby established to provide retirement benefits

as provided by this Ordinance. It shall be known as the

EMPLOYEES' PENSION PLAN OF THE CITY OF ANYTOWN, FLORIDA.

ARTICLE I. MEMBERSHIP AND SERVICE

3.1 Original Members: All full-time, permanent City

Employees who had not reached age sixty (60) when originally

employed by the City.

3.2 New Members: New, full-time, permanent City Em-

ployees will become eligible to participate in the Plan on

the first day of the month following, or coinciding with the

date of their employment.

3.3 Creditable Service: Creditable Service for retire-

ment for the purpose of calculating benefits shall consist of

the membership service rendered by the employee since he last

became a member, plus Past Service rendered continuously since

the employee's last date of employment, to his normal retire-

ment date. Any employee will be given credit for service to

the City starting January 1, 1960, or his date of employment,

whichever is later.

3.4 Service Before the Effective Date of the Plan: No

credit will be given general employees for service to the City

before January 1, 1960.







ARTICLE 4. CONTRIBUTIONS AND FUNDING

4.1 Cost of the Plan: The cost of the Plan will be

borne entirely by the City and by State remittances to

finance retirement of firemen and policemen in accordance

with Chapters 175 and 185 of the Florida Statutes. Employees

will not contribute to the cost of the Plan.

4.2 City's Contribution: The City shall pay into the

Fund amounts required to provide the benefits under the Plan,

as shall be determined by an actuarial investigation as

provided in Article 7.

4.3 Gifts to the Fund: The City may accept gifts, de-

vises, bequests, or appropriations to or for the Fund from

any source, but shall have the right to reject the same if

they are so conditioned as to conflict with the Charter or

this Ordinance, or to make the administration of the same

unreasonably difficult.

4.4 Treasurer: Gifts, bequests, devises, or appropria-

-tions to the Fund shall be received by the Treasurer, who

shall be the Treasurer for the Council. The Treasurer shall

be liable for the safekeeping of funds received, and appropri-

ated by the Commission under his bond. The Treasurer shall

promptly deposit funds in banks or savings and loan associa-

tions designated by the Commission, or transfer to the

Trustee or the Insurance Company all funds received and funds

appropriated by the City Commission, including those funds

received by virtue of the provisions of Chapters 175 and 185

of the Florida Statutes.







4.5 -Investment of the Fund: All monies paid into and

held by the Pension Fund shall be promptly deposited with

the Trustee or the Insurance Company for the benefit of the

Pension Fund according to the terms of a Trust Agreement or

contract to be negotiated with the Trustee or the Insurance

Company.

ARTICLE 5. RETIREMENT AND RETIREMENT BENEFITS

5.1 Normal Retirement: An employee will normally

retire on the first day of the month following (or coinciding

with) the attainment of the ages shown in the following sched-

ule:

5.1 (a) General Emolovees:

Age at Entry into the Plan Retirement Age

55 and under 65
56 66
57 67
58 68
59 69
60 and over 70

5.1 (b) Policemen and Firemen:

Age at Entry into the Plan Retirement Age

50 and under 60
51 61
52 62
53 63
54 64
55 to 60 65
In the event of such normal retirement the retiring

employee shall be entitled to and shall be paid an annuity

payable monthly beginning with the month of retirement and

continuing until death. The amount of annuity to which a

retiring employee will be entitled will be calculated as

follows:






(a) The monthly pension for general employees is $2.00

for every year of credit service.

(b) The monthly pension for policemen and firemen is

1 percent of average monthly earnings, during the last ten

years of service, for every year of credited service.

5.2 Pension Payments: Pension payments will be made

monthly beginning with the first month of retirement and con-

tinuing until death, unless a retirement annuity option has

been elected in which case payments will be made in accordance

with the option.

5.3 Delayed Retirement: An employee who does not desire

to retire on his normal retirement date may make written ap-

plication to the City Clerk or City Manager for retention in

regular or part-time employment subsequent to the time of

normal retirement showing that the same is in the best in-

terests of the City by reason of his special knowledge, rela-

tive efficiency, difficulty of replacement, or other similar

or extraordinary factors. Upon the approval of the City Nana-

ger the employee may be retained by the City for a period not

to exceed one year following his date of normal retirement.

Nevertheless, similar additional applications for renewal of

retention in employment, may be made under the same procedure

in each of four successive years, or until the employee

reaches age 70, whichever is earlier. In the event of such

deferred retirement, the employee, upon retirement, shall re-

ceive the same amount of monthly retirement pension that he

would have received had he retired on his normal retirement

date.







5.4 Retirement Prior to Normal Retirement Date: A

general employee who has twenty years of credited service and

has attained his 60th birthday may make written application

for early retirement to the City Manager. A fireman or police-

man who has twenty years of credited service and has attained

his 55th birthday may make written application to the City

Manager for early retirement. With approval of the City Mana-

ger the employee may retire on the first day of any month

following, or coinciding with, his 60th or 55th birthday,

'whichever shall be applicable as stated above. In such event,

he shall be entitled to and shall be paid an annuity equal in

amount to the annuity computed on the basis of normal retire-

ment, except that the amount so computed shall be reduced by

five-twelfths of one percent of said amount for each month

that early retirement precedes his 65th birthday for general

employees or his 60th birthday for policemen and firemen.

5.5 Termination of Service Prior to Normal Retirement:

(a) Less than 20 years of credited service or

less than age 55: If a member of the Plan dies or ceases to

be a permanent employee prior to his normal retirement date

and has less than 20 years of credited service, or has not

yet attained his 55th birthday in the case of general employees,

or his 50th -birthday in the case of policemen and firemen,

all rights of the employee in the pension plan will terminate.

(b). Twenty years or more of credited service and

gge_ or more: If any member of the Plan terminates employ-
ment with the City prior to his normal retirement date and






has completed 20 years or more of credited service and has

attained the age of 55 years or greater in the case of general

employees, or 50 years or greater in the case of policemen and

firemen, the pension credit earned -at termination will be

fully credited to the employee. He may, when he reaches his

normal retirement date, make written application to the City

Manager for the pension earned, and in such an event, he

shall be entitled to, and he shall be paid, an annuity com-

puted on the same basis as that of other employees who retire

on their normal retirement date.

5.6 Death Before Retirement Date: The interest of an

employee who dies before his normal retirement date will

cease and no death benefit under the Plan will be paid to his

estate or to the beneficiary of such employee.

5.7 Death After Retirement Date: If an employee dies

after retirement no additional payments will be made unless

a retirement annuity option has been elected in which case

*payments will be made in accordance with the option.

5.8 Retirement Annuity Option: The member may elect to

receive annuity benefits payable under the Plan with the ap-

proval of the Commission in the form of a joint and survivor

annuity instead of the normal annuity form, which shall be

the actuarial equivalent of the annuity which he would normally

receive. Under the joint and survivor annuity, two-thirds

of the retirement annuity income continues to the surviving

contingent annuitant, until his or her death. The joint and

survivor annuity election must be requested by the employee

at least three years prior to date of retirement, including
*N







retirement prior to normal retirement date, and shall be sub-

ject to approval or disapproval by the Commission at the time

of election.

The election of a joint and survivor annuity shall be

deemed to be automatically cancelled in the event of the death

of either proposed annuitant prior to the member's actual re-

tirement.

5.9 Social Security Ontion: An employee who retires

before he is entitled to receive monthly benefits under the

Federal Social Security System may elect to have his retire-

ment annuity benefits increased before his Social Security

benefits begin, and decreased thereafter to obtain, insofar

as practical, a level total yearly retirement income from

the two sources. The amounts he will receive both before and

after he becomes eligible for Social Security payments shall

be the actuarial equivalent of the benefits to which he would

have been entitled had he not selected this option.

5.10 Member Records;, Status Statements: A separate

record of account shall be maintained for each member, which

among other things, shall show his service record, his exact

age, any designation of alternate or contingent beneficiaries,

together with any such information as is necessary for an

active and comprehensive determination of his status under

this Plan.

5.11 DeBefJits Unassignable and not Subject to Process:

The right of any member or any beneficiary to any benefits

under the Plan or any other right accrued or accruing to any







. persons under the provisions of this Ordinance shall not be

subject to execution, garnishment, attachment, the operation

of any bankruptcy or insolvency law or any other process of

law whatever, and shall.not be subject to assignment, pledge

or hypothecation unless expressly authorized in this Ordinance.

5.12 Errors, Corrections and Adjustments: Should any

change or error in the records of the Plan be discovered,

or any error in any calculation be made resulting in any mem-

ber or beneficiary receiving from the Plan more or less than

he was entitled to receive, the Council shall have the power

to correct such error, and as far as possible to adjust the

payments thereafter to be made in such a manner that the

actuarially equivalent of the benefit to which such member

or beneficiary was correctly entitled, be paid.

5.13 No Interest in the Fund: No member, employee,

beneficiary or other persons shall have any interest in, or

right in, or to the Fund or any part thereof, or any assets

comprising the same, except only as to the extent expressed

and provided in this Ordinance.

5.14 Payments in Case of Legal or Other Disability:

Whenever and/or as often as a person entitled to payments

hereunder shall be under legal disability, or, in the sole

judgment of the Commission, shall otherwise be unable to

apply such payments to his best interest and advantage, the

Commission in the exercise of its discretion may direct that

all or any portion of the benefits of such members payable

in any one or more of the following ways:







(1) Directly to such person;

(2) To his legal guardian or conservator;

(3) To his spouse, or to any person to be expended for

his benefit.

The decision of the Commission shall, in each case, be

final and binding on all persons including the affected mem-

ber of the Plan.

ARTICLE 6. LEAVES OF ABSENCE AND MITLIT&RY SERVICE

6.1 Leaves of Absence: Any member who has been granted

a leave of absence (except for vacations, extended vacations,

sick leave, extended sick leave, or leaves of absence of

benefit to the City and approved by the City Manager) shall

be allowed service credit earned prior to the start of leaves

of absence, and with service credit to resume upon return to

employment.

6.2 Military and Related Service: When any member is

inducted or enlists into any of the Armed Forces of the

United States, or enlists in any reserve component, enlists

in the United States Coast Guard, or in any other reserve

component, or enters upon active duty in the Armed Forces

of the United States, the United States Coast Guard, or the

United States Public Health Service in response to an order

or call to active duty, (hereinafter referred to as "military

or related service"), and is subsequently re-employed by the

City within 90 days after release from any such service, shall

again become a member of the Plan, and shall be given service

credit for the service before entering military or related







service, and if approved by the Commission for the period of

time spent in military or related service as well.

6.3 Re-Emnloyment; No Leave of Absence or Military

Service: When any former employee -of the City is re-employed,

and said employee has not been granted a leave of absence,

he may receive credit for prior service if and only if (1)

the period of prior employment was of at least one year's

duration, (2) the City Manager recommends that he be given

credit for prior service, and (3) the Commission approved

said recommendation.

ARTICLE 7. ADMINISTRATION OF THE PLAN

7.1 General Supervision: The general supervision of

the administration of the Plan shall be by the Commission.

7.2 Com-ensti.on of the Commission: The members of

the Commission shall serve without compensation for their

services.

7.3 Meetings of the Commission: This Plan or any

-matter herein may be considered and disposed of at any Com-

mission meeting. A majority of the membership shall constitute

a quorum and all decisions, acts, and resolutions of the Com-

mission shall be by affirmative vote of at least three members.

7.4 Administrative Regulations: The Commission by

resolution may promulgate written rules and regulations not

in conflict with the expressed terms of this Ordinance or

the Charter to cover the operation of any phase or part of

the Plan as provided by this Ordinance. Copies of such

rules and regulations shall be furnished to any member of







the Plan upon request and at least one copy thereof shall

be kept available in the office of the City Clerk for examina-

tion by any interested persons at any time during ordinary

business hours. Otherwise, a copy 'of this Ordinance shall

fully meet the provisions herein.

7.5 Interpretation of the Plan: The Commission has

the power to construe all terms, rules, conditions and

limitations of the Plan, and its construction made in good

faith shall be final and conclusive upon all parties' interests.

7.6 Agents and Employees: The Commission shall have

the power to select, employ and compensate, or cause to com-

pensate from time to time such consultants, actuaries, ac-

countants, attorneys, investment counsel and other agents

and employees as they may deem necessary and advisable in the

proper and efficient administration of the Plan.

7.7 Other Powers and Duties: The powers and duties of

the Commission or of any other persons as set out herein are

*not intended to be complete or exclusive but each such body

or persons shall have such powers and duties as are reason-

ably implied under the terms of this Ordinance. Where not

in conflict with this Ordinance, or the Charter, the Trust

Agreement or contract entered into with the Insurance Com-

pany, shall govern.

7.8 Secretary of the Council: The City Clerk or Deputy

Clerk shall be Secretary to the Commission under this Plan.

7.9 Duties of the Secretary: It shall be the duty of

the Secretary to keep accurate minutes and records of the




50

acts of the Commission under this Plan separate and apart

from the regular minutes of City Commission meetings. This

provision is made for the express purpose of having all pro-

ceedings in connection with this Plan in one set of books,

thereby saving going through all of the minutes of the

various Commission meetings. They shall be available to the

public, city officials, and employees under this Plan at all

times.

7.10 Iritten Records: All notices, elections, designa-

tions and changes of beneficiaries and similar writings per-

taining to the operation of the Plan shall be made and

preserved in writing on such forms as the Commission may direct.

The secretary shall maintain all records in segregated files

pertaining to the Plan and they shall not be intermingled

with other files of the City. Whenever there .is any notice,

election, designation, complaint, ruling, or other written

proceedings relating to a particular employee, the Secretary

shall furnish the Trustee or the Insurance Company, when

necessary, with a copy of same, as well as the employee.

7.11 Authority_ of Commission: The Commission shall

have authority to direct that pension plan funds be deposited

with banks and/or savings and loan associations or invested

in securities, to negotiate appropriate contracts with a

bank having trust powers, or an insurance company or companies,

under the terms of which trust agreements or contracts funds

will be deposited with the bank, company or companies, as

determined by the Commission and annuities may be provided








for members and their beneficiaries in accordance with the

terms of this Plan. The Commission may terminate such trust

agreements or contracts or negotiate amendments as it sees

fit. Any trust agreement shall be 'for investment purposes

only and the Commission acting as a Board of Trustees shall

at all times maintain administration of the funds.

7.12 Annual Renorts by the Trustee or Insurance Comoany:

The Trustee or Insurance Company or Companies with which a

trust agreement or contract or contracts are entered into

for the administration of the Plan shall submit a statement

of the condition of the funds on deposit to the credit of

the Plan at least once yearly, and may be required to supply

copies of such statements to an actuarial consultant desig-

nated by the Commission. The original shall be retained

among the records of the Secretary of the Commission.

7.13 Actuary: The Commission shall employ an actuary

to review the operation of the Plan at intervals of not more

than two years, and to make his recommendations to the Com-

mission as to the actuarial solvency of the Plan, the amount

of the City's contributions to the Fund which in his opinion

is necessary to be made for the current operation of the Plan,

what benefits the Plan can afford to pay on the basis of ac-

cumulated contributions to the Plan, and current rates of con-

tribution, and such other information as the Commission may

require. The Actuary's report shall be submitted in writing

and copies thereof shall be available to members of the Plan

upon request. The Commission may also retain said Actuary







or some other actuary as a consultant, and provide for com-

pensation for services.

7.14 Adoption of Tables: In making any actuarial

computation provided in this Ordinance, the tables, charts

and other statistical information shall be selected by the

Commission from standard sources in common use by other

annuity and pension plans, including but not limited to

those operated by governmental bodies in the United States

of America or by the United States Internal Revenue Service.

7.15 Resoonsibilities of Members and Beneficiaries:

Each member or beneficiary or other interested member shall

be responsible for advising the Commission of his current

mailing address, and promptly advising the Commission re-

lating to any error, in whosoever's favor, in connection

with the payment of benefit or any other payment under or

in connection with the Plan.

7.16 Interest on Delayed Payments: Pension payments,

*although not promptly paid for any reason, and any other

payments to be made out of the Fund, although not paid promptly

for any reason, shall not bear interest unless so ordered by

the Commission, who shall have discretion to fix the rate

and calculate any such interest, and in such event, the interest

to be paid shall not exceed the then current rate of interest

being returned on the funds on deposit with the Trustee or

the Insurance Company, or other financial institution.

7.17 Personal Liability: Each member of the Commission

shall use ordinary care and diligence in the performance of






his duties and shall not be liable for any loss unless re-

sulting from his own gross negligence, or his willful mis-

conduct; nor shall such members be personally liable upon or

with respect to any agreement, act, transaction or omission

executed, committed or suffered to be committed himself as

one or a member of said body or by any other member, agent,

representative, .or employee of any body; moreover said bodies

and members and agents thereof shall each be fully protected

in relying on the advice of the City Attorney or his assis-

*tants, or upon any other attorney employed by the City, or

said bodies, or either of them insofar as legal matters are

concerned, or any accountant similarly employed insofar as

accounting matters are concerned, and of any actuaries simi-

larly employed so far as actuarial matters are concerned.

Any person having any claim under the Plan shall look solely

to the assets of the Fund for the satisfaction of such claims.

7.18 Small Annuities Lump Sum Payments: Whenever any

retirement annuities shall be less than $10.00 per month, the

Commission may elect to have payments made quarterly. If

the annuity payable at quarterly intervals shall be less than
.10.00, the Commission may elect to pay the commuted value

of the same, calculated at regular interest, in one lump sum.

Such election shall be made within six months after the mem-

ber's retirement unless he consents in writing to a subse-

quent election by the Commission under this Section.

7.19 Filin Defined: Where'any notice, election or

other instrument is required or permitted by this Ordinance

to be filed with the Commission, the same may be filed with


its Secretary.




54-5

ARTICLE 8. FUTURE CHANGES IN THE OPERATION OF THE PLAN

8.1 General: It is contemplated, and all original and

new members of the Plan shall be deemed to have notice, that

the City Commission of this City may in the future decide

that it is in the best interests of the City and the members

of the Plan to modify or terminate Trust Agreements or con-

tracts entered into with an insurance company or companies,

to exercise options available to the City under the terms of

such Trust Agreements or contracts, to select another in-

surance company, trust, or other financial institution, as

the depository for pension funds.

8.2 Termination of Plan and Distribution of Fund: The

provisions of Florida Statute 185.37 pertaining to termina-

tion of the Plan and distribution of the Fund are hereby

incorporated by reference as the same would apply to the

rights of policemen and firemen under the terms of this Plan.

ARTICLE 9. PROTECTION AGAINST FRAUD AND DECEIT

9.1 Violations and Punishment: Whosoever with intent

to deceive shall make or cause to be made any statement, re-

port, certificate, election, notice, claim or other instru-

ment, authorized or required under this Chapter, whether of

the enumerated classes or otherwise, which shall be untrue,

or who shall falsely or cause to commit to be falsified any

record comprising any part of the operation or administration

of the Plan contemplated by this Ordinance, shall be as follows:

Punished by a fine, not exceeding '300.00, or by imprisonment

not exceeding 90 days, or by both such fine and imprisonment.







Any. such violation shall also be punishable as provided under

the laws of the State of Florida.

ARTICLE 10. AEFND?,E.NT

10.1 Power to Amend: The City Commission shall have

continuous power to amend this Ordinance as provided by its

Charter.

ARTICLE 11. SEPARABILITY AND CONSTRUCTION

11.1 In the event any section, sub-section, sentence,

clause or phrase of this Ordinance shall be held to be in-

valid or unconstitutional such adjudication shall not in any

manner affect the remaining portions of the Ordinance, which

shall be, and remain in full force and effect as fully as

if the portions so adjudicated invalid are unconstitutional

were not originally a part thereof. The articles and sec-

tion headings included in this Ordinance shall not be con-

strued to limit the text included hereunder.

ARTICLE 12. .REPEAL OF CONFLICTING ORDINANCES

12.1 All ordinances and parts of ordinances in conflict

herewith are hereby repealed to the extent of such conflict.

ARTICLE 13. EFFECTIVE DATE

13.1 This Ordinance shall take effect in accordance with

law and the Charter of the City of Anytown, Florida, as amended,

and shall become effective immediately upon its passage and

approval by the Commission.


Passed and adopted by the City Commission of the City of

Anytown, Florida, on the 4 day of .ay 1968.












Mayor


ATTEST:


City Clerk













CHAPTER III


DEFINITIONS, EXPLANATION OF RELATED PROVISIONS
AND ESTABLISHMENT OF THE PENSION SYSTEM



The pension ordinance should give complete details of

the entire pension program. A pension plan that is properly

drawn at the beginning can save many administrative headaches

in the future. It is far better to cover all probable even-

tualities at the outset than to amend or improvise later to

meet a situation that is not covered in the original provisions

of the ordinance. Because eventualities may not be properly

covered, the ordinance should contain provisions permitting

the municipality to amend or even discontinue the plan if

necessary.

Florida law requires that an ordinance be preceded by

a brief description of its intent. This enables any interested

party to determine the nature and purpose of the ordinance by

reading the brief description rather than the entire ordinance.

The following paragraph briefly describes the pension ordinance:

An ordinance establishing a retirement and pension
plan for employees of the City -of Anytown, Any County,
Florida; Providing for its administration and other mat-
ters relating thereto.2


egf_.nition s

The language of the plan must be precise and exact in






its meaning. From a review of legal cases, we can conclude

that "the courts have consistently found that the language

of the plan is the controlling consideration in ascertaining

employee rights, as if the plan were a contract whose terms

were decided upon by equals dealing at arm's length."3

Towards this goal of precise language, the City Attorney

should be instrumental when drawing up the proper wording

of the ordinance. Every proper plan contains a list of terms

and their definitions which is included to prevent any mis-

understanding of the provisions of the pension program. Def-

initions may also be useful when they eliminate lengthy repet-

itive descriptions throughout the ordinance.

The list of definitions in the ordinance is preceded by

the following paragraph:

The following words and phrases, as used in this
Ordinance, unless a different meaning is plainly re-
quired by the context, shall have the following mean-
ings, and the same and similar terms when used in con-
nection with any Civil Service System or any other
ordinance of the City of Anytown shall not necessarily
apply to the members of the retirement system hereby
created except when specifically adopted.4

Actuarial Equivalent:

A benefit of equal value or equal cost when computed
on the basis of such interest rates, mortality, and other
actuarial tables as are in effect under the plan.

It is necessary to define this term in order to eliminate

any possible ambiguity in the meaning of Section 5.8, 5.9, and

5.12. These subsections of the model-ordinance permit employees

to elect an optional annuity form and state that these options

should be the "actuarial equivalent" of the annuity which he

would normally receive. If there were a possible alternative







interpretation, an employee might argue that he should be en-

titled to a greater amount of monthly annuity pEyments by the

selection of an optional annuity form than if determined by

an actuary.

This term is used in Sections 5.8, 5.9, and 5.12 of the

model pension ordinance.

5.8) With the approval of the commission, the member

may elect to receive his annuity benefits in the form of a

joint and survivor annuity instead of the normal annuity form.

The joint and survivor annuity shall be the "actuarial equiva-

lent" of the annuity which he would normally receive.

5.9) An employee who retires before he is entitled to

receive monthly social security p&.yments may elect to receive

a higher annuity before social security benefits begin, and

a decreased annuity after receipt of social security payments.

The reduced amount of retirement annuity plus social security

would, insofar as practical, be the same in amount as that pro-

vided prior to receipt of social security. The amounts he will

receive from the city both before and after he becomes eligible

for social security payments shall be the "actuarial equiva-

lent" of the benefits to which he would have been entitled had

he not selected this option.

5.12) Should any error in the records of the plan be

discovered, the Council shall have the power to correct such

error, and to adjust the payments thereafter to be made in

such a manner that the "actuarial equivalent" of the benefit

to which such member or beneficiary was correctly entitled,

be paid.







Annuity:

Annual payments for life to be paid in equal
monthly installments on the last day of the month
in which the same accrue. Such payments shall be
made on a calendar month basis and the payment for
any month may be prorated if appropriate.

It is necessary to define the term "annuity" because

the benefits payable for the lifetime of a retired employee

will vary according to occupation, creditable service, and

annual earnings.

This term is used in Sections 5.1, 5.4, 5.5(b), 5.8,

and 7.18 of the model pension ordinance.

5.1) When an employee retires he shall be entitled to

receive an "annuity" payable monthly beginning with the month

of retirement and continuing until death. The amount of the

"annuity" to which a retiring employee will be entitled is

calculated in subsection a and b of Section 5.1.

5.4) When an eligible employee retires prior to his

normal retirement date, he shall be entitled to and shall be

.paid an "annuity" that is less than the "annuity" which he

would have received at normal retirement.

5.5(b) A member who has attained a minimum age and has

completed 20 years or more of credit service may terminate his

employment with the city prior to his normal retirement date

and still receive an "annuity" when he reaches his normal re-

tirement date.

5.8) A member may elect to receive the benefits payable

under the plan in the form of a joint and survivor "annuity"

instead of the normal "annuity" form.







7.18) Whenever any retirement "annuity" shall be less

than .;10.00 per month, the commission may elect to have pay-

ments made quarterly. If the "annuity" payable at quarterly

intervals shall be less than $10.00, the Commission may elect

to pay the commuted value of the same, calculated at regular

interest, in one lump sum.

Annual Earnings:

Gross earnings received by the employee as com-
pensation for services to the City, including overtime
pay. Bonuses shall be excluded.

It is necessary to define this term because pension bene-

fits for policemen and firemen are based on earnings. Because

the pension is computed on average monthly earnings, it is

necessary to define annual earnings so that we will have a

basis for determining pension benefits. For example, if the

term is not defined, an employee might claim that his pension

should be based on his regular compensation, plus any bonuses

received. This definition limits the salary scale to be used

.when calculating the costs and liabilities of the retirement

system.

This term is used in Section 5.16 of the model pension

ordinance.

5.1(b) The monthly pension for policemen and firemen

is 1 percent of average monthly "earnings," during the last

ten years of service, for every year of credited service.

Beneficiary:

Any person in receipt of, or entitled to, an
annuity, retirement allowance, or other benefit as
provided by this Ordinance.







This definition clarifies the person we are referring

to when discussing the plan benefits.

The term is used in Sections 5.6, 5.10, 5.11, 5.12,

5.13, 7.10, and 7.15 of the model'pension ordinance.

5.6) If an employee dies before his normal retirement

date, no death benefit under the plan will be paid to his

estate or to the "beneficiary" of such employee.

5.10) A separate record of account shall be maintained

for each member, which among other things, shall show any

designation of alternate or contingent "beneficiaries."

5.12) Should any change or error in the records of the

plan be discovered resulting in any member or "beneficiary"

receiving from the plan more or less than he was entitled to

receive, the Council shall have the power to correct such error.

5.13) Except as provided in this Ordinance, no member,

employee, "beneficiary" or other persons shall have any in-

terest in the Fund.

7.10) All designations and changes of "beneficiaries"

shall be made and preserved in writing on such forms as the

Commission may direct.

7.15) Each member or "beneficiary" shall be responsible

for advising the Commission of his current mailing address,

and shall promptly advise the Commission of any error in con-

nection with any payment under the Plan.

Charter:

The Charter of the City of Anytown, Florida, as
amended.

The use of this definition saves lengthy descriptions


within the ordinance.







4.3) The City shall have the right to reject gifts, de-

vises, bequests, or appropriations if they are so conditioned

as to conflict with the "Charter."

7.4) The Commission may promulgate written rules and

regulations not in conflict with the "Charter" to cover the

operation of any phase or part of the Plan.

10.1) The City Commission shall have continuous power

to amend this Ordinance as provided by its "Charter."

13.1) This Ordinance shall take effect in accordance

with law and the "Charter" of the City of Anytown.



The City of Anytown, Florida.

The use of this definition eliminates the complete des-

cription of the City of Anytown.

This term is used in Sections 3.1, 3.3, 3.4, 3.5, 4.1,

4.2, 4.3, 5.3, 5.5(b), 6.1, 6.2, 6.3, 7.10, and 8.1 of the

model pension ordinance.

3.1) Original members shall be all full-time, permanent

City Employees who had not reached age sixty when originally

employed by the "City."

3.3) Any employee will be given credit for service to

the "City" starting January 1, 1960, or his date of employ-

ment, whichever is later.

3.4) No credit will be given general employees for ser-

vice to the "City" before January 1, 1960.

3.5) Policemen and Firemen will be credited with all

years of service to the "City."







4.1) The cost of the plan will be borne entirely by the

"City" and by State remittances to finance retirement of fire-

men and policemen in accordance with Chapters 175 and 185 of the

Florida Statutes.

,.2) The "City" shall pay into the Fund amounts required

to provide the benefits under the Plan.

4.3) The "City" may accept gifts, devises, bequests, or

appropriations to or for the fund from any source.

5.3) An employee may make Written application for delayed

retirement showing that retention in regular or part-time em-

ployment is in the best interests of the "City."

5.5(b) If any member of the Plan terminates employment

with the "City" prior to his normal retirement date and has

completed 20 years or more of credited service and has attained

a certain minimum age, the pension credit earned at termination

will be fully credited to the employee.

6.1) Any member who has been granted a leave of absence

(except for leaves of absence of benefit to the "City" and ap-

proved by the City Manager) shall be allowed service credit

earned prior to the start of leaves of absence, and with ser-

vice credit to resume upon return to employment.

6.2) When any member is inducted or enlists into any mili-

tary or related service, and is subsequently re-employed by the

"City" within 90 days after release from any such service, shall

again become a member of the Plan.

6.3) When any former employee of the "City" is re-employed,

and said employee has not been granted a leave of absence, he

may receive credit for prior service if he meets certain condi-

tions of this subsection.







7.10) The secretary shall maintain all records in segre-

gated files pertaining to the Plan and they shall not be inter-

mingled with other files of the "City."

8.1) It is contemplated, and all original and new mem-

bers of the Plan shall be deemed to have notice, that the City

Commission of this "City" may in the future decide that it

is in the best interests of the "City" and the members of

the Plan to modify or terminate Trust Agreements or contracts

entered into with an insurance company or companies, to exer-

cise options available to the "City" under the terms of such

Trust Agreements or contracts, to select another insurance com-

pany, trust, or other financial institution, as the depository

for pension funds.

City's Contribution:

The annual contribution needed to fund actuarially
the liability for annuities credited to employees on
the basis of actuarial methods and assumptions approved
by the Commission.

Insurance principles govern the operation of a pension

plan. It is necessary to comply with actuarial requirements;

therefore the annual rate of contribution has to be predeter-

mined at levels which will insure the accumulation of suffi-

cient reserves to meet the liabilities accruing under the

Plan.

This term is used in Sections 4.2, and 7.13 of the model

pension ordinance.

4.2) The City shall pay into the Fund amounts required

to provide the benefits under the Plan.







7.13) An actuary shall be employed by the Commission
and he shall recommend the amount of the "City's contributions"

to the fund which in his opinion is necessary for the current

operation of the Plan.

Commission:

City Commission of the City of Anytown.

The Commission is charged with the general administra-

tion and policy direction of the plan. The definition elimi-

nates use of the complete title of the City Commission within

the ordinance.

This term is used in Sections 4.4, 5.8, 5.14, 6.2, 7.1,

7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12,

7.13, 7.14, 7.15, 7.16, 7.17, 7.18, and 7.19 of the model

pension ordinance.

4.4) The Treasurer shall be liable for the safekeeping

of funds received, and appropriated by the "Commission" under

his bond.

5.8) The member may elect to receive annuity benefits

payable under the plan with the approval of the "Commission"

in the form of a joint and survivor annuity instead of the

normal annuity form.

5.14) In case of legal or other disability, the "Com-

mission" may direct that all or any portion of a member's

benefits be payable to someone other than the member. The

decision of the "Commission" shall be final and binding.

6.2) Under conditions of this subsection, a member shall

be given service credit for city service before entering mili-

tary or related service, and if approved by the "Commission"






for the period of time spent in military or related ser-

vice as well.

7.1) The general supervision of the administration

of the Plan shall be by the "Commission."

7.2) The members of the "Commission" shall serve with-

out compensation for their services.

7.3) This Plan or any matter herein may be considered

and disposed of at any "Commission" meeting, and resolutions

of the "Commission": shall be by affirmative vote of at least

three members.

7.4) The "Commission" by resolution may promulgate

written rules and regulations not in conflict with the ex-

pressed terms of this Ordinance or the Charter to cover the

operation of any phase or part of the Plan as provided by this

Ordinance.

7.5) The "Commission" has the power to interpret the

Plan, and its construction made in.good faith shall be final

and conclusive upon all parties' interests.

7.6) The "Commission" shall have the power to select,

employ and compensate such agents and employees as they may

deem necessary and advisable in the proper and efficient ad-

ministration of the Plan.

7.7) The powers and duties of the "Commission" as set

out herein are not intended to be complete or exclusive but

each such body or persons shall .have- such powers and duties

as are reasonably implied under the .terms of this Ordinance.

7.8) The Ciby Cleik shall be Secretary to the "Commission"

under this plan.







7.9) It shall be the duty of the Secretary to keep ac-

curate minutes and records of the acts of the "Commission"

under this Plan separate and apart from the regular minutes

of City Commission meetings.

7.10) All notices, elections, designations and changes

of beneficiaries and similar writings pertaining to the opera-

tion of the Plan shall be made and preserved in writing on

such forms as the "Cormmission" may direct.

7.11) The "Commission" shall have authority to direct

where pension plan funds be deposited or invested, and to

negotiate appropriate contracts with a bank-or an insurance

company. The "Commission" may terminate trust agreements or

contracts or negotiate amendments as it sees fit. The "Com-

mission" acting as a Board of Trustees shall at all times main-

tain administration of the funds.

7.12) The Trustee or Insurance Company or Companies with

which a trust agreement or contract or contracts are entered

-into for the administration of the Plan shall submit annual

reports which shall be retained among the records of the Secre-

tary of the "Commission."

7.13) The "Commission" shall employ an actuary to review

the operation of the Plan at intervals of not more than two

years, and to make his recommendations to the "Commission"' as

to the actuarial solvency of the Plan, and such other informa-

tion as the "Commission" may require. The "Commission" may:

retain the actuary as a consultant, and provide for compensa-

tion for services.






7.14) In making any actuarial computation provided in

this Ordinance, the tables, charts and other statistical

information shall be selected by the "Commission"' from stan-

dard sources in common use by other annuity and pension plans.

7.15) Each member or beneficiary or other interested

member shall be responsible for advising the "Commission"

of his current mailing address, and promptly advising the "Com-

mission" relating to any error in connection with the payment

of benefit under or in connection with the Plan.

7.16) Pension payments and any other payments to be

made out of the fund, although not paid promptly for any rea-

son, shall not bear interest unless so ordered by the "Com-

mission," who shall have discretion to fix the rate and cal-

culate any such interest.

7.17) Each member of the "Commission" shall use ordinary

care and diligence in the performance of his duties and shall

not be liable for any loss unless resulting from his own gross

negligence, or his willfull misconduct.

7.18) Whenever any retirement annuities shall be less

than 10.00 per month, the "Commission" may elect to have

payments made quarterly. If the annuity payable at quarterly

intervals shall be less than "10.00, the "Commission" may elect

to pay the commuted value of the same, calculated at regular

interest, in one lump sum.
7.19) Where any notice, election or other instrument is

required or permitted by this ordinance to be filed with the

"Commission," the same may be filed with its Secretary.




70

Creditable Service:

S Service in the employment of the City of Anytown
for which credit is allowed under the terms of this
Ordinance. Such service shall be computed to the
nearest whole month of completed service but not in-
cluding any fractional parts of a month.

Employee's retirement benefits are based upon their ser-

vice to the municipality. The conditions for retirement pre-

scribed in the model ordinance are the attainment of a certain

minimum age and the completion of a certain period of service.

It is important to clearly define employment that will be

credited for retirement so that both the employee and the

municipality can agree on computations of pension benefits.

This term is used in Sections 3.3, 5.1(a), 5.1(b), 5.4,

5.5(a), and 5.5(b) of the model pension ordinance.

3.3) "Creditable Service" for retirement for the pur-

pose of calculating benefits shall consist of the membership

service rendered by the employee since he last became a mem-

ber, plus Past Service subject to the limitations of this

section rendered continuously since the employee's last date

of employment, to his normal retirement date.

5.1(a) The monthly pension for general employees is

h2.00 for every year of "credited service."

5.1(b) The monthly pension for policemen and firemen

is 1 percent of average monthly earnings, during the last

ten years of service, for every year of "credited service."

5.4) A general employee who has twenty years of "cred-

ited service" and has attained his 60th birthday may make

written application for early retirement to the City Eanager.






A fireman or policeman who has twenty years of "credited ser-

vice" and has attained his 55th birthday may make written ap-

plication to the City Nanager for early retirement.

5.5(a) If a member of the Plan dies or ceases to be a

permanent employee prior to his normal retirement date and has

less than 20 years of "credited service," or has not yet at-

tained his 55th birthday in the case of general employees, or

his 50th birthday in the case of policemen and firemen, all

rights of the employee in the pension plan will terminate.

5.5(b) If any member of the Plan torninates, employment

with the City prior to his normal retirement date and has com-

pleted 20 years or more of "credited service" and has attained

the age of 55 years or greater in the case of general employees,

or 50 years or greater in the case of policemen and firemen, the

pension credit earned at termination will be fully credited to

the employee.

Effective Date of the Plan:

The date on which the operation of the Plan is
to commence for the purpose of determining eligibility,
benefits and related matters, which is hereby fixed as
the first day of January, 1968.

This definition fixes the date on which the operation of

the plan will co.raenc.e. This is necessary for the purpose of

determining eligibility, benefits, and related matters which

are computed from the effective date.

This term is used in Sections 3.4, and 3.5 of the model

pension ordinance.

3.4) With reference to service before the "effective

date" of the Plan, no credit will be given general employees

for service to the City before January 1, 1960.








3.5) Policemen and Firemen will be credited with all

years of service to the City before the "effective date"

of the Plan.

Employee:

All persons employed by the City and so classified
under rules and regulations and personnel records of the
City, including probationall" or permanent employees.
Any appointed officer shall only be qualified under this
Plan under one office and that office being the one from
which he receives the largest annual salary, compensa-
tion or remuneration. Independent contractors are ex-
cluded. Part-time employees are excluded.

Pension benefits must be kept within the financial limits

of the municipality. Keeping these benefits within reasonable

limits may be most equitably accomplished by eliminating cer-

tain classes of employees from the plan. The model ordinance

includes all permanent employees in the plan while eliminating

part-time employees and independent contractors. This elimina-

tion is accomplished by definition which excludes part-time

employees.

This term is used in Sections 3.3, 4.1, 5.1, 5.3, 5.6,

5.7, 5.9, 5.13, and 6.3 of the model pension ordinance.

3.3) Creditable service for retirement for the purpose

of calculating benefits shall consist of the membership ser-

vice rendered by the "employee" since he last became a member

plus past service. Any 'eemployee" will be given credit for

service to the City starting January 1, 1960, or his date of

employment, whichever is later.

4.1) "Employees" will not contribute to-the cost of the


Plan.







5.1) An "employee" will normally retire on the first

day of the month following (or coinciding with) the attainment

of the ages shown in the schedule presented in this subsection.

In the event of normal retirement the retiring "employee"

shall be entitled to and shall be paid an annuity payable

monthly beginning with the month of retirement and continuing

until death. The amount of annuity to which a retiring "em-

ployee" will be entitled is calculated in subsections (a)

and (b) of section 5.1.

5.3) An "employee" who does not desire to retire on his

normal retirement date may make written application to the

City Clerk or City Ilanager for retention in regular or part-

time employment. Upon the approval of the City MIanager the

"employee" may be retained by the City for a period not to

exceed one year following his date of normal retirement. In

the event of such deferred retirement, the "employee," upon

retirement, shall receive the same amount of monthly retire-

ment pension that he would have received had he retired on his

normal retirement date.

5.6) The interest of an "employee" who dies before his

normal retirement date will cease and no death benefit under

the Plan will be paid to his estate or to the beneficiary of

such "employee."

5.7) If an "employee" dies after retirement no additional

payments will be made unless a retirement annuity option has

been elected in which case payments will be made in accordance

with the option.







5.9) An "employee" may select the Social Security Option

so that he receives, insofar as practical, a level total yearly

retirement income from the two sources.

5.13) No member, "employee," beneficiary or other persons

shall have any interest in, or right in, or to the fund or any

part thereof, or any assets comprising the same, except only

as to the extent expressed and provided in this Ordinance.

6.3) When any former "employee" of the City is re-employed,

and said "employee" has not been granted a leave of absence,

he may receive credit for prior service if he meets the require-

ments of this subsection.

Fund or Pension Fund:

All sums of money paid into the Plan by the City,
and all gifts and contributions to the Fund, accepted
from other sources, together with earnings and apprecia-
tion of the same, less disbursements made from said money,
in accordance with the Plan, or less any losses or de-
preciation, of asset value.

Use of this definition eliminates lengthy descriptions

of the monetary assets accumulated to meet the obligations

of the retirement plan established by the model ordinance.

This term is used in Sections 4.2, 4.3, 4.4, 4.5, 5.13,

7.13, 7.16, 7.17, and 8.2 of the model pension ordinance.

4.2) The City shall pay into the "Fund:" amounts required

to provide the benefits under the Plan.

4.3) The City may accept gifts, devises, bequests, or

appropriations to or for the "Fund" from any source.

4.4) Gifts, bequests, devises, or appropriations to the

"Fund" shall be received by the Treasurer, who shall be the

Treasurer for the Council.







4.5) All monies paid into and held by the "Pension Fund"

shall be promptly deposited with the Trustee or the Insurance

Company for the benefit of the "Pension Fund" according to

the terms of a Trust Agreement or contract to be negotiated

with the Trustee or the Insurance Company.

5.13) No member, employee, beneficiary or other person

shall have any interest in, or right in, or to the "Fund" or

any part thereof, except as to the extent expressed and pro-

vided in this Ordinance.

7.13) The Commission shall employ an actuary to review

the operation of the Plan at intervals of not more than two

years. One of the recommendations that the actuary will make

to the Commission shall be the amount of the City's contribu-

tions to the "Fund" which in his opinion is necessary to be

made for the current operation of the Plan.

7.16) Pension payments, although not promptly paid for

any reason, and any other payments to be made out of the "Fund,"

although not paid promptly for any reason, shall not bear in-

terest unless so ordered by the Commission.

7.17) Each member of the Commission shall use ordinary

care and diligence in the performance of his duties and shall

not be liable for any loss unless resulting from his own gross

negligence or his wilful misconduct; therefore any person

having any claim under the Plan shall look solely to the assets

of the "Fund" for the satisfaction of such claims.

8.2) The provisions of Florida Statute 185.37 pertaining

to termination of the Plan and distribution of the "Fund" are







hereby incorporated by reference as the same would apply to

the rights of policemen and firemen Onder the terms of this

Plan.

Gender:

The masculine pronoun shall include the feminine
pronoun.

This definition is included for simplicity when draw-

ing up the pension ordinance.

General Employee:

A general employee shall include all employees
as defined in 1.11 herein, other than Policemen and
Firemen.

All full-time employees are included in the retirement

plan and all occupational groups of employees are included

within the model pension ordinance. The provisions of the re-

tirement plan differ according to the occupational require-

ments of the different classes of employees. For this reason,

it is necessary to define each class of employee.

This term is used in Sections 3.4, 5.1(a), 5.4, 5.5(a),

and 5.5(b) of the model pension ordinance.

3.4) Ho credit will be given "general employees" for

service to the City before January 1, 1960.

5.1(a) "General Employees" will normally retire on the

first day of the month following (or coinciding with) the

attainment of the ages shown in the schedule contained in

this subsection. The monthly pension for "general employees"

is ;2.00 for every year of credited service.

5.4) A "general employee" who has twenty years of credited

service and has attained his 60th birthday may make written







application for early retirement to the City Manager. In

such event, he shall be entitled to and shall be paid an

annuity equal in amount to the annuity computed on the basis

of normal retirement, except that the amount so computed shall

be reduced by five-twelfths of one percent of said amount for

each month that early retirement precedes his 65th birthday

for "general employees."

5.5(a) If a member of the Plan dies or ceases to be a

permanent employee prior to his normal retirement date and

has less than 20 years of credited service, or has not yet

attained his 55th birthday in the case of "general employees,"

all rights of the employee in the pension plan will terminate.

5.5(b) If any member of the Plan terminates employment

with the City prior to his normal retirement date and has

completed 20 years or more of credited service and has at-

tained the age of 55 years or greater in the case of "general

employees," the pension credit earned at termination will be

fully credited to the employee.

Member:

Any person employed by the City who is included
in the membership of the Plan as either an original
member or a new member. However, a member shall be
limited and restricted to the definition of employee.

Persons employed by the municipality should be able to

determine whether they will be eligible for the benefits of

the retirement system. This definition limits and restricts

members of the retirement system to the definition of employees.

This term is'used in Sections 5.5(a), 5.5(b), 5.8, 5.10,

5.11, 5.12, 5.13, 5.14, 6.1, 6.2, 7.4, 7.11, 7.13, 7.15, 7.18,


anCd 0.1 of the model pension ordinance.







5.5(a) if a "member" of the Plan dies or ceases to be

a permanent employee prior to his normal retirement date and

has less than 20 years of credited service, or has not yet

attained a certain age, all rights of the employee in the

pension plan will terminate.

5.5(b) If any "member'" of the Plan terminates employment

with the City prior to his normal retirement date and has com-

pleted 20 years or more of credited service and has attained

the ages specified in this subsection, the pension credit earned

at termination will be fully credited to the employee.

5.8) The "member" may elect to receive annuity benefits

payable under the Plan with the approval of the Commission

in the form of a joint and survivor annuity instead of the

normal annuity form. The election of a joint and survivor

annuity shall be deemed to be automatically cancelled in the

event of the death of either proposed annuitant prior to the

"member's" actual retirement.

5.10) A separate record of account shall be maintained

for each "member."

5.11) The right of any "'member" or any beneficiary to

any benefits under the Plan or any other right accrued or

accruing to any persons under the provisions of this Ordi-

nance shall be unassignable and not subject to process of law.

5.12) Should any change or error in the records of the

Plan be discovered, or any error in any calculation be made

resulting in any "member-" or beneficiary receiving from the

Plan more or less than he was entitled to receive, the Council






shall have the power to correct such error, and as far as

possible to adjust the payments thereafter to be made in

such a manner that the actuarially equivalent of the benefit

to which such "member" or beneficiary was correctly entitled,

be paid.

5.13) 1No "member," employee, beneficiary or other per-

sons shall have any interest in, or right in, or to the Fund

or any part thereof, or any assets comprising the same, ex-

cept only as to the extent expressed and provided in this

Ordinance.

5.14) Whenever and/or as often as a person entitled

to payments hereunder shall be under legal or other disabil-ity,

the Commission may direct that all or any portion of the bene-

fits of such "members" be payable in one or more of the ways

outlined in this subsection.

6.1) Any "member" who has been granted a certain leave

of absence shall be allowed service credit earned prior to the

start of leaves of absence, and with service credit to resume

upon return to employment.

6.2) When any "member" is inducted or enlists in the

military or related service in response to an order or call

to active duty, and is subsequently re-employed by the City

within 90 days after release from any such service, he shall

again become a membere" of the Plan and shall be given ser-

vice credit for this service before entering military or re-

lated service.

7.4) Copies of rules and regulations promulgated by

the Copmmission to cover the operation of any phase or part






of the Plan as provided by this Ordinance shall be furnished

to any "member" of the Plan upon request.

7.11) The Commission shall have authority to direct that

pension plan funds be deposited with banks and/or savings and

loan associations or invested in securities or an insurance

company or companies, as determined by the Commission and

annuities may be provided for "members" and their beneficiaries

in accordance with the terms of this Plan.

7.13) The Commission shall employ an actuary to review

the operation of the Plan, and his report shall be submitted

in writing and copies thereof shall be available to "members"

of the Plan upon request.

7.15) Each "member" or beneficiary or other interested

"member" shall be responsible for advising the Commission of

his current mailing address, and any other information in

connection with any payment under or in connection with the

Plan.

7.18) Whenever any retirement annuity payable at quarterly

intervals shall be less than $10.00, the Commission may elect

to pay the commuted value of the same in one lump sum provid-

ing such election is made within six months after the "member's"

.retirement unless he consents in writing to a subsequent elec-

tion by the Commission.

8.1) It is contemplated that the City Commission of this

City may in the future decide that it is in the best interests

of the City and the '"members" of the Plan to modify or terminate

Trust Agreements or contracts entered into with an insurance

company.or companies, or to select another insurance company,






trust, or other financial institution as the depository for

pension funds.

r1embershin Service:

Service rendered as a full-time permanent employee
since last becoming a member of the Plan. Such service
shall be computed to the nearest full month of completed
service but not including any additional fractional parts
of a month.

The formula for computing pension benefits is dependent

on the employee's service to the municipality. Part of the

employee's creditable service will be membership service

since last becoming a member of the retirement system.

This term is used in Section 3.3 of the model pension

ordinance.

3.3) Creditable service for retirement for the purpose

of calculating benefits shall consist of the "membership ser-

vice" rendered by the employee since he last became a member,

plus Past Service rendered continuously since the employee's

last date of employment, to his normal retirement date.

New Member:

Any permanent employee who .becomes a member of
the Plan after the effective date of the Plan.

It is important to differentiate between employees who

are hired after the effective date of the plan and employees

who are already in the employ of the municipality on the ef-

fective date of the plan. The definition of a "new member"

clarifies just whom we are talking about when referring to

employees hired after the effective date of the pension ordi-

nance.

This term is used in Sections 3.2, and 8.1 of the model

pension ordinance.






3.2) A "new member" will become eligible to participate

in the Plan on the first day of the month following, or coin-

ciding with the date of his employment.

8.1) It is contemplated, and all original and "new mem-

bers" of the Plan shall be deemed to have notice, that the

City Commission of this City may in the future decide that it

is in the best interests of the City and members of the Plan

to-modify or terminate Trust Agreements or contracts entered

into with an insurance company, or to select another insurance

company, trust, or other financial institution, as the deposi-

tory for pension funds.

Normal Retirement Date:

The normal retirement date of a member shall be
his normal retirement date as determined in accor-
dance with the terms of the Plan.

Normal pension benefits are payable when the member

reaches his normal retirement date. This may be at varying

ages because employees will be hired at different ages. Sec-

tion 5.1 contains a schedule listing the normal retirement

date for employees dependent upon their age at entry into the

retirement plan. This definition avoids confusion on the part

of the municipality and covered employees as to when they will

-retire and be eligible for benefits provided by this ordinance.

This term is used in Sections 3.3, 5.3, 5.4, 5.5(a),

5.5(b), 5.6, 5.7, and 5.8 of the model pension ordinance.

3.3) Creditable service for retirement for the purpose

of calculating benefits shall consist of the membership service

rendered by the employee since he last became a member, plus







past service rendered continuously since the employee's last

date of employment, to his "normal retirement date."

5.3) An employee who does not desire to retire on his

"normal retirement date" may make written application to the

City Clerk for deferred retirement. In the event of such

deferred retirement, the employee, upon retirement, shall re-

ceive the same amount of monthly retirement pension that he

would have received had he retired on his "normal retirement

date."

5.-4) An employee who has twenty years of credited ser-

vice and who has attained a minimum age may make written ap-

plication for retirement prior to his "normal retirement date."

5.5(a) If a member of the Plan dies or ceases to be a

permanent employee prior to his "normal retirement date" and

has less than 20 years of credited service, or has not yet

attained a certain age, then all rights of the employee in

the pension plan will terminate.

5.5(b) If a member of the Plan terminates employment with

the City prior to his "normal retirement date" and has com-

pleted 20 years or more of credited service and has attained

a certain age, then the pension credit earned at termination

-will be fully credited to the employee. He may, when he reaches

his "normal retirement date," make written application to the

City Manager for the pension earned, and in such event, he

shall be entitled to, and he shall be paid, an annuity com-

puted on the same basis as that of other employees who retire

on their "normal retirement date."







5.6) The interest of an employee who dies before his

"normal retirement date" will cease.

5.7) If an employee dies after his "normal retirement

date" no additional payments will be'made unless a retirement

annuity option has been elected in which case payments will

be made in accordance with the option.

5.8) The member may elect to receive annuity benefits

payable under the Plan with the approval of the Commission in

the form of a joint and survivor annuity which must be re-

quested by the employee at least three years prior to date

of retirement, including retirement prior to "normal retire-

ment date."

Original Member:

Any permanent employee of the City who becomes a
member as of the effective date of the Plan.

It is important to clearly define those employees who

are already in the employ of the municipality on the effective

date of the plan. The definition of an "original member"

clarifies just whom we are talking about when referring to

employees who are in the city's employ on the effective date

of the pension ordinance.

This term is used in Sections 3.1 and 8.1 of the model

pension ordinance.

3.1) "Original members" shall be all full-time, permanent

City employees who had not reached age -sixty when originally

employed by the City.

8.1) It is contemplated, and all 'original members" of

the Plan shall be deemed to have notice, that the City Commission







of this City may in the future decide that it is in the best

Interests of the City and the members of the Plan to modify

or terminate Trust Agreements or contracts entered into with

an insurance company, or other finanOial institution, as the

depository for pension funds.

Past Service:

Service rendered as a full-time permanent employee
from January 1, 1960 to the effective date of the Plan.

The pension ordinance gives consideration to employees

who are- in the employ of the municipality when the retirement

plan is established. The financial obligation for this past

service credit is assumed by the municipality and discharged

by city contributions over a period of years. This past ser-

vice liability for employee benefits which are payable on ac-

count of service rendered for the municipality before the ef-

fective date of the retirement plan can be rather large. It

is limited in amount by writing a maximum time limit on the

credits that may be allowed for past service.

This term is used in Section 3.3 of the model pension

ordinance.

3.3) Creditable service for retirement for the purpose

of calculating benefits shall consist of the membership ser-

vice rendered by the employee since he last became a member,

plus "Past Servicer rendered continuously since the employee's

last date of employment, to his normal retirement date.

Permanent employee :

An employee who has completed his probationary
period, been approved for perr'anrent status by the







department head under whom he is employed, or the City
Commission, if approved by it, and has been certified
by the City Clerk or City Manager as a permanent em-
ployee, or according to the personnel records of the
City pertaining to such employee. Certification or
approval for permanent status shall be subject to the
rules of the career service system of the City of Any-
town.

The model ordinance includes all permanent employees in

the retirement plan. The above definition very clearly states

the conditions that must be satisfied in order for an employee

to be certified as permanent. This leaves no doubt in regard

to their eligibility for benefits under the pension ordinance.

This term is used in Sections 2.1, 3.1, 3.2, and 5.5(a)

"of the model pension ordinance.

2.1) A pension and retirement system for full-time "per-

manent employees" in the service of the City of Anytown, Florida,

is hereby established to provide retirement benefits as pro-

vided by this Ordinance.

3.1) Original members shall be all full-time, "permanent

City employees" who had not reached age sixty when originally

employed by the City.

3.2) New, full-time, '"permanent City employees" will be-

come eligible to participate in the Plan on the first day of

the month following, or coinciding with the date of their em-

ployment.

5.5(a) If a member of the Plan dies or ceases to be a

"permanent employee" prior to his normal retirement date and

has less than 20 years of credited service, or has not yet at-

tained a certain age, all rights of the employee in the pen-

sion plan will terminate.







Plan, Pension Plan or Emnloyees' Pension Plan:

The system of retirement benefits provided under
this Ordinance.

Use of this definition shortens the wording of the ordi-

nance. We can use the term "plan" rather than Employees'

Pension Plan of the City of Anytown, Florida.

This term is used in Sections 4.1, 4.2, 5.5(a), 5.5(b),

5.8, 5.10, 5.11, 5.12, 6.2, 7.1, 7.3, 7.4, 7.5, 7.6, 7.8,

7.9, 7.10, 7.11, 7.12, 7.13, 7.17, 8.1, 8.2, anC 9.1 of the

model pension ordinance.

4.1) The cost of the "Plan will be borne entirely by

the City and by State remittances. Employees will not con-

tribute to the cost of the "Plan."

4.2) The City shall pay into the Fund amounts required

to provide the benefits under the "Plan."

5.5(a) If a member of the "Plan" dies or ceases to be

a permanent employee prior to his normal retirement date,

then under conditions of this subsection, all rights of the

employee in the "pension plan" will terminate.

5.5(b) If any member of the "Plan" terminates employ-

ment with the City prior to his normal retirement date and

has completed 20 years or more of credited service and has

attained a certain age, the pension credit earned at termina-

tion will be fully credited to the employee.

5.8) The member may elect to receive annuity benefits

payable under the "Plan" in the form of a joint and survivor

annuity instead of the normal annuity form with the approval

of the Commission.







5.10) A separate record of account shall be maintained

for each member, which shall show such information as is

necessary for an active and comprehensive determination of

his status under this "Plan."

5.11) The right of any member or any beneficiary to any

benefits under the "Plan'-' shall be unassignable and not sub-

ject to legal process.

5.12) Should any error or change in the records of the

"Plan" be discovered, the Council shall have the power to cor-

rect such error.

6.2) When any member is inducted or enlists into the

military or related service and is subsequently re-employed

by the City within 90 days after release from any such ser-

vice, he shall again become a member of the "Plan."

7.1) The general supervision of the administration of

the "Plan" shall be by the Commission.

7.3) This "Plan" or any matter herein may be considered

and disposed of at any Commission meeting.

7.4) The Commission by resolution may promulgate written

rules and regulations not in conflict with the expressed terms

of this Ordinance or the Charter to cover the operation of

any phase or part of the 'Plan" as provided by this Ordinance.

Copies of such rules and regulations- shall be furnished to

any member of the "Plan" upon request.

7.5) The Commission has the power to interpret the "Plan"

and its construction made in good faith shall be final and

conclusive upon all parties' interests.







7.6) The Commission shall have the power to select,

employ and compensate any agents and employees that they may

deem necessary and advisable in the proper and efficient ad-

ministration of the "Plan."

7.8) The City Clerk or Deputy Clerk shall be Secretary

to the Commission under this "Plan."

7.9) It shall be the duty of the Secretary to keep ac-

curate minutes and records of the acts of the Commission under

this "Plan" separate and apart from the regular minutes of

City Commission meetings. These records shall be available

to the public, city officials, and employees under this "Plan"

at all times.

7.10) All notices, elections, designations and changes

of beneficiaries and similar writings pertaining to the opera-

tion of the "Plan" shall be made and preserved in writing on

such forms as the Commission may direct.

7.11) The Commission shall have authority to direct

that "pension plan" funds be deposited with any financial

institution permitted by this Ordinance to provide members

and their beneficiaries the benefits provided in accordance

with the terms of this "Plan."

7.12) The Trustee or Insurance Company or Companies with

which a trust agreement or contract or contracts are entered

into for the administration of the "Plan" shall submit a

statement of the condition of the funds on deposit to the

credit of the "Plan" at least once yearly.







7.13) The Commission shall employ an actuary to review

the operation of the '"Plan" at intervals of not more than two

years, and to make his recommendations to the Commission as

to the actuarial solvency of the "Plan," and such other in-

formation as the Commission may require.

7.17) Any person having any claim under the "Plan" shall

look solely to the assets of the Fund for the satisfaction of

such claims.

8.1) It is contemplated, and all original and new mem-

bers of the "Plan" shall be deemed to have notice that the

City Commission may in the future modify agreement or con-

tracts with financial institutions, or select another financial

institution as the depository for pension funds.

8.2) The provisions of Florida Statute 185.37 pertaining

to termination of the "Plan" and distribution of the Fund are

hereby incorporated by reference as the same would apply to

the rights of policemen and firemen under the terms of this

"Plan."

9.1) Whosoever with intent to deceive shall falsely or

cause to commit to be falsified any record comprising any part

of the operation or administration of the "Plan" contemplated

by this ordinance, shall be punished or fined according to

this subsection.

Plan Year:

A period of twelve consecutive months measured
from the effective date of the Plan, or from any anni-
versary thereof.

It is necessary for the retirement system to maintain

orderly financial records based on a predetermineO calendar




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