Agenda Item 4C
April 21, 2015
Introduction
MEMORANDUM
April 17, 2015
TO:
FROM:
County Council
f\
Robert H. Drummer, Senior Legislative
Attorney~":J
SUBJECT:
Introduction:
Expedited Bill 20-15, Deferred Retirement Option Plan-
Amendments - Retirement Savings Plan-Annuity Guaranteed Retirement Income Plan­
Election
Expedited Bill 20-15, Deferred Retirement Option Plan-Amendments - Retirement
Savings Plan-Annuity - Guaranteed Retirement Income Plan-Election, sponsored by Lead
Sponsor Council President at the request of the County Executive, is scheduled to be introduced
on April 21, 2015. A public hearing is tentatively scheduled for May 5 at 1:30 p.m.
Bill 20-15 would:
(1)
make the guaranteed retirement income plan the default retirement option for new
employees in the Office, Professional and Technical (OPT) or the Service, Labor
and Trades (SLT) bargaining units;
establish a new deferred retirement option plan for sworn deputy sheriffs and
uniformed correctional officers;
provide an annuity option for employees who participate in the retirement savings
plan; and
generally amend the County employee retirement laws.
(2)
(3)
(4)
Bill 20-15 would implement 2 agreements negotiated by the Executive with MCGEO Local
1994. Changing the default option for new employees represented by MCGEO and the addition
of an annuity option for all employees in the RSP resulted from an interest arbitration decision in
favor ofthe County. See ©55-68. MCGEO sought, in arbitration, a new open enrollment period
to elect the GRIP for those MCGEO members who are participating in the RSP. The arbitrator
agreed with the County that a new open enrollment period for existing RSP members was
inappropriate.
The establishment of a new DROP for sworn deputy sheriffs and uniformed correctional
officers is part of the recently negotiated labor agreement with MCGEO for FYI6. This new
DROP would be similar to the existing DROP for sworn police officers.
An
eligible employee
could choose to enter the DROP at full retirement. Once in the DROP, the employee would
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continue to work and receive his or her normal salary for up to 3 years. The employee would stop
making retirement contributions and stop earning more service time for retirement while in the
DROP. The County would pay the employee's retirement pension into a separate DROP account.
The employee must choose investment options for these funds similar to the RSP. When the
DROP period is over, the employee must leave County service and not return. The employee
would receive the DROP account balance plus the pension the employee earned before entering
the DROP with enhancements
to
the pension for cost-of-living adjustments the employee missed
while in the DROP. As with the existing DROP for police and fire, the employee receives this
enhanced retirement benefit in return for providing management with advanced notice of
retirement to aid management in succession planning. The Sheriff, in his letter supporting the new
DROP, cited succession planning as the benefit to his Office. ©69.
This packet contains:
Expedited Bill 20-15
Legislative Request Report
County Executive Memo
Fiscal and Economic Impact statement
Arbitrator Decision
Sheriff Popkin letter
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Expedited Bill No.
20-15
Concerning:
Deferred
Retirement
Option Plan - Amendments ­
Retirement Savings Plan - Annuity ­
Guaranteed Retirement Income Plan
- Election
Revised: April 16, 2015 Draft No. 4 _
_
Introduced:
April 21, 2015
Expires:
October 21. 2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
...l.N..!.:.o::.!..!n~e
_ _ _ _ __
Ch, _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the Request of the County Executive
AN EXPEDITED ACT
to:
(1)
(2)
(3)
(4)
make the guaranteed retirement income plan the default retirement option for
certain employees;
establish a deferred retirement option plan for sworn deputy sheriffs and uniformed
correctional officers;
provide an annuity option for employees who participate in the retirement savings
plan; and
generally amend the County employee retirement laws.
By amending
Montgomery County Code
Chapter 33, Personnel and Human Resources
Sections 33-37, 33-38A, 33-44, 33-115 and 33-120
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
Heading or defined term.
Added to existing law
by
original
bill.
Deletedfrom existing law
by
original
bill.
Added
by
amendment.
Deletedfrom existing law or the
bill by
amendment.
Existing law unaffected by bill.
* * *
The County Council for Montgomery County, Maryland approves the following Act:
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Expedited Bill No. 20-15
1
Sec.
1.
Sections 33-37, 33-38A, 33-44, 33-115, and 33-120 are amended
as follows:
33-37. Membership requirements and membership groups.
(a)
Full-time employees.
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(1)
A full-time employee ofthe County or participating agency must
become a member of a County retirement plan as a condition of
employment, when the employee meets the applicable eligibility
requirements, if the employee waives all rights of membership
under any other retirement system supported in whole or in part
by the State, a political subdivision of the State, or the County.
(2) A part-time employee who becomes a full-time employee and is
not an active member of any County retirement plan must
become an active member of:
(A)
the integrated retirement plan, if the employee is eligible
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for membership in the integrated plan;
(B) the Retirement Savings Plan, if the employee satisfies the
requirements for membership in Group I or II, even if the
employee did not begin or return to County service on or
after October 1, 1994 and participates as described in
Section 33-115; or
(C) the guaranteed retirement income plan if the employee is
eligible for membership and [elects to] participate§ as
described in subsection (k).
(3) A temporary employee who becomes a full-time employee must
become an active member of:
(A)
the integrated plan, if the employee
IS
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eligible for
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membership in the integrated plan;
®
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(B)
the Retirement Savings Plan, if the employee satisfies the
requirements for membership
in
Group I or II, even if the
employee did not begin or return to County service on or
after October 1, 1994 and participates as described in 33­
115; or
(C)
the guaranteed retirement income plan if the employee is
eligible for membership and [elects to participate]
participates as described in subsection (k).
(b)
Part-time employees.
(l)
A part-time employee ofthe County or participating agency may
become a member of a County retirement plan if the employee
waives all rights of membership under any other retirement
system supported in whole or in part by the State, a political
subdivision of the State, or the County_ Membership is effective
on the date the employee's application for membership is
approved.
(2)
A part-time employee who is not an active member of a
retirement plan may become a member of either:
(A)
the integrated plan, if the employee
membership in the integrated plan;
(B)
the Retirement Savings Plan if the employee satisfies the
requirements for membership in Group I or II, even if the
employee did not begin or return to County service on or
after October 1, 1994 and elects to participate as described
in Section 33-115; or
IS
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eligible for
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Expedited Bill No. 20-15
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(1)
(k)
(C)
the guaranteed retirement income plan if the employee is
eligible for membership and elects to participate as
described in subsection (k).
*
*
(3)
*
*
*
*
[Election to join] Eligibilityfor the guaranteed retirement income plan.
An eligible full-time employee hired on or after July 1, 2009 and
before July..L 2015, and a part time or temporary employee who
becomes full time on or after July 1, 2009 and before July..L
2015, who does not participate in the retirement savings plan,
may elect to participate in the guaranteed retirement income plan.
An eligible employee must make an irrevocable election during
the first 150 days of full time employment.
If an eligible
employee elects to participate, participation must begin on the
first pay period after an employee has completed 180 days of full
time employment. An employee who does not participate in the
guaranteed retirement income plan must participate in the
retirement savings plan beginning on the first pay period after the
employee completes 180 days of full time employment.
*
*
*
A member of the Office, Professional and Technical (OPT) or
the Service, Labor and Trades (SLT) collective bargaining unit
must participate in the guaranteed retirement income plan unless
the employee makes
~
one time irrevocable election to participate
in the retirement savings plan during the first 150 days of full
time employment, if the employee:
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Expedited Bill No. 20-15
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(A)
is hired as
E!
full-time employee on or after July .L. 2015;
or
{ID
is
E!
part time employee who does not participate in the
retirement savings plan and becomes
E!
full-time employee
on or after July.L. 2015.
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Participation must begin on the first M period after an employee
has completed 180 days of full time employment.
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00
On
or after July.L. 2015, an eligible full-time employee or
E!
part­
time or temponlly employee who becomes
E!
full-time employee
in
E!
position that is not within
E!
bargaining unit must participate
in the retirement savings plan unless the employee makes
E!
one­
time irrevocable election to participate in the guaranteed
retirement income plan during the first 150 days of full time
employment. If the employee elects to participate, participation
must begin on the first
PE!Y
period after an employee has
completed 180 days of full-time employment.
A part-time
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employee who participates in either the retirement savings plan
or the guaranteed retirement income plan when the employee
becomes
E!
full-time employee must continue to participate in the
same retirement plan.
[(7)]m
An individual who changes employment from the County
government to a participating agency or from a participating
agency to the County government must continue to participate in
his or her retirement plan and is not eligible to make an election.
33-38A. Deferred Retirement Option Plans.
*
*
*
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(0
DROP Plan (or Sworn Deputy Sheriffs and UnifOrmed Correctional
Officers.
ill .
UnifOrmed
correctional officer
means Correctional Officer
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11
Correctional Officer III, Correctional
Dietary Officer
1
Correctional Dietary Officer
11
Correctional
Correctional Officer
Supervisor-Sergeant,
Correctional
Dietary
Supervisor,
Correctional Shift Commander-Lieutenant, Correctional Unit
Commander-Captain, Deputy Warden, Warden and Director of
the Department of Corrections.
ill
Sworn Deputy Sheriff
means Deputy Sheriff
1
Deputy Sheriff
11
Deputy Sheriff III, Deputy Sheriff Sergeant, Deputy Sheriff
Lieutenant, Deputy Sheriff Captain, Assistant Sheriff, and the
Chief Deputy Sheriff (Colonel).
ill
Eligibility.
A sworn deputy sheriff or uniformed correctional
officer who is at least age 55 years old and has at least 15 years
of credited service or is at least 46 years old and has at least 25
years of credited service may participate in the DROP.
A
uniformed correctional officer or sworn deputy sheriff must
participate in the optional retirement plan or the integrated
retirement plan as
£!
Group E member in order to participate in
the DROP.
ill
Application requirements.
An
eligible employee must apply at
least 60 days before the employee becomes
employee may withdraw
~
~
participant.
An
pending application within
.2
weeks
after submitting the application.
ill
Employee participation and termination.
The employee's
participation in the DROP must begin on the first day of
~
month
®
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Expedited Bill No. 20-15
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that begins at least 60 days, but not more than 90 days, after the
employee applied and must end
l
years after the employee begins
to participate or at an earlier date chosen
Qy
the employee. When
the employee's participation in the DROP ends, the employee
must stop working for the County and receive
~
pension benefit.
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®
Employment status.
An
employee who participates in the DROP
must continue to be
~
member ofthe retirement system, earn sick
and annual leave, and remain eligible to participate in health and
life insurance programs.
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ill
Retirement date, retirement contributions, and credited service.
The retirement date of an employee who participates in the
DROP is the date when the employee begins to participate in the
DROP,
and the
employee
must not make
retirement
contributions after that date.
An
employee who wishes to
purchase prior service must do so before the employee's
participation in the DROP begins. Sick leave in excess of 80
hours must be credited towards retirement at the beginning ofthe
employee's participation.
00
Pension benefits.
(A)
Before an employee's participation begins, the employee
must select a:
ill
(ii)
pension payment option under Section 33-44 for the
regular retirement pension payments; and
pension payment distribution option for the
distribution of the employee's DROP account.
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illl
A pension benefit must not be paid to the employee while
the employee participates in the DROP, but must be
(!J
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Expedited Bill No. 20-15
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deposited in
!!
DROP account established for the
participant
Qy
the County. The participant must receive
the account balance and the County must close the account
within 60 days after the employee stops participating in
the DROP. Subject to any requirements of the Internal
Revenue Code and other applicable law, the employee
may roll over the account balance into an eligible
retirement plan.
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.cg
An
employee must direct the Board of Investment
Trustees to allocate pension benefits contributed to the
employee's DROP account in one or more of the
investment funds selected
Qy
the Board.
An
employee's
direction of investment must remain in effect until the
employee changes the direction.
An
employee must select
investment options in order to participate in the DROP.
@
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After the employee's participation in DROP ends, the
employee's pension benefit will be based on:
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ill
the employee's credited service immediately prior
to the beginning of the employee's participation in
the DROP, adjusted to include credit for unused
sick leave under Section 33-41;
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(ii)
the employee's average final earnings, excluding
earnings during the period of participation in the
DROP; and
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(iii)
increases in the consumer price index during the
period of the employee's participation that would
have resulted in an Increase in the employee's
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Expedited Bill No. 20-15
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penSIOn benefit if the employee had not been
participating in the DROP.
(2}
Disability retirement.
An
employee may apply for disability
retirement prior to the tennination of the employee's
participation in the DROP.
(A)
A DROP participant who is eligible for
~
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servlce­
connected disability retirement must choose either:
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ill
(ii)
the retirement benefit under the DROP and the
DROP account balance; or
the service-connected disability retirement benefit
that the employee would have received if the
employee had continued as an active employee and
had not elected to participate in the DROP, and no
DROP account balance.
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ill}
A DROP participant who is eligible for
~
non-service­
connected disability retirement benefit must receive the
non-service-connected disability retirement benefit under
Section 33-43(h), with the benefit calculated as of the
member's DROP exit date, plus the DROP account
balance.
{Q
~
If
DROP participant ends participation in the DROP
before
~
final decision is made on the disability retirement
application, the DROP account must not be distributed
until
~
final decision is made.
{l.ID
Death benefit.
If
an employee dies during the employee's
participation in the DROP, the employee's beneficiary will
receIve:
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ill
the death benefit that the beneficiary would have received
if the employee had retired on the date on which the
employee began to participate in the DROP, adjusted
under subparagraph (7)(D); and
an
the balance of the employee's DROP account.
.Ql}
DROP account distribution options.
A member may have the
balance of the DROP account distributed as
~
lump sum or an
annuity, or have some or all paid directly to an eligible retirement
plan as
~
direct rollover distribution. If the member dies before
the balance of the DROP account is distributed, the beneficiary
may receIve distribution of the balance under any option
described in this paragraph as allowed under the Internal
Revenue Code and applicable regulations.
33-44. Pension payment options and cost-or-living adjustments.
*
ill
*
*
Transfer/rom Retirement Savings Plan.
A participant who transfers his or her retirement savings plan account
balance under Section 33-120 may elect to receive his or her account
balance paid as
an
annuity under subsection (g)(2).
33-115. Participant requirements and participant groups.
(a)
Participant Requirements.
(l)
Full-time employees.
(A)
Except
as
provided
in
paragraphs (3), (4), [and (7)] and the
last sentence of Section 33-37(e)(2), a full-time employee
eligible for membership in Group I or Group II must
participate
in
the Retirement Savings Plan or the
Guaranteed Retirement Income Plan when the full-time
®
­
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(iii)
(ii)
(C)
(iii)
(ii)
(B)
employee meets the applicable eligibility requirements or
forfeit employment, unless the Chief Administrative
Officer exempts the employee from participation.
A part-time employee who becomes a full-time employee
and is not an active member of any retirement plan for
County employees, must become a member of:
(i)
the integrated retirement plan, if the employee is
eligible for membership in the integrated plan;
the Retirement Savings Plan, if the employee
qualifies for Group I or
II,
even if the employee did
not begin or return to County service on or after
October 1, 1994; or
the Guaranteed Retirement Income Plan if the
employee is eligible for membership [and makes an
election].
A temporary employee who becomes a full-time employee
must become an active member of:
(i)
the integrated plan, if the employee is eligible for
membership in the integrated plan;
the Retirement Savings Plan, if the employee
satisfies the requirements for membership in Group
I or
II,
even if the employee did not begin or return
to County service on or after October 1, 1994; or
the Guaranteed Retirement Income Plan if the
employee is eligible for membership in the
Guaranteed Retirement Income Plan [and makes an
election under subsection (7)].
@
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*
*
(7)
Retirement Income Plan.
*
In
[Election to participate] Participation
the Guaranteed
(A) [A full time employee hired or rehired on or after July 1,
2009 and a part time and temporary employee who
becomes full time after July 1, 2009 participate in the
guaranteed retirement income plan.
An
eligible employee
must make a one time irrevocable election during the first
150 days of employment. If an eligible employee elects to
participate, participation must begin on the first pay period
after an employee has completed 180 days of full time
employment. A full time employee who does not elect to
participate in the guaranteed retirement income plan must
participate in the retirement savings plan beginning on the
first pay period after the employee has completed 180 days
of full time employment.]
A participant who changes
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employment from the County directly to a participating
agency or from a participating agency directly to the
County must continue to participate in his or her
retirement plan and is not eligible to make an election. A
member of the Office, Professional and Technical (OPT)
or the Service, Labor and Trades (SLT) collective
bargaining unit must participate in the Guaranteed
Retirement Income Plan, unless the employee makes
§:
one
time irrevocable election to participate in the Retirement
Savings Plan during the first 150 days of full time
employment, if the employee:
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@
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ill
is hired as
2015; or
~
full-time employee on or after July
L
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(ii) is
~
part time employee who does not participate in
the Retirement Savings Plan and becomes
time employee on or after July
L
2015.
Participation must begin on the first
~
~
full­
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period after an
time
employee has completed 180 days of full
employment.
(B) Except as provided in subparagraph
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!A1
an eligible
employee must participate in the Retirement Savings Plan
unless the employee makes
f!
one time irrevocable election
to participate in the Guaranteed Retirement Income Plan
during the frrst 150 days of full-time employment.
Participation must begin on the first
~
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period after an
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employee has completed 180 days of full- time
employment. A part-time employee who participates in
either the Retirement Savings Plan or the Guaranteed
Retirement Income Plan when the employee becomes
~
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full-time employee must continue to participate in the
same retirement plan.
{Q
A part time employee who is not a participant in the
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Retirement Savings Plan may make a one time irrevocable
election to participate in the Guaranteed Retirement
Income Plan any time after the employee has completed
150 days of employment.
(b)
Participants groups and eligibility.
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(1)
Group L
Except as provided in the last sentence of Section 33­
3 7(e)(2), any full-time or career part-time employee meeting the
criteria in paragraphs (A) or (B) must participate in the retirement
savings plan ifthe employee begins, or returns to, County service
on or after October 1, 1994.
An
employee hired on or after July
1, 2009 must be employed on a full time or part time basis with
the County for 180 days before participating in the Retirement
Savings Plan.
An
individual who changes employment from the
County government directly to a participating agency or from a
participating agency directly to the County government must
continue to participate in the same retirement plan. Participation
in the Retirement Savings Plan must begin on the first payroll
after an employee has completed 180 days of employment if the
employee:
(A)
(i)
(ii)
(iii)
(iv)
is not represented by an employee organization;
does not occupy a bargaining unit position;
is not a public safety employee; and
does not elect to participate in the Guaranteed
Retirement Income Plan; or
(B)
(i)
(ii)
is not a public safety employee; and
is subject to the terms of a collective bargaining
agreement between the County and an employee
organization which requires the employee to
participate in the [retirement savings] Guaranteed
Retirement Income Plan if the employee does not
elect to participate in the [guaranteed retirement
income] Retirement Savings Plan; and
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(iii)
[does not elect] elects to participate in the
Retirement Savings Plan.
*
33-120.
Distribution of Benefit.
*
*
*
*
*
(f)
Distribution methods.
The Chief Administrative Officer must pay, at
the request of the participant or the designated beneficiary, a
participant's account balances in the retirement savings plan upon
retirement, disability retirement, death, or separation from County
service.
354
355
356
357
*
*
*
358
359
360
361
362
363
Optional method gf distribution
:.
Transfer to Employees'
Retirement System. Annuity Option.
A participant may elect to
have the participant's entire account balance transferred to the
employees' retirement system and have the account balance paid
in one ofthe annuity options available under Section
33-44(g)C2).
*
*
*
364
365
366
367
Sec. 2.
Expedited
Effective
Date.
The Council declares that this legislation
is necessary for the immediate protection ofthe public interest. This Act takes effect
on July 1,2015.
368
Approved:
F:\LAW\BILLS\1520 Retirement - RSP - GRIP - Default - Annuity\BiII 4.Docx
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LEGISLATIVE REQUEST REPORT
Expedited Bill 20-15
DROP-Amendments
-
RSP-Annuity GRIP-Election
DESCRIPTION:
Amend the County's retirement law to support the collective
bargaining agreement entered into with the Municipal and County
Government Employees Organization, Local 1994 (MCGEO) and
the arbitrator's decision.
In order to implement the collective bargaining agreement entered
into with the Municipal and County Government Employees
Organization, Local 1994 (MCGEO) and the arbitrator's decision,
the retirement law needs to be amended.
PROBLEM:
GOALS AND
OBJECTIVES:
The Bill amends the retirement law to: (a) establish the Guaranteed
Retirement Income Plan (GRIP) as the default retirement option
for all MCGEO employees hired after July 1,2015; (b) establish a
new Deferred Retirement Option Plan (DROP) for sworn deputy
sheriffs and uniformed correctional officers; and (c) provide an
annuity option for employees who participate
in
the Retirement
Savings Plan (RSP) from the ERS.
COORDINATION: Montgomery County Employee Retirement Plans & Office of
Human Resources
FISCAL IMPACT: Office of Management and Budget
ECONOMIC
IMPACT:
EVALUATION:
Department of Finance
N/A
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
N/A
Linda Herman, Executive Director,
Employee Retirement Plans
Shawn Stokes, Director, OHR
Montgomery
County
APPLICATION
WITHIN
MUNICIPALITIES:
NI
A
PENALTIES:
N/A
F:\LAWlBILLS\1520 Retirement - RSP - GRIP - Default - Annuity\LRR.Doc
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~ -)~J
-
1[15 tPR
16 AH
9: 3q
OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
~
-..)
LL
SOP
!);
~
Isiah Leggett
County Executive
:MEMORANDUM
April 7,2015
MONTGOMf;RYCdUNTY
COUNCIL
RECEIVED
->010
J?
TO:
George Leventhal, President
County Council
Isiah Leggett, County Executiv
Expedited Legislation to Amend Chapter 33, Personnel and Human
Resources.
FROM:
SUBJECT:
I am attaching for the Council's consideration a Bill that would amend the
County's retirement law to support the collective bargaining agreement entered into with
the Municipal and County Government Employees Organization, Local 1994 (MCGEO)
and the arbitration award. The Bill amends the retirement law
to
(a) establish the
Guaranteed Retirement Income Plan (GRIP) as the default retirement option for all
MCGEO employees hired after July 1, 2015; (b) provide for a Deferred Retirement
Option Plan (DROP) for sworn deputy sheriffs and uniformed correctional officers; and
(c) provide an annuity option for employees who participate
in
the Retirement Savings
Plan (RSP) from the ERS.
Attachments
c:
Linda Herman, Executive Director, MCERP
Jennifer Hughes, Director, OMB
Shawn Stokes, Director, OHR
Joseph Beach, Director, Finance
@
montgomerycountymd.gov/311
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· '. i
.... 1
Fiscal Impact Statement
Expedited Council Bill XX-IS Retirement - Employees' Retirement System Deferred
Retirement Option Plan - Amendments - Retirement Savings Plan -: Guaranteed
Reprement Income Plan - Election .
1. Legislative Summary.
This bill implements changes to County employee retirement options as a result of the
collective bargaining process. Changes include the following: 1) set the default option
for all new employees in MCGEO effective July 1, 2015 to the Guaranteed Retirement
Income Plan (GRIP); 2) provide Retirement Savings Plan (RSP) participants with the
same option to purchase an annuity from the Employees' Retirement System as GRIP
participants; and 3) establish a Deferred Retirement Option Plan (DROP) for sworn
deputy sheriffs, uniformed correction officers, uniformed sheriff management, and
uniformed correctional management.
2. An estimate of changes in County revenues and expenditures regardless of whether the
revenues or expenditures are assumed in the recommended or approved bUdget. Includes
source of information, assumptions, and methodologies used.
Implementation of this bill requires one-time changes to various systems. For the GRIP
default change, the Oracle payroll system must be updated to reflect default retirement
status for an estimated one-time impactof$10,000. Additionally, the implementation of
the RSP annuity offering will require one time programming changes to PeopleSoft, the
pension administration system, for an estimated $10,000. For the addition of the DROP,
there are one-time costs of $30,000 to establish the plan with Fidelity, the County's
recordkeeper, $10,000 to program Oracle payroll changes, and $10,000 for PeopleSoft
programming changes.
.
The County's pension actuary, Gabriel Roeder Smith
&
Company (GRS), has determined
that the GRIP and RSP annuity will not increase costs. According to GRS, the actuarial
cost of the DROP would require an additional County contribution of between $84,675
and $253,679 annually beginning in FYI7.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
The total additional expenditures from the GRIP default and RSP annuity offering are
estimated at $20,000 in the first year, and no additional costs over 6 years.
The total additional expenditures from the DROP change are estimated at $50,000 in the
first year, and between $84,675 and $253,679 in each year afterwards for a total
estimated cost of between $473,375 and $1,318,395. The total impact of this bill would
be estimated at $70,000 in the first year, and between $493,375 and $1,338,395 over 6
years.
4. An actuarial analysis through the entire amortization period for each bill that would affect
retiree pension or group insurance costs.
See attached.
5. An estimate of expenditures related to County's information technology (IT) systems,
including Enterprise Resource Planning (ERP) systems.
i.
i.
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,
I
.
,
;
As
mentioned in #2, there is a total one-time impact of $20.000 to make payroll changes,
a one-time impact of $20,000 to make PeopleSoft programming changes.
6. Later actions that may affect future revenue and expenditures if the bill authorizes future
spending.
Not applicable.
7.
An
estimate of the staff time needed to implement the bill.
No additional staff time will be required to implement the bill.
8.
An
explanation of how the addition of new staff responsibilities would affect other duties.
No additional
staff
responsibilities would be added.
9.
An
estimate of costs when an additional appropriation is needed.
No additional appropriation is necessary,
as
the retirement funds
will
absorb the'
implementation cost.
An
additional appropriation would
be
required
in
FYI7,
as noted in
#2, to fund the actuarial cost ofthe DROP.
10. A
description ofany variable that could affect revenue and cost estimates.
The DROP cost range could be affected by a participation rate different from the actuarial
assumed rate.
.
11. Ranges of revenue or expenditures that are uncertain or difficult to project.
See#2.
12.
If
a bill is likely to have no fiscal impact, why that is the case.
Not applicable.
13. Other fiscal impacts or comments.
Not applicable.
14. The following contributed to and concurred with this analysis:
Corey Orlosky, Office of Management and Budget
Linda Herman, Executive Director. Montgomery County Employee Retirement Plaris
~d
Date
I
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Economic Impact Statement
Bill ##-15, Retirement - Employees' Retirement System - Deferred Retirement
Option Plan - Retirement Savings Plan -Guaranteed Retirement Income Plan ­
Election - Annuity
Background:
This legislation would amend the law regarding the Employees' Retirement System
(ERS)
to:
• establish the Guaranteed Retirement Income Plan (GRIP) as the
default
retirement
option for all MCGEO employees hired after July
1,2015;
• provide for a Deferred Retirement Option Plan (DROP) for swom deputy sheriffs
and uniformed correctional officers; and
• provide an annuity option for employees who participate in the Retirement
Savings Plan (RSP) from the ERS.
1.
The sources of information, assumptions, and methodologies used.
The
source
of information is from the staff of the Montgomery County Employee
Retirement Plans. Assumptions and methodologies used have been provided by the
ERS'
actuary.
2. A
description of any variable that could affect the economic impact estimates.
The estimate ofcosts is based upon projections including participation rates (DROP),
life expectancies (RSP annuity offering), investment earnings (GRIP) and other
demographic assumptions from the actuarial analysis. Ifthe actual assumptions
are
different than what was estimated by
that
analysis for each ofthe three projections
and demographic assumptions, there could
be
an economic impact. At this time, it is
Uncertain what changes to the estimated projections and demographic assumptions
would
be
and would have on the future economic impacts.
3~
The Bill's positive or negative effect,
if
any on employment, spending, saving,
investment, incomes, and property values in the County.
The proposed legislation amends
the
law regarding
the
ERS that would result in
changes to
the
participation of various groups
in
the
retirement plans offered by the
County. However, based on the actuarial analysis cited in section 2, changes in
participation will not impact the County's property values, incomes, investment,
saving, .or spending of County residents.
4.
If
a Bill
is
likely to have no economic impact, why
is
th_t the case?
See paragraph
#3
above.
5.
The following contributed to or concurred with this analysis: David Platt and Rob
Hagedoom,
Finance;
Linda Herman, Executive Director, Montgomery County
Employee Retirement Plans.
Page 1 of2
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...j
.
I
.. l
Economic Impact Statement
Bill ##-15, Retirement -
Employees~
Retirement System - Deferred Retirement
Option Plan - Retirement Savings Plan -Guaranteed Retirement Income Plan - .
Election - Annuity
ph F. Beach, Director
Department ofFinance
Page2of2
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GRS
March 19,2015
Gabriel
Roeder Smith
&
Company
Consultants
&
Actuaries
20 North Clark Street
Suite 2400
Chicago. IL
60602-5111
312.456.9800 phone
312.456.9801
fax
www.gabrielroeder..com
Ms. Linda Herman
Executive Director
Montgomery County Employees' Retirement System
RockVille, Maryland
Re: Projections ofthe Guaranteed Retirement Income Plan (GRIP) under Alternate New
Hire GRIP Election Scenarios (Update to January 26, 2015, letter)
Dear Linda:
In accordance with your request, we have performed projections of the Guaranteed Retirement
Income Plan County contribution requirement and funded ratio based on the actuarial valuation
as of July 1,2014, under alternate new hire GRIP election scenarios.
The new hire election (or defaulting into) GRIP scenarios that we considered include the
following. The percentage of new hires that are not assumed to elect GRIP are assumed to elect
the Retirement Savings Plan (RSP).
New Hires Elect GRIP
Scenario
Baseline - 33 1/3% Elect GRIP
50% Elect GRIP
Percentage ofNew Percentage of New
Hires Electing GRIP Hires Electing RSP
33 1/3%
50%
662/3%
50%
33113%
66 2/3%
Elect GRIP
662/3%
For each ofthe new hire election scenarios outlined above, we performed projections showing
the GRIP County contribution requirement and funded ratio assuming a future investment return
of 7.50%. The results of our projections for each of the three new hire GRIP election scenarios
are summarized in Graph A and Exhibit
A.
Exhibit A also illustrates projected RSP payroll and projected County contribution dollars
combined for GRIP arid RSP. Due to the volume of data from the projections, we summarized
the key projection information in the exhibits.
For these projections, we used the GRIP census data used in the actuarial valuation as ofJuly
1,
2014, and census data provided by Pat Paoli on January 12,2015, for current RSP members.
@
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Ms. Linda Hennan
Montgomery County Employees' Retirement System
March 19,2015
Page 2
The projection scenarios are based on the following data and assumptions:
• Census data file of current RSP members provided by the County, including:
o Demographic infonnation for each participant
(date
of birth and date of hire)
o RSP balance as of June 30, 2014
o Contributions for each year ending June 30 for the period 2012 through 2014
• Approximately 3,500 active RSP members were included in the analysis from the data
file
• Pay rates and salaries were not available for RSP members. Therefore, we estimated the
2014 pay rate based on the actual contribution amounts received in the data and used it
to
project future contributions
.
• Assumptions from the actuarial valuation as of July 1,2014, for GRJP members
including assumptions for salary increases, tennination rates, retirement rates, and pre­
retirement mortality
Exhibit B summarizes the actuarial assumptions and methods for GRJP used in the analysis and
Exhibit C summarizes the GRJP benefit provisions. For purposes of projecting RSP payroll, we
have assumed the RSP member behavior and salary increases would follow the same
assumptions as GRJP.
The County contribution rate
to
the RSP is 8.00% of pay. The County nonnal cost rate for GRJP
is approximately 7.30% ofpay based on an investment return assumption of 7.50% and a GRJP
interest crediting rate of 7.25%. When GRJP experiences gains and assets exceed liabilities, the
County contribution rate will be lower than nonnal cost. When GRJP experiences losses and
there is an unfunded liability, the County contribution rate will be higher than normal cost.
The GRJP County contribution rate during the 20 year projection period is less than 8.00% under
all new hire GRJP election scenarios. For the majority ofthe 20-year projection period, total
projected County contribution dollars decrease as the percentage of new hires electing GRJP
increases.
Because the County bears the investment risk for the GRIP and the plan members bear the
investment risk for the RSP, higher GRJP elections for new hires will result in the County
undertaking more risk. However, the County also benefits from the rewards
(if
investment
returns are favorable).
Stochastic projections which simulate future investment returns for a number ofpotential future
outcomes (such as 1,000 outcomes) could help illustrate the probability of alternative investment
return scenarios occurring. However, stochastic projections were outside the scope ofthis
assignment.
Future actuarial measurements may differ significantly from the current measurements presented
in this cost analysis, due to such factors as the following: plan experience differing from that
anticipated by the economic or demographic assumptions; changes in economic or demographic
assumptions; and changes in plan provisions, contribution amounts or applicable law.
Gabriel Roeder Smith
&
Company
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Ms. Linda Herman
Montgomery County Employees' Retirement System
March 19, 2015
Page
3
If
any of the provisions, underlying data or assumptions used in this analysis appear
to
be
incorrect or unreasonable, please let
us
know as soon as possible so we can update the analysis.
The signing actuaries
are
independent of the plan sponsor.
Lance Weiss and Amy Williams are Members ofthe American Academy ofActuaries
(MAAA)
and meet the Qualification Standards of the American Academy ofActuaries
to
render the
actuarial opinion herein.
Please let us know
if
you have any questions or would like
to
discuss the results of this analysis
further.
Sincerely,
t?r'~. d~_~~v
I
~v~
Amy Williams, ASA, MAAA
Consultant
Lance
J.
Weiss,/iA, FC A, MAAA
Senior Consultant
LW/AW:mrb
Gabriel Roeder Smith
&
Company
 PDF to HTML - Convert PDF files to HTML files
Graph A
"-----~
--
.....•
---­
Projected Funded Ratio and County Contribution Amounts Based on
Future Annual Investment Return
of
7.50%
and Alternate New Hires GRlP Election
"Scenarios
125.0%
120,0%
115.0%
110.0%
~
14.00%
12.00%
1
~i:."'_"'!f !!!i!i.~~
~
.
.
=~
10.00%
8.00010
~
105.0%
'a
-8
1:1
~
100.0%
95.0010
h
t
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'I
II
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Pi
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&.
Colllpany
4
 PDF to HTML - Convert PDF files to HTML files
Exhibit A
Montgomery County Employees' Retirement System
Projection Results ­ Comparison of GRfP Results Under Alternlltlve Future Investment Return Scenarios
Results Based on July 1, 2014 Actuarial Valuation and
331130/.,
50% and 66
213%
of New Hires Elect GRIP
A... ume. AnouAllllvellroenl Retu", or7.50%
($
In Ihollla"")
Year
Ended
Inve.tInenl
~
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Refilm
17.66%
1.50%
1.50%
1.50%
1.50%
7.50%
7.50%
7.50%
7.50%
7.50%
7.50%
7.50'A.
7.50%
7.50%
7.50%
7.50%
7.50%
7.50%
7.50'10
7.50'''
7.50'10
GRIP Attive Member
Poj!!!IRtion
'';' orNew Hire. Ele.t GRIP
Bo.elln.
50%
66113%
1,263
1,263
1.263
1,346
1,445
1,544
1,409
1,581
1.754
1,942
1,465
1,703
2,114
1,516
1,815
1,562
2,269
1,916
2,413
1.604
2,008
2,546
1,641
2,094
1,676
2,671
2,173
2,186
1,707
2,247
1,736
2,895
2,316
1,762
2,996
2,379
1,786
2,437
3.089
2,492
3,116
1.808
3,256
1,828
2.542
3,331
2,589
1.847
1,863
3,399
2,631
1,878
2,669
3,461
1,892
3,517
2.705
2,737
3,569
1.904
1,916
2,767
3,617
GRIP Atttve Member PAXroll
% orN.wHl.... Elecl GRIP
Baseline
66113%
50'"
83,226 $
$
83,226
83.226
$
95,816
90.508
101,124
97,399
116,844
107,121
104,484
118,591
132,699
III ,923
130,463
149,003
165,485
119,431
142,458
121,056
154,696
182,336
134,749
167,162
199.576
142,627
217,371
119,999
150,738
235,735
193.236
159,090
206,952
254,814
167.598
221,003
274,408
176,463
294,654
235.558
250,689
315,707
185.670
195.130
266,267
337,404
205,012
282,434
359,855
215.171
299,074
382.977
225,762
316,310
406.857
236,746
334,121
431,495
248,014
352,431
456,848
259,776
483,073
371.425
GRIP County COlltributlon
Rote
% or N.w HI.... EI.ct GRIP
Bueline
50'A.
66113%
6.45%
6..45%
6.45%
6.72%
6.72%
6.72%
6.61%
6.61%
6.61%
6.37%
6.43%
6.48%
6.36%
6.25%
6.45%
6.12%
6.28%
6.40'A.
6.04%
6.24%
6.39%
6.06%
6.28%
6.45%
6.08%
6.33%
6.50%
6. 1O'A.
6.36%
6.54%
6.39%
6.57%
6.12%
6.13%
6.61%
6.42%
6.14%
6.45%
6.63%
6.15%
6.47%
6.65%
6.16%
6.67%
6.48%
6.17%
6.50%
6.69%
6.80'/,
6.33%
6.63%
6.65%
6.35%
6.82%
6.35%
6.66%
6.83%
6.47%
6.75%
6.90'10
6.56%
6.95%
6.81%
GRIP Funded Rntl.
% orNe,. Hires Elect GRIP
B•••11ne
50%
66113'A.
108.22% 108.22% 108.22%
112.66% 112.66% 112.66%
113.98% 113.86%113.73%
115.13% 114.83% 114.54%
115.39% 114.88% 114.40%
114.08% 113.40''' 112.78%
112.78% 111.96% 111.24%
111.6Q'Yo 110.67% 109.88%
110.53% 109.50% 108.66%
109.50% 108.42% 107.56%
108.55% 107.43% 106.56%
107.66% 106.52% 105,67%
106.78% 105.66% ·104.85%
105.94% 104.85% 104.10%
105.13% 104.10"10 103.41%
104.33% 103.39% 102.78%
103.67% 102.81% 102.27%
103.02% 102.26% 101.80%
102.39'10 101.74% 101.36'1',
101.84% 101.30% 101.00'A.
101.35% 100.92% 100.69%
RSPPAmli
'';' orNe,.Hlre. Elect GRIP
662130/,
B...U.e
50%
203,987 $
$
203.987
203.987
$
213,735
208.427
219,042
234,064
224.341
214.618
235,650
249,757
221,542
247,176
265,716
228,636
258,712
235,685
281,739
270,417
242,778
298,057
314,557
282,143
249,729
331,180
293,808
256;436
348,074
305,576
263,077
317,252
269,391
365.114
328,947
382,352
215,542
340,854
281,759
399,950
417,752
352,734
287,715
435,884
364,747
293,610
376,939
454,361
299,517
473,307
389.404
305.501
402,538
311,990
493,086
416,067
318,692
513,441
430,084
534,500
325.667
556,136
444.487
332,839
County Conlrlhullon Doll.... (RSP and
GRIP)
% orNe,. Hire. Elect GRIP
50'A.
66213%
Boullne
22,326
S
22,326
$
22,326 $
21,913
21,913
21.913
23,430
23,356
23.504
24,834
24,931
24,742
26,512
26,393
26,280
28,108
21,965
27,830
29,584
29,427
29,750
31,542
31,354
31,175
33,147
33,360
32,944
34.958
35.196
34.728
36.801
36,544
37,065
38,669
38,382
38,962
40,560
40.884
40,242
42,852
42,498
42,148
44,471
44.858
44.087
46,486
46,066
46,907
48,881
48,425
49,333
51.036
50,542
51.526
53,791
53.262
52,728
55,824
55,249
56,391
57,802
58,421
59,029
®
3/19/2015
Gabriel Roeder Smith
&
Company
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ExhibitB
Actuarial Assumptions and Methods
The assumed rate of price inflation is 3.00%.
The assumed rate of investment return used for the GRlP was 7.50%, net of expenses,
annually.
The rates of annual salary increase used for individual members are in accordance with the
following table. This assumption is used to project a member's current salary to the salaries
upon which benefit amounts will be based.
Salary Increases
Service
0
5
10
15
20
25
30
Public Safety
9.25%
8.25%
6.25%
5.50%
5.00%
4.50%
4.25%
Non-Public Safety*
6.00%
6.00%
6.00%
6.00%
4.25%
4.00%
4.00%
*
Includes GRIP
The assumed rate of total payroll growth is 4.00%.
Rates of separation from active membership are represented by the following table (rates do not
apply to members eligible to retire and do not include separation on account of death or
disability). This assumption measures the probabilities of members terminating employment.
Service
0
1
2
3
4
5
6
7
8
Over 8
years
GRIP
9.500%
9.500%
6.000%
6.000%
5.000%
4.250%
3.000%
3.000%
2.500%
2.500%
3119/2015
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ExhibitB
Rates of disability were as follows:
GRIP
Age
20
25
30
35
40
45
50
55
60
Male
0.0975%
0.1800%
0.2475%
0.2925%
0.3300%
·0.5880%
0.7080%
0.5400%
0.8625%
Female
0.0375%
0.0975%
0.1800%
0.2550%
0.3150%
0.3375%
0.5100%
0.5800%
0.5625%
Rates of retirement for members eligible to retire during the next year were as follows:
GRIP
Age
Under 59
59
60
61
62
63
64
65
66
67
68
69
70
Rate
0.00%
0.00%
5.00%
5.00%
15.00%
15.00%
15.00%
40.00%
40.00%
40.00%
40.00%
40.00%
100.00%
3/19/2015
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Exhibit B
The mortality table used to measure retirement mortality was based on the RP2000 Mortality
Table, sex-distinct, projected to the year 2030 for healthy mortality and projected to the year
2010 for disabled mortality. Rates are set forward five years for the disabled mortality
assumption. The healthy mortality assumption is used to measure the probabilities of members
dying before retirement and the probabilities of each benefit payment being made after
retirement. We expect that because the mortality table is projected to the year 2030, this
provides a margin for
future
mortality improvement.
Healthy Mortality
Future
Life
Mortality Rate
Expectancy
(yeal'S~
Women
Men
Women
Men
Disabled Mortality
Future Life
Mortality Rate
Expectan~
(yeal'S
1
Men
Women
Men
Women
Age
.25
30
35
40
45
50
55
60
65
70
75
80
0.0278%
0.0382%
0.0665%
0.0848%
0.1018%
0.1240%
02038%
0.4159%
0.8344%
1.4111%
2.4785%
4.7613%
0.0136%
0.0195%
0.0341%
0.0449"/0
0.0693%
0.1002%
02135%
0.4349%
0.8351%
1.4405%
22088%
3.7161%
57.94
53.03
48.15
43.33
38.51
33.71
28.94
24.32
19.94
15.89
12.11
8.79
59.71
54.76
49.83
44.91
40.03
35.18
30.40
25.81
21.49
17.51
13.86
10.54
0.0422%
0.0735%
0.0996%
0.1323%
0.1783%
0.2991%
0.5742%
1.1062%
1.9091%
32859%
5.8213%
10.3244%
0.0239%
0.0425%
0.0607%
0.0957%
0.1412%
02507%
0.4808%
0.9231%
1.5923%
2.5937%
4.2767%
7.2923%
51.06
46.19
41.38
36.59
31.85
27.17
22.66
18.44
14.60
11.12
8.13
5.75
53.61
48.69
43.81
38.96
34.16
29.44
24.89
20.61
16.69
13.15
10.00
7.31
For this analysis, sex was not given for current RSP members, therefore, pre-retirement mortality
was based on male only mortality rates.
Benefit Service:
Exact fractional years of service are used to determine the amount of
benefit payable.
All decrements are assumed to occur at the beginning ofthe year.
Decrement Timing:
Decrement
Operation:
Tumover decrements do not operate after the member reaches
retirement eligibility.
Eligibility Testing:
Eligibility for benefits is determined based upon the age nearest
birthday and service on the
date
the decrement is assumed to occur.
Pay
Increase Timing: End of (fiscal) year.
3/19/2015
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Roeder Smith
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Company
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Exhibit C
Benefit Provisions
Guaranteed Retirement Income Plan
(effective
71112009)
A. Eligibility for GRlJ> entry:
• Full-time non-public safety employees hired on or after July 1, 2009 who do not
participate in the retirement savings plan may make a one-time irrevocable election
to
participate in the GRlJ> within the fIrst 150 days of full time employment.
• Part-time or temporary non-public safety employees hired on or after October 1,
1994 who do not participate in the retirement savings plan may make a one-time
irrevocable election to participate in the GRlJ> after at least 150 days of
employment
B.
The GRlJ> account collects:
• Member contributions (pre-tax unless noted otherwise)
a. Non-public safety employees: 4% of regular base earnings up to the maximum
Social Security wage base plus 8% ofthe excess.
b. Public safety employees: 3% of regular base earnings up to the maximum
Social Security wage base plus 6% ofthe excess.
c. Effective July 1, 2011 members may contribute an additional 2% of regular
earnings for service between June 30, 2011 and July 1, 2012, on an after-tax
basis by making an election in writing on or before September 1,2011.
• Employer contributions
a. Non-public safety employees: 8% of regular base earnings. Effective July 1,
2011, the employer contribution is 6% of regular base earnings for service
between June 30, 2011 and July 1, 2012.
b. Public safety employees: 10% of regular base earnings. Effective July 1, 2011,
the employer contribution is 8% of regular base earnings for service between
June 30, 2011 and July 1, 2012.
• 7.25% interest credited from the date of contribution.
C. Vesting Schedule:
• Employees are 100% vested in employee contributions
at
all times.
• County contributions are 0% vested from 0-3 years of credited service and 100%
vested at 3 or more years of credited service.
• Participants become 100% vested at death or disability.
311912015
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ExhibitC
D. Nonnal Fonn of Payment- Lump sum
E. Optional Fonns of Payment:
Direct rollover
Life annuity purchased from an insurer
F. Eligible Agencies:
CC - credit union employees (outside agency)
CM - union employees (represented)
CN - non-bargaining employees (non-represented)
CP - public safety employees
CZ - elected officials who transferred from the EOP
3119/2015
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Smith
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Company
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GRS
March 11,2015
Gabriel Roeder Smith
&
Company
Consultants
&:
Actuaries
20 North Clark Street
Suite 2400
Chicago,
II.
60602-5111
312.456..9800
phone
312.456.9801 fax
www.gabrielroeder..com
Ms. Linda Herman
Executive Director
Montgomery County Employees' Retirement System
Rockville, Maryland
Subject:
Dear Linda:
Cost Impact of DROP Proposal for Group E (Uniformed MCGEO Only)
As
requested, we have measured the cost impact to the Montgomery County Employees'
Retirement System (ERS) ofthe following proposal to change benefit provisions for current
active Uniformed MCGEO Group E employees.
• Implement a DROP with an interest crediting rate based on actual investment
performance of a self-directed DROP account.
The proposed effective date of this change is July 1, 2015, and the change would only affect
members that are active as ofthat date.
The main provisions of the DROP would be the same as the current DRSP for Group F members
and include:
• Members may enter the DROP once minimum age and service requirements have been
met for normal retirement
o Age 55 with 15 years of credited service or age 46 with 25 years of credited
service
• The following amounts are accumulated in the DROP account and are credited actual
investment returns during participation in DROP:
o The accrued benefit frozen at time ofDROP
• The DROP account does not collect COLAs granted during the DROP
period
• The maximum DROP period is equal to three years.
o Employees may opt out of DROP annually at their anniversary of entering DROP
• Upon exit from DROP, the member receives:
o The monthly benefit amount equal
to
the frozen accrued benefit at time of DROP
plus the COLA increases granted during the DROP period, plus
o Distribution ofthe DROP account
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Ms. Linda Herman
Montgomery County Employees' Retirement System
Page 2
The illustrated cost impacts are shown in Exhibits
1-
N:
.
• Exhibit
1-
Swnmary of DROP Scenarios
• Exhibit II Implement DROP, Scenario 1 Retirement Rates
• Exhibit
ill -
Implement DROP, Scenario 2 Retirement Rates
• Exhibit
N
-
Group E Contribution Rate Summary
The analysis includes the following assumptions and methods:
• Members will enter the DROP earlier than when they are currently assumed
to
retire
under the current provisions. Two alternative sets ofDROP/retirement rates were used in
the analysis and are shown in Appendix
I.
These rates assume that members will exit .
DROP and commence normal retirement later than currently assumed.
• 70% DROP participation rate, which is the same assumption currently used for Group F
and Group G.
• Members will participate in the DROP for the maximum period of time (three years
under the proposal) and extend their careers on average by exiting DROP approximately
1.0 year or 1.5 years later than under the current provisions with no DROP.
• The other assumptions and methods as used and disclosed in the actuarial valuation as of
July 1,2014.
The data is swnmarized in Appendix II. We have assumed that all active uniformed MCGEO
members of Group E would be affected by the change (ifthey meet the eligibility conditions).
Summary of Results
Implementing a DROP for Group E uniformed MCGEO members is expected to increase the
actuarial liabilities and contribution requirements ofthe System based on the assumptions used.
The cost of the DROP is significantly affected by how member retirement behavior changes as a
result of implementing the DROP.
If
members commence retirement benefits sooner (by the
benefit amount being deposited into the DROP account), costs are typically expected to increase.
Exhibit I contains a summary ofthe key results for the two DROP scenarios included in this
analysis and the results if 100% ofmembers entered DROP or retired at .first eligibility for
retirement. The 100% scenario was provided in order to give a high-end estimate on what the
additional cost might be.
The following table summarizes the increase in costs of implementing a DROP for the indicated
groups:
Increase
in
first year costs
Accounting
2
Funding
1
230,505
$
2,805,524
85,&25
1,631,042
croup and Scenario
Uniformed MCGEO - Scenario 1 Rates
Uniformed MCGEO ­ Scenario 2 Rates
1
Increase
in
2
$
first year County contnbution (total cost amortized over 20 years).
Increase
in
GASB 68 pension eJq)ense (total cost immediately recognized).
Gabriel Roeder .smith
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Company
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Ms. Linda Hennan
Montgomery County Employees' Retirement System
Page 3
Below is a summary of the key results for the two DROP scenarios included in this analysis and
the results if 100% of members entered DROP or retired at fIrst eligibility for retirement The
100% scenario was provided in order
to
give a high-end estimate on what the additional cost
might be.
.
100%
DROPlRetirement
at
FirstFligilility
$
90,581,379
8,154,735
35.80"10
Unifonned
MCGED
Active Actuarial Accrued
l.ia.bility
County Contribution
Requ.ireJ:n:nt
$
County Contribution Requirement
%
(Includes Retirement Incentive)
Average Age
at
RetirementIDROP
Average Age at Retirement*
NunDer
ofRetirementIDROP
First Year
TotalERS.
Funded Ratio (A ctuarial Value ofAssets)
Baseline
$
DROP Scenario 1 DROP Scenario 2
83,638,135
$
7,693,023
31.88010
55.5
55.5
11
86,443,659
$
7,923,52&
33.45%
54.4
56.5
85,269,177
7,778,848
3274%
55.0
57.1
15
84.17%
16
84.14%
533
55.4
2&
84.05%
•Assumes
70%
of members retire
3 years
after entering
DROP.
The following provision of the DROP is cost neutral based on the current actuarial assumptions
when a member remains in the DROP compared to retiring:
• Interest crediting equal to actual investment performance of a member-directed DROP
account because the member bears the investment risk
The following provision ofthe DROP decreases costs when a member remains in the DROP
compared to retiring:
• COLAs are not payable during the DROP period
Additional implications of implementing a DROP:
• A lower payroll base on which both County and member contributions are made as a
result of an increase in total members participating in the DROP at a given time. (The
total active member payroll which includes DROP and non-DROP members would be
expected to remain the same, but the total non-DROP payroll would be expected to be
lower.)
o This means that the portion ofthe contribution rate to amortize the unfunded
liability may be higher, but the contribution as a dollar amount to amortize the
unfunded liability may not be substantially different.
Future actuarial measurements may differ signifIcantly from the current measurements presented
in this cost analysis, due to such factors as the following: plan experience differing from that
anticipated by the economic or demographic assumptions; changes in economic or demographic
assumptions; and changes in plan provisions, contribution amounts or applicable law.
If
any of the provisions, underlying data or assumptions used in this analysis appear
to
be
incorrect or unreasonable, please let us know as soon as possible so we can update the analysis.
Gabriel Roeder Smith
&
Company
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Ms. Linda Herman
Montgomery County Employees' Retirement System
Page 4
The signing actuaries are independent ofthe plan sponsor.
Lance Weiss and Amy Williams are members ofthe American Academy ofActuaries
(MAAA)
and meet the Qualification Standards ofthe American Academy ofActuaries to render the
actuarial opinion herein.
Please let
us
know ifyou have any questions or would like to discuss the results of this analysis
further.
Sincerely,
~~~v
Lance
J.
Senior Consultant
cc:
weis6.~.,
F.e.A., M.A.A.A.
Amy Williams, A.S.A., MA.A.A.
Consultant
Mr.
Ryan Gundersen, Gabriel, Roeder,
Smith,
and Company
Mr.
Neil Nguyen, Gabriel, Roeder,
Smith
and Company
L:\C3323_MontgomezyCounty\2015\ImpactStatements\02Feb20YROP\MCGEO]roposal_0309201 S.docx
Gabriel Roeder Smith
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Exhibit I
Cost Impact of DROP - Summary of Scenarios
Uniformed MCGID Only
Actuarial Accrued Liability
Net Nonnal Cost
Amortization ofUnfunded Liability
County Contribution Requirement
Average Age at RetirementIDROP
Average Age at Retirement·
Number ofRetirementIDROP First Year
(Includes Retirement Incentive)
Groul!E
Actuarial Accrued Liability
County Contribution Requirement $
County Contribution Requirement %
(Includes Retirement Incentive)
$
Baseline
DROP Scenario 1
83,638,135
$
86,443,659
$
6,622,219
6,632,597
2,655,300
2,843,954
7,693,023
7,923,528
55.5
54.4
55.5
56.5
11
16
Impact...
DROP Scenario 2
2,805,524
$
85,269,177
$
10,378
6,571,879
188,654
2,764,978
230,505
7,778,848
-1.1
55.0
1.0
57.1
5
15
Impact*"
1,631,042
(50,340)
109,677
85,825
-0.5
1.6
4
100%
DROP/Retirement
at First Eligibility
$
90,581,379
$
6,520,942
3,122,190
8,154,735
53.3
55.4
28
Impact**
6,943,244
(101,277)
466,890
461,712
-2.2
-0.1
17
$
165,611,776 $
12,587,119
31.98%
168,417,300 $
12,817,624
32.93%
2,805,524
$
230,505
0.95%
167,242,818 $
12,672,944
32.51%
1,631,042 $
85,825
0.53%
172,555,020
$
13,048,831
34.30%
6,943,244
461,712
2.32%
TotalIiRS
Actuarial Accrued Liability
$
Funded Ratio (Actuarial Value ofAssets)
3,958,929,718
$
84.20"/0
3,961,735,242
$
84.14%
2,805,524
$
-0.06%
3,960,560,760
$
84.17%
1,631,042
$
-0.03%
3,965,872,962
$
84.05%
6,943,244
-0.15%
• Assumes 70% of members retire 3 years aner entering DROP .
.. The change in the actuarial accrued
liability
and the net normal cost
is
the change in the GASB 68 pension expense accounting cost. The change in the County contribution requirement is the change
in
the first
year funding cost (total costs are amortized over 20 years).
(B
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Exhibit II
Cost Impact of DROP - Scenario 1 Retirement Rates
ValuRtlon lIS or Julr1,2014
Unifonmd
MCGEO
Uniformed
MCGEO
Iml!!:t-
DROP
S.enarlo 1
Uniformed
MCGEO
Cbsnge
Total
Grou~
l!
TotalFllS
%
of
Pay
roll
Total Groue
B
Tot.1FllS
%ofPa:z:rnli
Total Group
B
TotalBRS
% ofPayroll
Tllta!
All Plans
Actuarial Accrued Liability
Active Membera
DRSPIDROP Memb....
Terminated V...ted Member.
Retired Membe... Illld
BeneflCiarie.
TptBl
Contribution Ba.i, Payrnll:
For
Normal
Cost
For Amortl",tion orUnfunded Liability
Actuarial Value ofA.sell
Unfunded Actuarial Accrued Liability
Funded Ratio (Actuarial Value ofAn.to)
Annual
Oro••
Normal Cost
Benefits
$
83,638,135
$
162,527,468
3,084,308
83,638,135
165,611,776
S 1,313,483,134
99,431,144
26,461,195
~459,547,645
$
86,443,659
$
165,332,992
3,084,308
86,443,659
1,376,288,658
99,437,144
26,461,195
~459,547,645
2,805,524
$
2,805,524
$
2,8OS,524
3,958,929,718
168,417,300
3,961,735,242
2,805,524
2,805,524
2,805,524
23,474,153
25,479,199
37,611,162
42,951,126
$
360,825,013
378,030,049
3,333,484,724
625,444,994
84,2"10
$
23,001,948
25,012,994
S
37,144,957
42,484,921
$
360,358,868
377,563,844
3,333,484,724
628,250,518
84.1%
(466,205)
(466,205)
$
(466,205)
(466,205)
$
(466,205)
(466,205)
2,805,524
~.1%
$
&.penseo of Administration
TolAl
AlTDrtl",tion ofOnfunded Uability
Annual Contribution Requirement:
County Portion
ilnlJloyoe Portion
Total
County Public Sefety Contribution
AllDrti:mtion orOnfunded LiBbilky
Annual Contribution Requirelllent:
County Portion
ilnlJloyeo Portion
Total
County Public Sofety Contribution
$
6,417,555
204,664
6,622,219
2,599,208
$
10,324,699
327,921
10,652,620
4,381,570
$
74,984,310
~966,8OO
77,951,170
56,951,509
(20,78%)
(0,82%2
(2LW'4)
(15,0'1%)
6,427,933
204,664
6,632,597
$
10,335,077
327,921
10,662,998
74,994,148
2,966,800
77,961,548
(20,81%)
101
(0,82"
(21.63%)
$
10,318
10,318
$
10.378
10,318
188,654
10,378
10,378
S
188,654
(0,03%)
(0,00'41
(0,03%)
(0,06%)
$
S
$
$
Eltcl udi nil Retirement hloentlve
2,187,862
$
4,570,224
$
57,140,163
(15,13%)
S
188,654
7,636,930
1,584,491
9,221,421
12,492,562
2,541,628
15,034,190
$
112,667,487
:1:3.
235,192
134,902,679
76,156,901
(30,51%)
(6.16%1
(36.61%)
S
7,867,435
1,553,024
9,420,459
$
12,723,061,
$
~SI0,155
15,233,222
112,891,992
:1:3.
203,719
135,101,711
(30,60%)
(6.l6%l
(36,76'10)
$
230,505
(31,4!!l
199,032
230,505
(31,473l
199,032
$
230,505
QI,473!
199,032
230,505
188,654
(0,09%)
IQ,OO%l
(0,09%)
$
2,655,300
4,476,127
59,II!,514
(15,64%)
16,481,412
hltilldins Retirement Illoentive
4,664,781
$
2,843,954
$
99,300,228
$
(1S,7I%)
$
188,654
$
188,654
$
(0,01"10)
$
7,693,023
1~84,491
9,277,520
12,587,119
2,541,628
15,128,747
S
114,827,552
:1:3.
235,192
137,062,744
(31.08%)
{6,16%l
(37,24%)
$
7,923,528
1,553,024
9,476,552
12,811,624
~S101155
15,327,779
115,058,057
22,203,719
137,261,776
76,581,969
(31.18%)
(6.l6%l
(37,34%)
230,505
S
(31,4731
199,032
230,505
$
(31,4732"
199,032
S
230.505
Ql,473}
199,032
230,505
(0.10'11)
(O,OO'lol
(O,IWt)
16,351,464
Numbers may not add due to rounding,
®
Gabriel Roeder Smith
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Exhibit
In
Cost Impact of DROP - Scenario 2 Retirement Rates
V.I••tlon ..
of
Ju1Z1,1014
UnifonllOd
MCGEO
Unifortlllld
MCGEO
Iml!!!tl- DROP Stell.rlo 1
Unifortlllld
MCGEO
ChRn:e:e
Total Orou2 E
TotolEllS
0/0
ofP.~roli
Totol Oroue E
TotolEllS
%
ofPoXroJi
Total Oroue E
Totol EllS
%ofPayroU
ToW All P!aI!s
Actuarial Accrued Liability
Active Members
DR.SP/DROP Mentle..
Tenninated V.,ted Men"'....
Retired MenDen and Beneficiaries
TotRI
83,638,135
162,527,468
3,084,308
1,373,483,134
99,437,744
26,461,1~5
85,269,177
164,158,510
3,084,308
1,375,114,176
99,437,744
26,461,1~5
~459,547,645
1,631,042
1,631,042
1,631,042
83,638,135
165,6ll,776
2,459,547,645
3,958,929,718
85,269,177
167,242,818
3,!ltlO,560.760
1,631,042
1,631,042
J,631,042
Contribution BaBis Payroll:
I'or Nonnal
Co.t
I'or Amcrtization of Unfunded Liabilily
Actuarial Value ofA...l.
Unfunded Actuarial Accrued Liability
I'unded Ratio (Actuerial Value ofA..ets)
23,474,153
25,479,199
$
37,611,162
42,951,126
360,825,073
378,030,049
3,333,484,724
625,_,994
84,2%
23,081,741
25,086,787
$
37,218,750
42,558,714
$
360,432,661
377,637,637
3,333,484,724
627,076,036
84,2'/.
$
(392,412)
(392,412)
$
(392,412)
(392,412)
$
(392,412)
(392,412)
1,631,042
O.w.
(20,79%)
(0,82%)
(21.61%)
Annual
Omll!l
Normal Cost
BenefiU
Expensell of
Adnuni.tIB:tion
Tolal
Amorti....tion ofUnlUnded Liability
6,417,555
204,664
6,622,.219
10,324,699
327,921
10,652,620
74,984,370
2~8oo
77,951,170
(20,78%)
(0,82'/')
(21.6<1'/.)
6,367,215
204,664
6,571,879
$
10,274,359
327,921
10,602,280
74,934,030
~8oo
$
(50,340)
(50,340)
(50,340)
(50,340)
(50,340)
(50,340)
77,900,830
(0.01%)
(0,000/0)
(O,OI'Ho)
2,599,208
S
4,381,570
56,951,509
(15,07"/.)
2,708,885
Etcludlnl Retlremfnt Ineentive
4,491,247
$
57,061,186
$
(1s.l1%)
$
109,677
S
109,617
109m
(0,04%)
Annual Contribution Requirement:
County Portion
Employeel'ortion
Total
County Public Safety Contribution
Amorti....tion of Unfunded Uability
7,636,930
1,584,497
9,221,427
12,492,562
2,541,628
15,034,190
112,667,487
~35,192
134,902,679
76,256,907
(30.51%)
(6,16%2
(36.67%)
7,722,755
1,558,009
9,280,764
$
12,578,387
2,515,140
15,093,527
112,753,312
~208,704
134,962,016
(30,56''')
(6,16%)
(36,72%)
85,825
~4881
$
59,337
85,825
Q6,488
1
59,337
85,825
Q6,488
1
59,337
85,825
(M5'Ho)
(0.00'A1
(0.05%)
$
76,342,732
59,221,251
(l5.68%)
109,617
109,617
Intl.dln. Rdlrem.nIIntenll....
2,655,300
4,476,127
59,111,574
(l5,64%)
$
2,764,978
$
4,585,804
S
109,677
(0.04%)
An nusl Contribution Requirement:
County Portion
Employee Portion
Total
County PUblic Safety Contribution
7,693,023
1,584,497
9,277,520
12,587,119
2,541,628
15,128,747
114,827,552
22~35,19J
137,062,744
76,351,464
(31.08%)
(6,16%1
(37.24%)
S
7,178,848
1,558,009
9,336.857
$
12,672,944
~5lS,140
114,913,317
~208,704
15,188,084
137,122,081
(31.13%)
A
(6.l6"
l
(37,29'A)
$
85,825
(2~4881
$
$
85,825
(26, 488
1
85,825
~,4881
59.337
59,337
59,:137
(0.05%)
(0,000/01
(0,05%)
S
76,437,28~
85,825
Numbers may not add due to rounding.
@
Gabriel Roeder Smith
&
Company
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Exhibit
IV
Contribution Rate Summary - Group E
GroupE
Valuation as of
Julyl,2014
Impict-DROP
Impict - DROP
Scenario 1
Scenario 2
County Contribution Requirement
($)
(Includes Retirement Incentive)
Unifonncd MCGID
Total Group E
Change
in
Total Group
E
Contribution from the Valuation
Unifonncd MCGID
Total Group
E
Olange
in
Total Group
E
Rate from
the
Valuation
$
7,693,023
$
12,587,119
7,923,528
12,817,624
230,505
22.08%
21.95%
0.38%
$
7,778,848
12,672,944
85.825
21.72%
21.730/.
0.16%
County Norrnal Cos t Co ntributio n Re quire me nt
(%
0
fPayro II)
21.46%
21.57"10
0.000/0
County Contribution Requirement
(%
of Payroll)
(Exclude s Re tire me ntInce ntiv e)
Unifunncd MCGEO
Total Group
E
Olange
in
E
Rate from
the
Valuation
31.66%
31.76%
0.00%
33.23%
32.71%
0.95%
32.52%
32.28%
0.52%
County Contribution Requirement
(%
ofPlIyroll)
(Includes Retirement Incentive)
Unifonncd MCGEO
Total Group
E
Olange
in
Total Group
E
Rate from the Valuation
31.88%
31.98%
0.00%
33.45%
32.93%
0.95%
32.74%
32.51%
0.53%
Numbers may not add due
to
rounding.
@)
Gabriel Roeder Smith
&:
Company
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Appendix I
Group E Retirement Rates
Valuation Rates
1st Elig. For
Age
Normal Ret
3.50%
Under 45
46
15.00%
47
15.00%
48
15.00%
15.00%
49
50
20.00%
51
20.00%
52
20.00%
53
20.00%
54
20.00%
55
50.00%
50.00%
56
57
50.00%
58
50.00%
50.00%
59
60
100.00%
Ultimate
Rate
3.50%
8.00%
8.00%
8.00%
8.00%
10.00%
10.00%
18.00%
18.00%
18.00%
50.00%
50.00%
50.00%
50.00%
50.00%
100.00%
Drop Scenario 1
Grou~E
Drop Scenario 2
1st Elig. For Ultimate
Rate
Normal Ret
3.50%
3.50%
15.00%
8.00%
15.00%
8.00%
15.00%
8.00%
8.00%
15.00%
25.00%
15.00%
30.00%
15.00%
30.00%
23.00%
35.00%
23.00%
40.00%
23.00%
75.00%
55.00%
80.00%
55.00%
85.00%
55.00%
90.00%
55.00%
95.00%
55.00%
100.00%
100.00%
1st Elig. For
Normal Ret
3.50%
40.00%
40.00%
45.00%
50.00%
55.00%
65.00%
70.00%
75.00%
80.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Ultimate
Rate
3.50%
8.00%
8.00%
8.00%
8.00%
10.00%
10.00%
18.00%
18.00%
18.00%
50.00%
50.00%
50.00%
50.00%
50.00%
100.00%
DROP rates apply to unifonned MCGEO employees only.
Rates of20% are added to the retirement rates above in the first year of implementation of the DROP for the DROP scenarios for members that have been previously eligible to retire.
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Gabriel Roeder Smith
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Company
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Appendix II
Data Summary
Non-Public SafeL-
GrouQA
Groul!H
Uniformed
MCGEO*
Valuation as ofJul:t: 112014
Public Safe!J:
Total Groul! E
Groul!F
GroupO
GRIP
Total
Total All Plans
Active Members
Number
Average Age
Average Service
Total Base Payroll
Contribution Basis Payroll:
For Nonml Cost
For Aroortization ofUnfunded Liability
DRSPIDROP Members
Number
TotaiBase Payroll
Total Benefits
Tenninated Vested Members
Number
Total Benefits
Retired Members and Beneficiaries
Number
Total Benefits
Total Membership
527
56.7
26.7
$
50,976,638
$
43,189,541
799
56.8
24.6
$
55,866,352
$
47,460,110
401
420
11.1
$
25,479,199
$
23,474,153
626
43.5
12.4
$
42,951,126
$
37,611,162
$
$
1,190
38.1
12.9
89,215,\31
82,124,733
89,215,131
39
3,740,247
2,523,134
$
$
1,130
37.5
11.7
80,663,980
75,043,449
80,663,980
60
5,944,122
3,626,704
19
121,662
1,263
49.5
8.3
$
83,225,&68
$
75,396,078
5,535
45.7
14.5
$
402,899,096
$
360,825,073
38,979,842
42,994,102
25,479,199
42,951,126
83,225,868
378,030,049
99
9,684,369
6,149,838
403
2,360,255
6,143
$
$
68
751,726
$
88
740,739
$
26
334,743
$
35
41l,385
167
$
$
$
5,024
$
223,419,018
12,180
·22
out
of th. total 423 uniformed MCGBO member. in the data provided .... r. not activo member... of
July
1,2014, and tb.rofor......... not included in this analysis.
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Gabriel Roeder Smith
&
Company
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GRS
March 11,2015
Gabriel Roeder Smith
&
Company
Consultants
&
Actuaries
20 North Clark Street
Suite
2400
Chicago,
IT.
60602-5111
312.456.9800
phone
312.456.9801
fax
www.gabrielroeder.com
Ms. Linda Hennan
Executive Director
Montgomery County Employees' Retirement System
Rockville, Maryland
Subject:
Dear Linda:
As requested, we have measured the cost impact to the Montgomery County Employees'
Retirement System (ERS) ofthe following proposal to change benefit provisions for current
active Unifonned Non-MCGEO Group E employees.
• Implement a DROP with an interest crediting rate based on actual investment
perfonnance of a self-directed DROP account.
The proposed effective date ofthis change is July 1, 2015, and the change would only affect
members that are active as ofthat date.
The main provisions of the DROP would be the same as the current DRSP for Group
F
members
and include:
• Members may enter the DROP once minimum age and service requirements have been
met for nonna! retirement
o
Age 55 with 15 years of credited service or age 46 with 25 years of credited .
servIce
• The
following amounts are accumulated
in
the
DROP
account and are credited actual
investment returns during participation in DROP:
o The accrued benefit frozen at time of DROP
• The DROP account does not collect COLAs granted during the DROP
period
• The maximum DROP period is equal to three years.
o Employees may opt out of DROP annually at their anniversary of entering DROP
• Upon exit from DROP, the member receives:
o The monthly benefit amount equal to the frozen accrued benefit at time ofDROP
plus the COLA increases granted during the DROP period, plus
o Distribution ofthe DROP account
Cost Impact of DROP Proposal for Group E (Uniformed Non-MCGEO
Only)
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Ms.
Linda Hennan
Montgomery County Employees' Retirement System
Page 2
.
The illustrated cost impacts are shown in Exhibits I - IV:
• Exhibit 1,.- Summary of DROP Scenarios
• Exhibit II - Implement DROP, Scenario 1 Retirement Rates
Implement DROP, Scenario 2 Retirement Rates
• Exhibit
• Exhibit IV - Group E Contribution Rate Summary
m-
The analysis includes the following assumptions and methods:
• Members will enter the DROP earlier than when they are currently assumed
to
retire
under the current provisions. Two alternative sets ofDROPlretirement rates were used in
the analysis and are shown in Appendix
I.
These rates assume that members will exit
DROP and commence normal retirement later than currently assumed.
• 70% DROP participation rate, which is the same assumption currently used for Group F
andGroupG.
• Members will participate in the DROP for the maximum period of time (three years
under the proposal) and extend their careers on average by exiting DROP approximately
1.0 year or 1.5 years later than under the current provisions with no DROP.
• ,The other assumptions and methods as used and disclosed in the actuarial valuation as of
July 1,2014.
The data is summarized in Appendix II. We have assumed that all active unifonned Non­
MCGEO members of Group E would be affected by the change (if they meet the eligibility
conditions).
Summary of Results
Implementing a DROP for Group E unifonned Non-MCGEO members is expected to increase
the actuarial liabilities and the County contribution rates of the System based on the assumptions
used. The projected dollar contribution requirements of the System are expected to increase
under the Scenario 1 retirement rates and decrease slightly under the Scenario 2 retirement rates
because the increase in the contribution rate more than offsets the decrease in the non-DROP
payroll in Scenario 1, but the increase
iIi
the contribution rate is more than offset by the decrease
in the non-DROP payroll in Scenario 2. The combination of the change in the projected non­
DROP payroll and the change in the contribution rate detennines the projected change in the
contribution dollar amount. The cost of the DROP is significantly affected by how member
retirement behavior changes as a result of implementing the DROP.
If
members commence
retirement benefits sooner (by the benefit amount being deposited into the DROP account), costs
are typically expected to increase.
Exhibit I contains a summary of the key results for the two DROP scenarios included in this
analysis and the results
if
100% of members entered DROP or retired at first eligibility for
retirement. The 100% scenario was provided in order to give a high-end estimate on what the
additional cost might be.
Gabriel Roeder Smith
&
Company
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Ms. Linda Herman
Montgomery County Employees' Retirement System
Page 3
The following table summarizes the increase in costs of implementing a DROP for the indicated
groups:
Increase in first year costs
Group and Scenario
Uniformed Non-MCGED - Scenario 1 Rates
Uniformed Non-MCGED - Scenario 2 Rates
1
Increase
2
$
Funding
1
Accounting
2
23,174
$
1,335,619
(1,150)
989,728
in first year County contnbution (total cost amortized over 20·years).
Increase in
GABB
68 pension expense (total cost i:rnrn!diately recognized).
Below is a summary of the key results for the two DROP scenarios included in this analysis and
the results if 100% of members entered DROP or retired at fIrst eligibility for retirement. The
100% scenario was provided in order to give a high-end estimate on what the additional cost
might be.
100%
DROPlRetirement at
First
Eigilility
$
32,376,204
1,144,561
48.81%
Uniformed Non-MCGED
Active Actuarial Accrued
Uability
County Contribution Requirement
$
County Contnbution Requirement
%
(Includes Retirement Incentive)
Average Age
at
RetirementIDROP
Average Age at Retirement*
Number ofRetirementIDROP FIrst Year
Baseline
$
DROPScenario 1 DROP Scenario 2
28,158,832
$
29,494,451
$