Presentation on theme: "City of Kalamazoo Early Retirement Incentive (ERI) 2011."— Presentation transcript:
City of Kalamazoo Early Retirement Incentive (ERI) 2011
Why Provide an ERI? ERI will help: –Avoid layoffs –Preserve employee morale –Help in restructuring the workforce
ERI Program Criteria A full retirement will be made available to employees who qualify under current criteria, or would reach 25 years of service, regardless of age, no later than December 31, 2015.
ERI Program A retirement date in 2012 will be calculated as retiring on 12/31/12 plus 3 years. A retirement date in 2013 will have 3 additional years of credited service added following the last day worked. Any caps in pension benefit identified in the current plans will still be in effect.
ERI Program Qualified employees who elect to participate will also be provided with a cash incentive equal to 1% of the final average compensation multiplied by credited years of service.
ERI Program Assumptions: $60,000 FAC Multiplier 2.3% Years of Service = 22 plus 3 ERI Credited Years Pension Example: $60,000 x 2.3% = $1,380 $1,380 x 22 + 3 years (25) = $34,500 Incentive Example: $60,000 FAC x 1% = $600 $600 x 22 + 3 (25) years = $15,000
ERI Program Payout Upon Retirement Date: –All vacation time earned and accrued –½ Sick leave earned –1% Incentive Vacation will not be run out during this program.
ERI Program A window of 2 months will be given for eligible employees to consider the ERI. Electing to take the ERI is an irrevocable decision, however there is a 45 calendar day period required to consider the offer, and 7 calendar day period to revoke the decision after accepting the offer.
ERI Program Timeline 10/13/11Unions Decisions Made 10/14/11Notification of FY 2012 Position Eliminations 10/17/11First reading of the City Commission 10/18/11Begin education sessions of ERI to those qualified 10/31/11Second reading of the City Commission 11/1/11 – 1/03/12Decision window for employees 4/1/12 – 1/02/14Phased out retirements effective
ERI Program The ERI addresses a short-term financial issue. There is a long term structural imbalance after the ERI has been implemented. A second step is needed to address the long-term structural issue, and that is the implementation of a 2-tier wage scale that reduces wages by 5% for NEW HIRES.
ERI Program Managed phase out –Beginning 4/1/12 –Most will retire by October of 2012 –Running through 1/02/14 –Depends on how many accept the offer –Will run in quarters (April, July, October, December)
ERI Program Logistics Approval Process Unions City Commission Need for managed phase out process Employees will be required to sign Election and Waivers
Personal Considerations A major life decision Personal long term goals Family obligations Informed choice City cannot give advice
Summary Review the criteria and the timeline Consider your personal circumstances Consult outside professionals Make an informed choice Questions and Answers