HomeMy WebLinkAboutA001 - Council Action Form dated May 6, 1986 ITEM #
DATE: May 6, 1986
CITY OF AMES, IOWA
COUNCIL ACTION FORM
SUBJECT: Ordinance change permitting Utility Retirement members to 'buy-back'
prior service years.
BACKGROUND:
Retirement benefits for members of the Utility Retirement System are based on
years of service times 1.8% times average monthly earnings for prior 60 months.
As a result of federal law, the Utility Retirement ordinance was changed in
1977 to allow members who left the utility employment and had at least five (5)
years of service to have the option to 'vest' . Prior to this time, they were
required to withdraw their contribution and lose prior service years.
There are some employees who terminated and have been rehired by a utility who
have requested permission to 'buy-back' prior service years. These years would be
used in the calculation of benefits.
The Utility Retirement Board is agreeable to this option so long as the
original withdrawal is repaid with compounded interest based on system earnings
from date of withdrawal to the effective date of the ordinance change. The
'buy-back' would be optional and contingent upon a lump sum payment.
ALTERNATIVE:
1. Adopt the ordinance as recommended to grant the option to employees who
terminated prior to the vesting option and who have become re-employed, to 'buy-
back' prior service years contingent on lump sum repayment.
2. Not allow employees who terminated and have been re-employed to 'buy-back'
service years.
MANAGER'S RECOMMENDED ACTION:
It is recommended by the City Manager that the Council adopt Alternative #1
and adopt the ordinance to allow 'buy-back' of service years prior to 1977.
COUNCIL ACTION: