[HISTORY: Adopted by the City Commission
of the City of Royal Oak as indicated in article histories. Amendments
noted where applicable.]
[Adopted 12-7-1992 by Ord. No. 92-19; amended in its entirety 6-18-2007 by Ord. No.
2007-06]
This restatement will apply to individuals employed
by the City on and after the effective date of the restatement. The
retirement rights of an individual whose City employment terminated
before the effective date of this restatement will be governed by
the provisions of the retirement system in effect on the date the
individual last terminated employment.
As used in this article, the following terms
shall have the meanings indicated:
The credit balance in a member's individual account in the
Member Contribution Fund Reserve.
The amount of funds presently required to provide a payment
or series of payments in the future calculated in accordance with
the actuarial assumptions established from time to time by the Retirement
Board.
The City of Royal Oak, Michigan, including its offices, boards,
departments, agencies, and instrumentalities.
For those members represented by a collective bargaining
association, the coverage plan shall be those benefit provisions contained
within the applicable collective bargaining agreements. For those
members not represented by a collective bargaining association, the
coverage plan shall be those benefit provisions contained within the
administrative rules of the City of Royal Oak or as otherwise adopted
by the City in accordance with applicable law. The separate coverage
plans are attached as attachments and will be updated automatically
as provided for under the applicable collective bargaining agreement
or administrative rule covering such group or category of employees.[1] The provisions of the collective bargaining agreements
or administrative rules shall supersede any provisions in the retirement
ordinance or coverage plan attachments.
The final average salary shall be calculated in accordance
with the provisions of the coverage plan applicable to the member.
The form of payment of a pension selected by a member or
otherwise provided for in accordance with the provisions of the Retirement
Ordinance.
Reasonable basis, founded on the relations of the parties,
either pecuniary or contractual or by blood or affinity, supporting
the continued life of the member.
An individual who is a member of the retirement system:
GENERAL MEMBERA member who is not a police member or fire member.
POLICE MEMBERA member who is employed by the City as a police officer and who has taken the oath prescribed for police officers.
FIRE MEMBERA member who is employed by the City as a fire fighter and who has taken the oath prescribed for fire fighters.
A series of monthly payments to a retired member or survivor
pension beneficiary as provided in the Retirement Ordinance.
A person who has been designated to be paid accumulated member
contributions in the event of the death of a member or former member,
or a residual refund of unexpended accumulated member contributions
in the event of the death of a retired member or survivor pension
beneficiary.
A person who is being paid a pension on account of membership
in the retirement system.
The trustees of the retirement system.
The retirement system maintained in accordance with the provisions
of the Retirement Ordinance.
The salary defined in the coverage plan applicable to the
member.
An individual who is being paid a pension or who has been
designated to be paid a pension as a result of the death of a member
or retired member.
[1]
Editor's Note: Said attachments are included as attachments to this chapter.
A.
Each employee of the City shall be a member of the retirement system unless excluded from membership in accordance with Subsection B of this section.
B.
The following employees are excluded from membership:
(1)
Employees designated by the City as being employed
in a position normally requiring less than 1,200 hours of work in
a calendar year;
(2)
An individual serving the City under a contract which
specifically excludes the individual from membership in the retirement
system; or
(3)
An individual serving the City in a manner not subject
to withholding of federal Income tax or applicable FICA tax.
C.
Employees designated as being employed in a position
normally requiring less than 1,200 hours of work in a calendar year
shall be notified in writing, by the City, of the designation and
the consequences of the designation with respect to membership, credited
service and benefits under the Retirement Ordinance. A copy of the
notification shall be filed with the retirement system within 30 days.
A.
Service rendered the City by a member shall be credited
to the member's credited service account in accordance with Retirement
Board rules and regulations, subject to the following limitations:
(1)
Service shall be credited to the nearest month;
(2)
In no case shall a member be credited with a year
of service for less than 10 months of service in any period of 12
consecutive months or more than a month of service for all service
in any calendar month or more than a year of service for all service
in any period of 12 consecutive months;
(3)
A member shall not be credited with a month of service
unless the member has worked the equivalent of 10 or more full-time
days during the calendar month; and
(4)
Credited service shall not be granted a member for
periods during which the member was exempt from membership as provided
in the Retirement Ordinance.
B.
Credited service shall be forfeited under the following
circumstances:
(1)
Credited service shall be forfeited if an individual
incurs a break in membership of more than 36 consecutive months and
is not a vested former member; and
(2)
Credited service for which an individual has made
member contributions shall be forfeited if the individual's accumulated
member contributions are paid to the individual, the individual's
refund beneficiary or the individual's legal representative.
C.
Credited service forfeited because of a break in membership of more than 36 consecutive months, as provided in Subsection B of this section, cannot be reinstated.
D.
Credited service forfeited for a reason other than
a break in membership of more than 36 consecutive months shall be
reinstated if each of the following conditions is met:
(1)
The member pays the retirement system all accumulated
member contributions previously paid to the member, plus compound
interest from the date of the payment to the member to the date of
the repayment at interest rates set by the Retirement Board; and
(2)
The repayment is completed within 36 months of resumption
of membership.
A member who left the employ of the City to
enter an armed service of the United States during time of war, period
of compulsory military service or period of national emergency recognized
by resolution of the City Commission shall be given credited service
for periods of active duty subject to the following conditions:
A.
The member is reemployed by the City within one year
following termination of the period of active duty;
B.
The member reinstates any forfeited credited service
which can be reinstated. The member shall repay any previously withdrawn
contributions plus interest from the date of withdrawal to the date
of repayment;
C.
Contributions, benefits and service credit with respect
to qualified military service will be provided in accordance with
IRC § 414(U) and regulations;
D.
Credited service shall not be given for periods of
active duty which have been used or are usable to obtain or increase
a benefit from another retirement program; except for service that
is or would be credited under the federal government for service in
the reserves; and
E.
The maximum credited service which may be obtained
under the provisions of this section is six years.
A.
A member may purchase service credit subject to the
following conditions:
(1)
The member pays the retirement system the purchase cost determined according to Subsection B of this section;
(2)
The aggregate amount of credited service purchased
under this section cannot exceed 10 years;
(3)
Credited service purchased under this section shall
not be considered for purposes of eligibility for retirement system
benefits and amount of retirement system benefits until the member
has acquired 10 years of credited service as a member of the retirement
system; and
(4)
Credited service purchased under this section can
only be used for the meeting of eligibility requirements and the computation
of pension amounts under the retirement system but shall have no application
to any other provisions of any collective bargaining agreement.
B.
The purchase cost for each year of credited service
purchased under this section is equal to the increase in the actuarial
present value of projected benefits resulting from the additional
credited service. Payments shall be made within 60 days of the date
the member is informed of the amount of payment.
A.
A member or vested former member may retire upon fulfilling
the following requirements:
(1)
A written application for normal retirement, in the
form prescribed by the retirement system, is filed with the retirement
system prior to the selected date of retirement;
(2)
Employment by the City is terminated prior to the
selected date of retirement;
(3)
The member or vested former member selects a date
of retirement; and
(4)
The member or vested former member meets an age and
service requirement for normal retirement specified in the coverage
plan applicable to the member or vested former member.
B.
Except as otherwise provided by the Retirement Ordinance
and the applicable provisions of the Internal Revenue Code, the amount
of a normal retirement pension under form of payment Option SL is
determined in accordance with the coverage plan applicable to the
member or vested former member. The pension of a member who has credited
service under each of two or more coverage plans shall be determined
in proportion to the credited service under the two or more coverage
plans applicable to the member at time of termination of membership.
C.
A member or vested former member who is retiring under the normal retirement provisions of the Retirement Ordinance may file an election with the retirement system at any time following application for normal retirement and prior to the later of the date first payment of the pension is made and the date age 60 years is attained, to be paid all or any portion of the member's accumulated member contributions at time of normal retirement. The election shall be made on a form furnished by the retirement system. The amount of pension determined under Subsection B of this section shall be reduced if the retiring member elects to be paid all or any portion of the member's accumulated member contributions as provided in this subsection. The amount of reduction in the pension shall be the amount which has the same actuarial present value as the amount of accumulated member contributions paid the retiring member.
[1]
Editor’s Note: Former § 146-8, Normal retirement;
suspension of pension, was repealed 6-27-2016 by Ord. No. 2016-04.
A.
A member who ceases to be a member for a reason other
than death or retirement shall be a vested former member if the member
meets the following requirements:
B.
Eligibility for normal retirement and the amount of
normal retirement pension shall be determined according to the provisions
of the Retirement Ordinance in effect at the time of termination of
membership.
C.
An election by a vested former member to be paid accumulated
member contributions shall cause forfeiture of credited service and
all rights to any benefits of the retirement system other than payment
of the accumulated member contributions.
A.
Conditions for; amount of pension.
(1)
Upon the application of a member or the member's department
head, a member in the employ of the City who becomes totally and permanently
incapacitated for employment by the City by reason of a personal injury
or disease and who has in force the applicable period of credited
service specified in the coverage plan applicable to the member may
be retired subject to the following:
(a)
The member is medically examined by or under
the direction of the City-appointed medical director;
(b)
The medical director certifies to the Retirement
Board that the member is mentally or physically totally incapacitated
for continued employment by the City, that such incapacity will probably
be permanent, and the member should be retired; and
(c)
The Retirement Board concurs with the certification
of the medical director.
(2)
Upon disability retirement, a member shall be paid
a disability retirement pension equal to a percent, specified for
the disability retired member's coverage plan, of the member's salary
at the time of disability retirement. The disability retirement pension
is subject to the maximum specified for the disability retired member's
coverage plan.
(3)
Subject to Subsection A(4), upon attainment of the applicable age specified for the disability retired member's coverage plan, the amount of disability pension shall be recomputed as a normal retirement pension based on the formula, final average salary and, subject to Subsection C(2), credited service in effect at the time of disability retirement.
(4)
If provided by the provisions of the applicable coverage
plan, a disability retired member whose disability retirement commences
on or after attainment of age 65 years may be paid a disability retirement
pension for up to two years, but not later than attainment of age
70 years.
B.
The Retirement Board shall determine, at the time
of approval, the nature of a disability, whether duty or nonduty.
C.
Disability retirement, duty-connected.
(1)
A member with less than the period of credited service
specified for disability retirement shall have credited service increased
to the applicable specified period for the sole and exclusive purpose
of qualifying for disability retirement subject to the following conditions:
(a)
The Retirement Board finds the member's total
and permanent incapacity for continued City employment to be the natural
and proximate result of a personal injury or disease arising out of
and in the course of the member's actual performance of service in
the employ of the City.
(b)
The member is paid workers' compensation on
account of the incapacity.
(2)
Upon the expiration of a disability retired member's
workers' compensation period, the disability retired member's credited
service shall be increased by a period equal to the workers' compensation
period.
D.
Continuation subject to reexamination.
(1)
The Retirement Board may require a disability retired
member to undergo periodic medical examination by or under the direction
of the medical director if the disability retired member has not attained
the age specified in the applicable coverage plan for discontinuance
of disability retirement reevaluation. If a disability retired member
refuses to submit to a medical examination, payment of the disability
pension may be suspended by the Retirement Board until withdrawal
of the refusal. Should refusal continue for one year, all the disability
retired member's rights in and to a disability pension may be revoked
by the Retirement Board. A disability retired member shall be restored
to active employment with the City and the disability retirement pension
discontinued if following a medical examination the medical director
certifies that the disability retired member is mentally and physically
able and capable of resuming employment with the City and the Retirement
Board concurs with the certification of the medical director. The
City shall be allowed reasonable latitude in placing the returned
disability retired member in a position commensurate with the position
held at time of disability retirement.
(2)
The age requirements for discontinuance of disability
retirement reevaluation are as provided in the coverage plan applicable
to the member.
(3)
A disability retired member who has been restored to employment with the City as provided in Subsection D(1) of this section shall again become a member of the retirement system. The disability retired member's credited service at time of retirement shall be restored to full force. Service shall be credited for the period the disability retired member was being paid a disability pension if within the period the disability retired member was paid workers' compensation on account of the same disability which caused retirement; otherwise credited service shall not be given for the period of disability retirement.
E.
Offsets. If a member's retirement is pursuant to Subsections A and C (disability retirement), the member's straight life disability retirement pension shall be subject to the minimums and offsets which follow:
(1)
The amount of level straight life disability retirement
pension payable during the waiting or qualifying period specified
in a disability insurance contract which covers the disability retired
member shall not be less than the amount of disability benefit which
would become payable under the disability insurance contract following
expiration of the waiting or qualifying period, reduced by any and
all workers' and/or unemployment compensation payments accruing during
said qualifying period. This minimum shall apply only to pension payments
made prior to the disability retired member's attainment of the age
specified in the disability insurance contract as the date of termination
of a period of disability.
(2)
Subject to Subsection E(3) of this section, the amount of level straight life disability retirement pension payable during any period other than the one specified in Subsection E(1) of this section shall not be less than an amount computed assuming the disability retired member had 10 years of credited service.
(3)
The amount of any benefit payable pursuant to a disability
insurance contract shall be offset against and payable in lieu of
any disability retirement pension payable by the retirement system.
The offset shall be on a month-by-month basis without carry-forward.
(4)
The amount of disability retirement pension may be
reduced for income received from gainful employment pursuant to the
terms provided by the coverage plan applicable to the member.
A.
Automatic coverage of eligible spouse and children.
(1)
A survivor pension shall be paid to the eligible surviving
spouse and eligible surviving children of a deceased member who does
not have an elective survivor pension beneficiary designation in effect
under the Retirement Ordinance if the following requirements are met:
(a)
A written application for the pension, in the
form prescribed by the retirement system, is filed with the retirement
system; and
(b)
The deceased member had three or more years
of credited service at time of death; or
(c)
The Retirement Board finds the member's death
to have been the natural and proximate result of causes arising out
of and in the course of the member's performance of duty in the employ
of the City.
(2)
An eligible surviving spouse is the spouse to whom
the deceased member was married at time of death. An eligible surviving
child is an unmarried natural or adopted child of the deceased member
who is under age 19 years.
(3)
If the member's death occurs prior to the date the
member attains age 60 years, the amount of survivor pension shall
be calculated using credited service equal to the sum of the member's
actual credited service and the amount of credited service the member
could have acquired between the date of death and the date age 60
would have been attained.
(4)
The amount of the survivor pension payable to a surviving
spouse shall be the percent, specified in the coverage plan applicable
to the member, of the amount of pension calculated in the same manner
as a normal retirement pension under form of payment Option SL.
(5)
The amount of the survivor pension payable to an eligible
surviving child shall be the percent, specified in the coverage plan
applicable to the member, of the amount of pension calculated in the
same manner as a normal retirement pension under form of payment Option
SL.
(6)
An eligible surviving child's pension shall terminate
upon death or marriage, or reaching age 19 years. The pension of each
remaining eligible surviving child shall be recalculated. An eligible
surviving spouse's pension shall terminate upon death or remarriage.
(7)
The aggregate amount of any workers' compensation
benefits paid a surviving spouse or surviving child on account of
the death of the member shall be deducted from and offset against
the pensions payable under the provisions of this section. The term
"workers' compensation benefits" as used in this subsection shall
include weekly benefits, redemptions of benefits and settlements in
lieu of benefits but shall not include reimbursement of medical expenses.
B.
Survivor pension to a designated survivor pension
beneficiary.
(1)
A survivor pension shall be paid for life to the designated
survivor pension beneficiary of a deceased member who has elected
optional form of payment Option SL and designated a survivor pension
beneficiary in accordance with the provisions of the Retirement Ordinance,
if the following requirements are met:
(a)
A written application for the pension, in the
form prescribed by the retirement system, is filed with the retirement
system;
(b)
The member meets an age and service requirement
for designated survivor pension beneficiary eligibility specified
by the coverage plan applicable to the member; and
(c)
The designated survivor pension beneficiary
is the member's spouse or the Retirement Board finds the designated
survivor pension beneficiary to have been dependent upon the deceased
member for at least 50% of the beneficiary's financial support due
to the beneficiary's lack of financial means.
(2)
The amount of pension is calculated in the same manner
as a normal retirement pension under form of payment Option SL, in
accordance with the coverage plan applicable to the member at time
of death.
(3)
An election of form of payment Option SL may be rescinded
and the designated survivor pension beneficiary may be changed by
the member at any time prior to the date a pension payment is made
to the member.
(4)
If provided by the terms of the applicable coverage
plan, a vested former member shall be presumed to have elected form
of payment Option SL and designated the vested former member's spouse
as survivor pension beneficiary. Payment of the pension to the designated
survivor pension beneficiary shall commence the first day of the calendar
month following the later of the date of death of the vested former
member and the first date pension payments could have commenced to
the vested former member.
The maximum amount of an initial normal retirement
pension shall be a percent of the retired member's final average salary
reduced by a percent of the retired member's initial monthly social
security benefit. The maximum aggregate initial monthly pensions which
can be paid survivor pension beneficiaries on account of the death
of a member, vested former member or retired member, as the case may
be, shall be a percent of the deceased member's, retired member's
or vested former member's final average salary reduced by a percent
of the sum of the initial monthly social security benefits paid the
survivor pension beneficiaries. The percents shall be those specified
in the coverage plan applicable to the member, retired member or vested
former member. This section shall be applied without taking into account
cost of living increases which may be granted under the Retirement
Ordinance or social security. As used in this section, "social security"
means the Federal Old Age, Survivors, Disability and Health Insurance
Program.
[1]
Editor's Note: See now "Attachments" at the end of this chapter for separate group coverage plans formerly in §§ 146-13 through 146-23.
In accordance with the amount specified in either
the applicable labor agreement or administrative rules at the time
of retirement, the retirement system will provide a supplemental lump
sum death benefit upon the death of the retired member.
A.
A member may elect to have pension payments made under
any one of the forms of payment provided in the Retirement Ordinance
and name a survivor pension beneficiary. The election of form of payment
and naming of survivor pension beneficiary shall be made on a form
furnished by and filed with the retirement system prior to the date
the first pension payment is made. An election of form of payment
may not be changed after the date the first pension payment is made.
A named survivor pension beneficiary of a retired member shall have
an insurable interest in the life of the retired member on the date
first payment of the pension is made. Payment shall be made under
form of payment SL if there is not a timely election of another form
of payment.
B.
The amount of pension under forms of payment Option
SL, Option B and Option C shall have the same actuarial present value,
computed as of the effective date of the pension, as the amount of
pension under form of payment SL.
C.
Form of payment Option C is only available for election
by general members, including vested former general members.
A.
Straight, life pension, form of payment Option SL. The retired member is paid the pension for life under form of payment Option SL. All payments stop upon the death of the retired member, except as provided by Subsection F. The amount of pension is determined in accordance with the coverage plan applicable to the retired member.
B.
Life payments with full continuation to survivor pension
beneficiary, form of payment Option A. The retired member is paid
a reduced pension for life under form of payment Option A. Upon the
death of the retired member during the lifetime of the named survivor
pension beneficiary, the named survivor pension beneficiary is paid
the full amount of the reduced pension until death.
C.
Life payment with 1/2 continuation to survivor pension
beneficiary, form of payment Option B. The retired member is paid
a reduced pension for life under form of payment Option B. Upon the
death of the retired member during the lifetime of the named survivor
pension beneficiary, the named survivor pension beneficiary is paid
1/2 the amount of the reduced pension until death.
D.
Life payment with amount increased to the adjustment
age and reduced thereafter, form of payment Option C. The retired
member is paid an increased pension until the retired member attains
the adjustment age specified by the Retirement Board and a reduced
pension thereafter. The amount of increase and reduction shall be
determined in accordance with procedures adopted by the Retirement
Board.
E.
Life payment with a specified percent continuation
to surviving spouse, form of payment Option D. The retired member
is paid a pension for life under form of payment Option D. The amount
of the pension is the amount of pension under form of payment Option
SL multiplied by the Option D percent specified by the coverage plan
applicable to the retired member at time of retirement. Upon the death
of the retired member, the surviving spouse of the deceased retired
member, if any, is paid a percent of the amount of the retired member's
pension until death. The percent is the continuation percent specified
by the coverage plan applicable to the retired member at time of retirement.
F.
If all pension payments permanently terminate before
there is paid an aggregate amount equal to the former member's accumulated
member contributions at time of retirement, the difference between
the amount of accumulated member contributions and the aggregate amount
of pension paid shall be paid to the refund beneficiary. If no refund
beneficiary survives the former member, the difference shall be paid
to the estate of the former member.
A.
A normal or disability pension shall commence the
first day of retirement. A pre-retirement survivor pension shall commence
the first day of the month following the date of the death resulting
in the pension. A post-retirement survivor pension shall commence
the first day of the month following the date of the death resulting
in the pension.
B.
Termination of payment of a pension shall occur on
the first day of the month after the event causing termination occurs.
C.
A change in the amount of a pension shall occur the
first day following the date of the event causing the change.
A.
A benefit claimant shall be notified in writing, within
30 days, of denial of a claim for benefits. The notification shall
give the reason for the denial. A claimant may appeal the denial and
request a hearing. The appeal shall be in writing filed with the Secretary
of the Retirement Board within 90 days of the denial. The appeal shall
contain a statement of the claimant's reason for claiming the denial
to be improper. The Secretary of the Retirement Board shall schedule
a hearing of the appeal before the Retirement Board or, at the discretion
of the Retirement Board, a committee of the Retirement Board, within
60 days of receipt of the appeal. A final decision on the matter being
appealed shall be made by the Retirement Board.
B.
Appeals from a final decision of the Retirement Board
shall be to the District Court and initiated by filing a notice of
appeal with the Circuit Court within 30 days after the Retirement
Board has issued its final decision. The review of the District Court
shall be restricted to the record made before the Retirement Board,
and the District Court shall not permit the introduction of new evidence
on any of the issues presented before the Retirement Board.
C.
The decision of the Retirement Board shall be upheld
by the District Court unless the District Court finds the decision
of the Retirement Board to be unlawful, arbitrary or capricious, or
not supported by substantial evidence on the entire record as submitted
by the Retirement Board.
A retired member or eligible survivor pension
beneficiary may continue to be insured under the provisions of any
City group health insurance plan in effect at the time of retirement
or death or under the terms of any separate subsequent City group
health insurance plan if the retired member or eligible survivor pension
beneficiary pays the periodic premium charges which may be required
and consents to have the retirement system deduct the periodic premium
charges from the retired member's or eligible survivor pension beneficiary's
pension.
The accounting reserves of the retirement system
are the "Member Contribution Reserve," "City Contribution Reserve,"
"Pension Payment Reserve," and "Undistributed Investment Income Reserve."
The maintenance of separate accounting reserves shall not require
the actual segregation of the assets of the retirement system among
the various accounting reserves.
A.
The Member Contribution Reserve is the accounting
reserve in which shall be accumulated contributions made by members
and which shall be charged with refunds and transfers of accumulated
member contributions as provided in the Retirement Ordinance. The
City shall cause the member contributions specified by the coverage
plan applicable to a member to be deducted from the salary of each
member. The City shall remit the deducted member contributions to
the retirement system in accordance with the procedures and schedules
established by the retirement system. The retirement system may assess
an interest charge and a penalty charge on any remittance not made
by its due date. Each member shall be deemed to consent and agree
to the deductions made and provided for in this section by continuing
employment with the City. Contributions of members shall be credited
to the members' individual accounts in the Member Contribution Reserve.
B.
A member's or vested former member's accumulated contributions
shall be transferred to the Pension Payment Reserve if a pension becomes
payable upon the retirement or death of the member or vested former
member. If a disability pension is terminated for a reason other than
the death of the retired member before an amount equal to the retired
member's accumulated member contributions has been paid, the unexpended
balance of the accumulated member contributions shall be transferred
from the Pension Payment Reserve to the former retired member's individual
account in the Member Contribution Reserve.
C.
The accumulated member contributions of a former member
or a member on leave of absence from the City as a consequence of
the entry into active duty with the Armed Forces of the United States
shall be paid to the former member upon written application.
D.
If a member or former member dies and no pension becomes
payable on account of the death, the deceased member's or former member's
accumulated member contributions shall be paid to the refund beneficiary
named in the most recent designation of refund beneficiary on file
with the retirement system unless that beneficiary is deceased. If
there is not a living refund beneficiary named in the most recent
designation of refund beneficiary on file with the retirement system,
the deceased member's or former member's accumulated member contributions
shall be paid to the legal representative of the deceased member or
former member.
E.
Except as otherwise provided in the Retirement Ordinance,
a former member's accumulated member contributions unclaimed by the
former member or refund beneficiary shall be transferred to the Undistributed
Investment Income Reserve at the expiration of a period of five years
from the date of cessation of membership.
Upon implementation, the City shall, solely
for the purpose of compliance with Section 414(h) of the Internal
Revenue Code, pick up, for the purposes specified in that section,
member contributions required by the Retirement Ordinance for all
salary earned by the member after implementation. Member contributions
picked up under the provisions of this section shall be treated as
City contributions for purposes of determining income tax obligations
under the Internal Revenue Code; however, such picked-up member contributions
shall be included in the determination of the member's gross annual
salary for all other purposes under federal and state laws. Members'
contributions picked up under this section shall continue to be designated
member contributions for all purposes of the Retirement Ordinance
and shall be considered as part of the member's salary for purposes
of determining the amount of the member's contribution. The provisions
of this section are mandatory, and the member shall have no option
concerning the pickup or to receive the contributed amounts directly
instead of having them paid by the City to the retirement system.
Implementation occurs upon authorization by the retirement system.
In no event may implementation occur other than at the beginning of
a pay period. This section is applicable only to those coverage plan
groups contracting for this treatment.
A.
The "City Contribution Reserve " is the reserve in
which shall be accumulated contributions made by the City. The City
shall remit its contributions to the retirement system in accordance
with the procedures and schedules established by the retirement system.
The retirement system may assess an interest charge and a penalty
charge on any remittance not made by its due date.
B.
Each year following receipt of the report of the annual
actuarial valuation, the excess, if any, of the reported actuarial
present value of pensions being paid retired members and survivor
pension beneficiaries and residual refunds likely to be paid to refund
beneficiaries of retired members and to survivor pension beneficiaries
over the balance in the Pension Payment Reserve shall be transferred
to the Pension Payment Reserve.
The "Pension Payment Reserve " is the reserve
from which shall be paid all pensions to retired members and survivor
pension beneficiaries and all residual refunds to refund beneficiaries
of retired members and survivor pension beneficiaries.
A.
The "Undistributed Investment Income Reserve" is the
reserve to which shall be credited all interest, dividends, rents
and other income from investments of the retirement system, all gifts
and bequests, all unclaimed member contributions and all other money
the disposition of which is not specifically provided for in the Retirement
Ordinance. There shall be paid or transferred from the Undistributed
Investment Income Reserve all administrative expenses of the retirement
system which are not paid directly by the City.
B.
Distribution of Undistributed Investment Income Reserve.
The retirement system shall at least annually distribute all or a
portion of the balance in the Undistributed Investment Income Reserve
to the Member Contribution Reserve, the Pension Payment Reserve and
the City Contribution Reserve. Distribution rates shall be determined
by the Retirement Board and may vary by reserve.
A.
The funding objective of the retirement system is
to establish and receive each fiscal year City contributions which
are sufficient, together with member contributions, to:
(1)
Fund the actuarial cost of benefits likely to be paid
on account of credited service earned by members during the fiscal
year (the normal cost); and
(2)
Fund the unfunded actuarial cost of benefits likely
to be paid on account of credited service earned by members prior
to the current fiscal year over periods of not more than 30 years.
Contributions shall be determined by annual actuarial valuation using
a level percent of payroll actuarial cost method which produces a
contribution not less than that produced by the individual entry age
actuarial cost method.
B.
The Retirement Board shall certify to the City Commission
and the City Manager the amount of contribution needed to satisfy
the funding objective, and the City Council shall appropriate and
cause the contribution to be paid to the retirement system.
A.
Authority; membership.
(1)
The Retirement Board shall be the trustee of the retirement
system and shall have all the powers necessary or convenient to carry
out and effectuate the purposes and provisions of the Retirement Ordinance,
including, in addition to any specific powers provided for in the
Retirement Ordinance, but without limiting the generality of the foregoing,
the power:
(a)
To administer the Retirement Ordinance, including
the management of the retirement system and making effective the provisions
of the Retirement Ordinance;
(b)
To employ competent legal counsel, in addition
to the services of the City Attorney, to handle the legal matters
of the Retirement Board and the retirement system and to give advice
and counsel in regard to any matter connected with the duties of the
Retirement Board and, in the discretion of the Retirement Board, to
represent the Retirement Board in legal proceedings;
(c)
To administer oaths;
(d)
As required, to adopt and use a seal for authentication
of records, processes and proceedings;
(e)
To create and maintain records relating to all
members, the City and all activities and duties required of the Retirement
Board;
(f)
To issue subpoenas and compel the production
of evidence and attendance of witnesses in connection with any hearings
or proceedings of the Retirement Board;
(g)
To make and execute contracts;
(h)
To make and adopt such reasonable rules and
regulations as may be necessary or convenient to carry out the duties
of the Retirement Board and activities of the retirement system, including
any rules and regulations necessary to preserve the status of the
retirement system as a qualified pension plan under the provisions
of the Internal Revenue Code of the United States, as amended, or
under successor or related provisions of law;
(i)
To designate committees and to designate committee
members, including individuals who may not be members of the retirement
system.
(j)
To determine who is a member within the meaning
of the provisions of the Retirement Ordinance and the applicable coverage
plan.
(k)
To adopt the actuarial assumption of the retirement
system in consultation with its actuary.
(2)
The Retirement Board shall be a quasi-judicial body
consisting of:
(a)
Two members of the City Commission, to be appointed
by and serve at the pleasure of the City Commission; and
(b)
The City Manager, by virtue of the position;
(c)
One general member of the retirement system,
to be elected by the general members of the retirement system; and
(d)
One member of the retirement system who is either
a fire member or a police member, to be elected by the fire members
and the police members of the retirement system.
(3)
The City shall indemnify to the extent authorized
or permitted by law the members of the Board, their representatives,
and any other employees of the City who are deemed to be acting on
behalf of the retirement system and hold them harmless against any
and all liabilities, including legal fees and expenses, arising out
of any act or omission made or suffered in good faith pursuant to
the provisions of the plan, or arising out of any failure to discharge
any fiduciary obligation imposed, other than a willful failure to
discharge a fiduciary obligation of which the person was aware. There
shall be no duty to indemnify where such person is judicially determined
to have incurred liability due to fraud, gross neglect, or malfeasance
in the exercise and performance of their duties.
B.
Election of; term of office; vacancies; compensation.
(1)
The elections to select the members of the Retirement
Board elected by the members of the retirement system shall be conducted
according to rules and regulations the Retirement Board shall from
time to time adopt.
(2)
The regular term of office of the members of the Retirement
Board elected by the members of the retirement system shall be four
years. The term of one member-elected Retirement Board member shall
expire biennially on May 31. Members of the Retirement Board shall
serve until their successors have qualified.
(3)
A member elected to the Retirement Board who fails
to attend five consecutively scheduled meetings of the Retirement
Board, unless in each case excused for cause by the Retirement Board
members in attendance, shall be considered to have resigned from the
Retirement Board, and the Retirement Board shall by resolution declare
the office vacated as of the date of adoption of the resolution. A
vacancy occurring on the Retirement Board, except in the case of the
City Manager and appointed members, shall be filled within 90 days
for the unexpired term in the manner provided for in this section.
(4)
Members of the Retirement Board shall serve without
additional salary for their services as Retirement Board members.
They shall be reimbursed for necessary and reasonable travel expenses,
and employee members shall suffer no loss of salary or wage in fulfilling
their Retirement Board duties.
C.
Meetings. The Retirement Board shall hold at least
four regular meetings each calendar year, one in each calendar quarter,
and shall designate in advance the time and place of the meetings.
Special meetings and emergency meetings of the Retirement Board may
be held upon call of the Chairperson or any three members of the Retirement
Board. Written notice of special meetings shall be sent to each member
of the Retirement Board at least 72 hours in advance of the special
meeting. Verbal notice of emergency meetings shall be given to as
many members as is feasible at least eight hours before the emergency
meeting, and the meeting shall commence with a statement of the nature
of the emergency. The Retirement Board shall adopt its own rules of
procedure and shall keep a record of its proceedings. All meetings
of the Retirement Board shall comply with the Open Meetings Act (MCLA
§ 15.261 et seq.) A majority of Retirement Board members
shall constitute a quorum. Each attending member of the Retirement
Board is entitled to one vote on each question before the Retirement
Board, and at least three concurring votes shall be necessary for
a decision by the Retirement Board.
D.
Officers; employment of services.
(1)
The Retirement Board shall elect from its own number
a Chairperson and a Chairperson Pro Tem.
(2)
The Director of Finance shall be the Secretary to
the Retirement Board and chief administrative officer for the Retirement
Board and the retirement system.
(3)
The Retirement Board shall employ professional, technical,
clerical and other services as required for the operation of the retirement
system. The compensation for employed services shall be fixed by the
Retirement Board.
(4)
The City Attorney shall be a legal advisor to the
Retirement Board.
(5)
The Director of Finance shall be the Treasurer of
the retirement system and the custodian of its assets, except as to
the assets the Retirement Board may from time to time place in the
custody of a nationally chartered bank or trust company. The general
bond of the City shall cover all liability for acts as Treasurer of
the retirement system. The Treasurer shall credit all receipts of
money and assets of the retirement system to the retirement system.
No warrant shall be drawn unless it has been previously authorized
by a general or specific resolution of the Retirement Board.
(6)
The Board shall appoint an actuary who shall be the
technical advisor to the Board on matters regarding the operation
of the retirement system and who shall perform such other duties as
are required in connection therewith.
(7)
The Board shall appoint as Medical Director a physician
who is not eligible for membership in the retirement system and who
has not, within five years prior to appointment as Medical Director,
filled an elective, appointive, or salaried office in the City. The
Medical Director shall be responsible to and shall hold office at
the pleasure of the Board. The Medical Director shall arrange for
and pass upon all medical examinations required under the provisions
of this retirement system; shall investigate all essential statements
and certificates of a medical nature by or on behalf of a member or
beneficiary in connection with an application for disability benefits
or accidental death benefits; and shall report in writing to the board
his/her conclusions on matters referred to the Medical Director.
A.
The Retirement Board is trustee of the assets of the
retirement system, and it may invest and reinvest the assets subject
to the terms, conditions, limitations and restrictions imposed by
the State of Michigan on the investments of public employee retirement
systems (Act 314, Public Acts of 1965, as amended (MCLA § 38.1132
et seq.).
B.
The Retirement Board may employ outside investment
counsel to advise the Board in the making and disposition of investments.
C.
All assets of the retirement system shall be held
and invested for the sole purpose of meeting the legitimate obligations
of the retirement system and shall be used for no other purpose. No
part of the assets shall be used for or diverted to purposes other
than for the exclusive benefit of members and beneficiaries prior
to satisfaction of all retirement system liabilities.
D.
Members of the Retirement Board and its employees
are prohibited from: 1) having a beneficial interest, direct or indirect,
in an investment of the retirement system; 2) borrowing from the retirement
system; and 3) receiving any pay or emolument from any individual
or organization providing services to the retirement system. Nothing
contained herein shall be construed to impair the rights of any member,
retirant, or beneficiary of the retirement system to benefits provided
by the retirement system.
E.
In exercising its discretionary authority, the Retirement
Board shall exercise the care, skill, prudence and diligence under
the circumstances then prevailing that a person of prudence, acting
in a like capacity and familiar with such matters, would use in the
conduct of an enterprise of like characteristics and with like aims.
The right of a person to a pension, to the return
of accumulated member contributions, the pension itself, any optional
benefit, and any other right accrued or accruing to any person under
the provisions of this chapter, and any monies and assets belonging
to the retirement system, shall not be subject to execution, garnishment,
attachment, the operation of bankruptcy or insolvency law, or any
other process of law whatsoever, and shall be unassignable except
as is specifically provided in this chapter and in accordance with
Public Act 100 of 2002, as amended. If a member is covered under a
group insurance or prepayment plan participated in by the City, and
should member or his or her beneficiary be permitted to and elect
to continue such coverage as a retiree or beneficiary, the member
or beneficiary may authorize the Board of Trustees to deduct required
payments to continue coverage under such group insurance or prepayment
plan. The City shall have the right of setoff for any claim arising
from embezzlement by or fraud of a member, retired member or survivor
pension beneficiary.
The right of an individual to a pension, to
the return of accumulated member contributions, the pension itself,
or any other benefit under the provisions of the Retirement Ordinance
shall be subject to award by a court of competent jurisdiction pursuant
to Section 18 of Chapter 84, Revised Statutes of 1846, being MCLA
§ 552.18 of the Michigan Compiled Laws, and to any other
order of a court of competent jurisdiction pertaining to child support.
If an award or order requires the retirement system to withhold payment
of a pension, accumulated member contributions or other benefit from
the individual to whom it is due, or requires the retirement system
to make payment to a spouse, former spouse or child, the withholding
or payment provisions of the award shall be effective only against
the amounts as they become payable to the individual being paid the
pension or other benefit. These limitations shall not apply to accumulated
member contributions of an individual who is neither a member nor
a vested former member.
The retirement system shall correct errors in
the records and actions of the retirement system. The retirement system
shall seek to recover overpayments and shall make up underpayments.
Recovery of overpayments may be accomplished by reducing the amount
of future payments so that the actuarial present value of actual payments
is equal to the actuarial present value of correct payments.
A.
The City intends the retirement system to be a qualified
pension plan under Section 401 of the Internal Revenue Code, as amended,
and that the trust be an exempt organization under Section 501 of
the Internal Revenue Code. The Retirement Board shall administer the
retirement system so as to fulfill this intent.
B.
The retirement system is a governmental plan under
IRC § 414(D) and is administered for the exclusive benefit
of the plan's participants and their beneficiaries.
The Retirement Board is hereby authorized and
empowered to receive donations, gifts and bequests and credit them
to the undistributed investment income reserve.
In the event a member, retired member or survivor
pension beneficiary becomes entitled to a pension as the result of
an accident or injury caused by the act of a third party, the City
shall be subrogated to the rights of such member, retired member or
survivor pension beneficiary against such third party to the extent
of pensions which the City pays or becomes liable to pay on account
of such accident or injury.
The expenses of administering the retirement
system shall be paid by the retirement system.
Whoever with intent to deceive shall make any
statements and/or report required under this chapter which are untrue,
or shall falsify or permit to be falsified any record or records of
the retirement system or who shall otherwise violate, with intent
to deceive, any of the terms or provisions of this chapter, shall
be guilty of a misdemeanor and, upon conviction thereof, shall be
subject to a fine not to exceed $500 or to imprisonment for not more
than 90 days, or both, at the discretion of the court.
A member shall be entitled to those benefits
based upon the terms and conditions in effect at the time of separation
from employment.
The plan and trust shall be construed pursuant
to the laws of the State of Michigan. The Board shall administer this
pension trust fund consistent with the trust fund provisions, Article
9, Section 24 of the State of Michigan constitution and other applicable
law. The Board shall have the fiduciary obligations, limitations and
authority as provided by Public Act 314 of 1965 of the state statues,
as amended. The Board shall administer this pension trust in accordance
with applicable collective bargaining agreements.
The retirement system is a reciprocal retirement
system under the provisions of Act 88, Public Acts of 1961 of the
State of Michigan, as amended, which were adopted August 28, 1967.
[Adopted 11-14-2016 by Ord. No. 2016-13]
The City of Royal Oak Retiree Health Care Trust is established
for the purpose of funding other postretirement employee benefits
for eligible City retirees and their beneficiaries (an essential governmental
function). The Retiree Health Care Trust is created and is intended
to be a governmental trust pursuant to § 115 of the Internal
Revenue Code of 1986, as amended, and the applicable treasury regulations.
This article and trust may be known and cited as the "City of
Royal Oak Retiree Health Care Trust" ("Retiree Health Care Trust").
As used in this article, the following terms shall have the
meanings indicated below:
The City of Royal Oak, Michigan, including its offices, boards,
departments, agencies, and instrumentalities.
The Internal Revenue Code of 1986, as amended. Reference
to any section or subsection of the Code includes reference to any
comparable or succeeding provision of any legislation which amends
or replaces such section or subsection and any regulations thereto.
Any written agreement, supplemental agreement, memorandum
of understanding, final arbitrator's decision, judicial decision
or decision of any public board or agency, by and between applicable
collective bargaining associations and the City, and any amendments,
continuations, or renewals, which require the City or any other entity
to make payments for retiree health care benefits.
The plan through which the City provides retiree health care
benefits to eligible City retirees and beneficiaries in accordance
with applicable insurance agreements, collective bargaining agreements,
personnel policies, or other documents.
The City's Director of Human Resources or such other
person, persons, firm, corporation or insurance company or companies
appointed by the City to administer the benefits of the plan.
Health, dental, vision, prescription drug or other health
care benefits to eligible retirees and their qualified spouses and
dependents as determined by the City and applicable collective bargaining
agreements.
The Board of Trustees of the City of Royal Oak Retiree Health
Care Trust.
The City of Royal Oak Retiree Health Care Trust established
and maintained in accordance with the provisions of this article.
The City's Director of Finance or such other person,
persons, firm, corporation or insurance company or companies, appointed
by the City to administer the Trust's investments and funding.
A.
The Trust shall be an irrevocable trust administered consistent with
applicable federal and Michigan law, and shall constitute a governmental
trust under § 115 of the Code, as amended, Revenue Rulings
77-261 and 90-74, and other relevant guidance. The Trust is intended
to fund the City's retiree health care obligations. The Trust
shall conform to all applicable sections of the Internal Revenue Code,
the applicable collective bargaining agreements, personnel policies,
the statement of purpose in this Trust, and all statutes, ordinances,
rules, regulations, arbitrators' awards and judicial decisions
interpreting the foregoing provisions.
B.
The Trust shall consist of City contributions, all investments made
or held by the Trust, and all income therefrom, both received and
accrued, and any other property, which may be received or held by
reason of this Trust.
C.
The Retiree Health Care Trust is intended to be a trust governed by Subpart E of Part I of Subchapter J of Chapter 1 of the Code and related treasury regulations, under which the City is treated as the owner of the Retiree Health Care Trust for U.S. federal income tax purposes. The income accruing to the Trust shall be excluded from gross income as such trust income is derived from the exercise of an essential governmental function as provided for under § 115 of the Code, as amended, and other relevant guidance.
A.
All assets of the Retiree Health Care Trust shall be held and administered,
invested and reinvested, and distributed in accordance with the provisions
of this article and the plan.
B.
The Trust assets shall not be used for or diverted to purposes other
than to provide the benefits contemplated under the Trust or to pay
for reasonable and necessary services, costs and expenses related
to the administration of the plan and Trust.
C.
All income, profits, recoveries, contributions, forfeitures and any
and all monies, securities and properties of any kind at any time
received or held by the Retiree Health Care Investment Board shall
become part of the Retiree Health Care Trust when received, and shall
be held for the use and purposes hereof.
D.
No part of the principal or income of the Trust may inure to the
benefit of the City, any participant or beneficiary other than by
benefit payments pursuant to the plan or for services provided for
the administration of the plan and Trust.
A.
The Retiree Health Care Trust shall receive contributions made by
the City, including the net proceeds from the City's sale of
bonds, to pay the retiree health care obligations consistent with
the actuarial valuations and calculations made by the actuary for
the Trust. The City reserves the right to fund these retiree health
care obligations on a pay-as-you-go basis and the right to provide
such lesser amount as the City determines.
B.
The City, in its sole and absolute discretion, may cause additional
funds to be transferred or contributed to the Retiree Health Care
Trust, and such funds, if any, shall be subject to the terms of this
Trust.
A.
The Board of Trustees of the Retiree Health Care Trust ("Retiree
Health Care Investment Board") shall be vested with the authority
and responsibility for the administration, management and operation
of the Trust. The Retiree Health Care Investment Board shall be a
quasi-judicial body comprised of five members as follows:
(1)
The City Manager.
(2)
Two members of the City Commission who are serving as the City representatives
on the Board of Trustees of the City of Royal Oak Retirement System.
(3)
One general member who is serving as the general member on the Board
of Trustees of the City of Royal Oak Retirement System.
(4)
One police or fire member who is serving as the police or fire member
on the Board of Trustees of the City of Royal Oak Retirement System.
B.
The general administration, management and responsibility for the
proper operation of the Trust and for making effective and construing
the provisions of the Trust shall be vested in the Retiree Health
Care Investment Board established by this section, consistent with
applicable state and federal laws and regulations. A trustee, or other
fiduciary under the Trust, shall act solely in the interest of the
Trust and paying reasonable expenses of administering the Trust. A
trustee shall discharge their duties with the care, skill, and caution
under the circumstances then prevailing which a prudent person, acting
in a like capacity and familiar with those matters, would use in the
conduct of an activity of like character and purpose.
A.
The regular terms of office of the trustees on the Retiree Health
Care Investment Board shall be four years or, if applicable, shall
coincide with and be identical to their terms of office as members
of the Board of Trustees of the Royal Oak Retirement System.
B.
Each trustee shall serve until the expiration of their term of office
or until their death, incapacity, resignation or removal.
C.
A vacancy or vacancies in the office of the trustees shall not impair
the powers of the remaining trustees to administer the affairs of
the Trust, provided there are sufficient trustees to constitute a
quorum.
A.
The trustees shall elect from their own membership a chairperson
and vicechairperson. The chairperson and vicechairperson shall serve
a term of one year or until a new chairperson and vicechairperson
is elected.
B.
The City's director of finance shall be the secretary to the
Retiree Health Care Investment Board.
C.
The City's director of finance shall be the treasurer of the
Trust and the custodian of its assets, except to the assets of the
Trust that the Retiree Health Care Investment Board may place in the
custody of a nationally chartered bank or trust company. The general
bond of the City shall cover all liability for acts as treasurer of
the Retiree Health Care Trust. The treasurer shall credit all receipts
of money and assets of the Retiree Health Care Trust to the Retiree
Health Care Trust. No Trust assets shall be transferred unless previously
authorized by a general or specific resolution of the Retiree Health
Care Investment Board.
D.
The Trust Administrator shall be responsible for the day-to-day operations
related to investments and funding of the plan and shall carry out
the directives of the Retiree Health Care Investment Board.
E.
The Retiree Health Care Investment Board shall retain all professional,
technical, clerical and other services required for the operations
related to investments and funding of the Retiree Health Care Trust.
The compensation for such services shall be as determined by the Retiree
Health Care Investment Board.
F.
The Retiree Health Care Investment Board shall appoint an actuary
who shall advise the Retiree Health Care Investment Board on the actuarial
operation of the Trust. The Retiree Health Care Investment Board shall,
from time to time, adopt such mortality and other tables of experience
and a rate or rates of regular interest as are necessary in the operation
of the Trust on an actuarial basis.
G.
The Retiree Health Care Investment Board may retain legal counsel
to handle the legal matters of the Retiree Health Care Trust and to
give advice and counsel with respect to any matter connected with
the duties of the Retiree Health Care Investment Board.
H.
The Retiree Health Care Investment Board may utilize City staff for
such functions as personnel administration, accounting, banking, and
purchasing. The Retiree Health Care Investment Board may reimburse
the City for actual costs of these services as jointly agreed upon
by the Retiree Health Care Investment Board and the City.
A.
The Retiree Health Care Investment Board shall be the trustee of
the Retiree Health Care Trust and shall have all the powers necessary
to carry out and effectuate the purposes and provisions of the Trust,
including, in addition to any specific powers provided for in this
article, but without limiting the generality of the foregoing, the
power to:
(1)
Administer the Retiree Health Care Trust, including the management
of its assets, and making effective its provisions;
(2)
Make and adopt such reasonable rules and regulations as may be necessary
to carry out the duties of the Retiree Health Care Investment Board
and activities of the Retiree Health Care Trust, including rules and
regulations necessary to preserve the status of the Trust under § 115
of the Internal Revenue Code, as amended, or under successor or related
provisions of law;
(3)
Create and maintain the records of the Retiree Health Care Trust,
including all meeting agenda and minutes;
(4)
Retain such clerical or administrative personnel to perform whatever
administrative activities are required in the proper operation related
to investments and funding of the Retiree Health Care Trust. The Board
may utilize City staff for such functions; and
(5)
Make and execute contracts.
B.
The Retiree Health Care Investment Board shall make distributions
from the Retiree Health Care Trust assets pursuant to a written notification
of the amount from the plan Administrator of the Health Care Plan.
Distributions may be made more frequently than once per year, but
in no case shall the aggregate amount distributed to the Health Care
Plan in any fiscal year exceed the estimated health care costs for
that year. Distributions pursuant to this section shall be made from
the income of the Retiree Health Care Trust and, to the extent that
the income is insufficient, from the corpus of the Retiree Health
Care Trust.
C.
If the Retiree Health Care Investment Board undertakes to defend
any litigation arising in connection with the Retiree Health Care
Trust, the City, to the fullest extent permitted by applicable law,
shall indemnify the Board and Retiree Health Care Trust against their
actual costs, expenses and liabilities (including, without limitation,
reasonable and actual attorneys' fees and expenses incurred)
relating thereto and to be primarily liable for such payments; provided
however, that the City shall not indemnify the Board for any litigation
arising from any actions that are determined by a court of competent
jurisdiction to be fraudulent, in bad faith, illegal or grossly negligent.
A.
The Retiree Health Care Investment Board shall be the trustee of
the Retiree Health Care Trust and shall have the authority to carry
out the purposes of the Retiree Health Care Trust, including, but
not limited to:
(1)
Invest and reinvest the assets of the Retiree Health Care Trust subject
to the terms, conditions, limitations and restrictions imposed by
the State of Michigan on the investments of public employee retirement
systems by the Public Employee Retirement System Investment Act, 1965
P.A. 314, as amended (MCL 38.1132 et seq.). In exercising its discretionary
authority with respect to the management of the Retiree Health Care
Trust, the Retiree Health Care Investment Board shall be an investment
fiduciary and shall act with the care, skill, prudence and diligence
under circumstances then prevailing, that a prudent person, acting
in a similar capacity and familiar with those matters would use in
the conduct of a similar enterprise with similar aims. This shall
include diversifying the assets of the Retiree Health Care Trust so
as to minimize the risk of large losses, unless under the circumstances
it appears prudent not to do so.
B.
Subject to the foregoing, the Retiree Health Care Investment Board
shall have the following rights, powers and duties with respect to
the assets of the Retiree Health Care Trust:
(1)
To retain, manage, improve, repair, operate and control all property,
real or personal, at any time comprising part of the Trust;
(2)
To manage, sell, contract to sell, grant options to purchase, convey,
exchange, partition, lease for any term, and otherwise dispose of
the Trust from time to time and in such manner, for such consideration,
and upon such terms and conditions as the Board, in its discretion,
shall determine;
(3)
To retain all or any part of the Trust in the form in which such
assets were received or acquired by the Retiree Health Care Investment
Board;
(4)
To hold all or part of the Trust in cash or in bank accounts without
the necessity of investing the same;
(5)
To vote any corporate stock either in person or by proxy for any
purpose; to exercise or sell any stock subscription or conversion
right; to participate in voting trusts; to consent to, take any action
in connection with, and receive and retain any securities resulting
from, any merger, consolidation, reorganization, readjustment of the
financial structure, liquidation, sale, lease or other organization
the securities of which may constitute a portion of the Trust;
(6)
To keep property in the name of a nominee with or without disclosure
of any fiduciary relationship; to have evidence of ownership of any
security maintained in the records of a Federal Reserve Bank under
the Federal Reserve Book Entry System; to deposit funds in any bank
or trust company; to carry in the name of the Retiree Health Care
Trust or the nominee or nominees of the Retiree Health Care Trust
and with or without the designation of fiduciary capacity, or to hold
in bearer form, securities or other property which are required or
permitted to be registered; and to cause any securities to be held
by a depository corporation of which the Retiree Health Care Trust
shall be a member or be an agent under a safekeeping contract; provided,
however, that the books and records of the Retiree Health Care Trust
shall at all times show that such investments are part of the Trust;
(7)
To take any action with respect to conserving or realizing upon the
value of any property in the Retiree Health Care Trust; to collect,
pay, contest, compromise or abandon demands of or against the Trust;
(8)
To litigate, defend, compromise, settle, abandon, or submit to arbitration,
on such terms as the Retiree Health Care Investment Board determines,
any claims in favor of or against the Retiree Health Care Trust;
(9)
To employ such agents, experts, investment fiduciaries, legal counsel
and other persons or entities deemed by the Retiree Health Care Board
to be necessary or proper for the administration and management of
the Retiree Health Care Trust; to rely and act on information and
advice furnished by such agents, experts, investment fiduciaries,
legal counsel, and other persons or entities; and to pay their reasonable
expenses and compensation for services to the Board from the Retiree
Health Care Trust.
(10)
To transfer to an investment fiduciary [as defined at MCL 38.1132c(1)]
the authority and accompanying duty to direct the investment and management
of all or a portion of the Retiree Health Care Trust, provided that
such an investment fiduciary shall acknowledge, in writing, fiduciary
status with respect to the Trust; and
(11)
To make, execute, and deliver any and all such instruments,
in writing, as shall be necessary or proper to carry out any power,
right, duty or obligation of the Board of Trustees or any disposition
whatsoever of the Retiree Health Care Trust, and to perform any and
all acts which in the judgment of the Board is necessary or desirable
for the proper and advantageous administration of the Trust.
(12)
To the extent provided by law, the Retiree Health Care Investment
Board may commingle the investment of the Trust assets with other
funds.
A.
The Retiree Health Care Investment Board shall meet at least once
per calendar quarter. The Retiree Health Care Investment Board shall
determine the time for the regular meetings of the trustees and the
place or places where such meetings shall be held.
B.
Notice and conduct of all meetings of the Retiree Health Care Investment
Board, both regular and special, shall be given in accordance with
applicable law, including the Open Meetings Act (MCL § 15.261
et seq.).
C.
The Retiree Health Care Investment Board shall adopt its own rules
of procedure and shall keep a record of its proceedings. Three trustees
shall constitute a quorum at any meeting of the Retiree Health Care
Investment Board. Each trustee shall be entitled to one vote on each
question before the Retiree Health Care Investment Board and at least
three concurring votes shall be necessary for a decision of the Retiree
Health Care Investment Board.
All trustees shall serve without compensation as members of
the Retiree Health Care Investment Board, except that trustees who
are City employees shall suffer no loss in compensation on account
of their services as trustees. Trustees may also be reimbursed by
the Trust for reasonable and necessary costs and expenses in performing
their duties as trustees.
The Retiree Health Care Investment Board's responsibilities
and liabilities shall be subject to the following limitations and
other limitations as set forth in the Trust:
A.
The Retiree Health Care Investment Board shall have no duties other
than those expressly set forth in this Trust and those imposed on
the Retiree Health Care Investment Board by applicable law.
B.
The Retiree Health Care Investment Board and Trust Administrator
shall be responsible only for money and property actually received
by the Retiree Health Care Investment Board, and then only to the
extent described in this Trust.
C.
The Retiree Health Care Investment Board and Trust Administrator
shall not be responsible for the correctness of any determination
of payments or disbursements from the plan.
D.
The Retiree Health Care Investment Board and Trust Administrator
shall have no liability for the acts or omissions of any investment
advisor; insurance company; investment fund; or independent contractor.
E.
In the event of any suit brought against the trustees or Trust Administrator
arising out of the acts within the scope and powers and duties of
the trustees or Trust Administrator, or in the event of any lawsuit
brought by the trustees, the cost of defense or prosecution of such
lawsuit shall be charged to the Trust, and shall be paid directly
from the Trust, provided such costs are not incurred by reason of
bad faith, gross negligence, or breach of a fiduciary obligation to
the Trust.
F.
The Retiree Health Care Investment Board may authorize the purchase
of insurance for the Trust and for the trustees and Trust Administrator
to cover liability or losses occurring for any reason, including,
but not limited to, an act or omission (errors or omissions) of a
fiduciary, including the trustees and Trust Administrator.
A.
The City shall not be liable for payment to the Trust of any amount
other than those required pursuant to this Trust. The City, plan participant/beneficiary,
Trust Administrator or trustee shall not be liable for any debts,
liabilities or obligations of the Trust except as provided herein.
Neither the City nor any plan participant/beneficiary shall have any
right to the return of any money properly paid into the Trust, except
as otherwise specifically provided in the Trust.
B.
Neither the Retiree Health Care Investment Board, Trust Administrator
or its trustees shall be responsible for the validity of any insurance
agreement issued in connection with the Trust or for the failure on
the part of the Insurer to make payments provided by such insurance
agreement, or for the action of any person which may delay payment
or render an insurance agreement null and void or unenforceable in
whole or in part. Notwithstanding the establishment of the Trust or
anything contained in this agreement, the trustees and Trust Administrator
shall not be empowered to interpret the rights and obligation of the
City in any collective bargaining agreements.
C.
No part of the Trust or any benefits payable by the trustees shall
be subject to alienation, sale, transfer, assignment, pledge, or encumbrance
by any person. No plan participant or beneficiary shall be entitled
to receive any part of the contributions made by the City or payments
required to be made by the Trust, in lieu of such benefits provided
under the plan as determined by the trustees in accordance with the
Trust.
A.
The Retiree Health Care Investment Board, or its respective designees,
shall establish a uniform system for the timely transmission of required
reports and shall complete and provide any reports as may be required
by the Code, applicable federal, state or local law.
B.
The trustees, in accordance with the requirements of law, may direct
an impartial firm of independent certified public accountants to act
as agent of the trustees to examine the records and reports as may
be necessary to determine the monies due on behalf of this Trust and
to make a written report to the trustees.
C.
The trustees shall maintain, or cause to be maintained, proper books
of accounts and records of and for the administration of the Trust,
including the minutes of all meetings, and make them available for
inspection during reasonable business hours.
A.
The Trust is established and shall be construed in accordance with
the laws of the State of Michigan and applicable federal laws and
regulations.
B.
The Trust shall constitute a governmental trust pursuant to § 115
of the Code, as amended, and shall be construed, enforced and administered
and the validity thereof determined in accordance with the Code and
the laws of the State of Michigan. If any provision of the Trust is
held to violate the Code or to be illegal or invalid for any other
reason, that provision shall be deemed to be null and void, but the
invalidation of that provision shall not otherwise affect the Trust.
C.
Neither the establishment of the Trust, nor any modification thereof,
nor the creation of any fund or account, nor the payment of any benefits
shall be construed as giving to any person covered under the plan,
or any other person, any legal or equitable right or claim to any
benefits or assets against the City, its elected or appointed officials
or employees, the Retiree Health Care Investment Board or any individual
Retiree Health Care Investment Board member, except as may otherwise
be provided in this Trust.
D.
The headings and subheadings in this Trust are inserted for convenience
of reference only and are not to be considered in the construction
of any provision of the Trust.
E.
Words herein in the masculine gender shall be construed to include
the feminine gender where appropriate, and words used herein in the
singular or plural shall be construed as being in the plural or singular
where appropriate.
F.
In resolving any conflict among provisions of this Trust or any uncertainty
as to the meaning or intention of any provision of this Trust, the
interpretation that causes both the Trust to be exempt from tax and
the Trust to comply with all applicable requirements of the Code shall
prevail over any different interpretation.
G.
This Trust shall be binding upon all plan participants and beneficiaries,
or their applicable heirs, executors, administrators, successors,
and assigns.
Notice given to all interested parties shall, unless otherwise
specified in this Trust, be sufficient if in writing and delivered
or sent by prepaid first-class mail. Except as otherwise noted, the
distribution or delivery of any statements or documents required under
the Trust shall be sufficient if delivered in person or prepaid first-class
mail.
A.
The City, in its sole and absolute discretion, may amend the Retiree
Health Care Trust in accordance with the provisions of § 115
of the Internal Revenue Code, as amended, or as otherwise required
pursuant to the provisions of applicable state and federal law and
regulations.
B.
The Retiree Health Care Trust, though irrevocable, may be terminated
by the City, but only in the following limited circumstances:
C.
Upon termination of the Retiree Health Care Trust, the remaining
assets shall be distributed to the City.
D.
In no event will the Retiree Health Care Trust assets revert to any
entity that is not a state, a political subdivision of the state,
or an entity whose income is excluded from gross income under Code
§ 115.
Third parties may rely on the representations of the Retiree
Health Care Investment Board relating to any authority granted under
the Retiree Health Care Trust.
