New Information
2012 Retirement Board Election Notice
From June 4, 2012 through June 18, 2012 the Kansas City Police Employees' Retirement Systems (KCPERS) will hold elections to fill three positions on the Retirement Board created by expiring terms. According to applicable state statutes only members of the Civilian Employees' Retirement System of the Police Department of Kansas City can seek the board seat currently held by Gary Howell; only retired members of the Police Retirement System can seek the board seat currently held by (Ret.) Major Vic Kauzlarich; and only members of the Police Retirement System in active service and who have not attained the rank of sergeant or higher can seek the board seat currently held by Detective Dave Reyburn.
Candidates should submit a letter declaring their candidacy and identifying the seat they are seeking, accompanied by their resume, to the attention of Richard Smith, Election Director, at the KCPERS office, 1328 Agnes, no later than May 3, 2012 at 4:00 p.m.
Following the close of the election filing period a meeting will be scheduled for all candidates to ask questions about the election process and learn more about the possibility of including a short candidate profile in the voting ballot packet that is mailed to all members.
This year, elections will be conducted by mail, phone or electronic balloting. The Retirement Board has engaged VR Election Services to conduct the trustee election. In addition to traditional ballots by mail, members will be able to cast their vote by phone or by logging on to a secure website. Please watch your mail carefully for any mail from the Kansas City Police Employees' Retirement Systems and VR Election Services so that you do not miss instructions on how to cast your vote. Ballots and voting instructions will be mailed to all KCPERS members on June 4, 2012. All votes must be received at VR Election Services office in Dallas, Texas by June 18, 2012. Official voting results will be provided to the Election Director and Retirement Board Chair by June 20.
Anyone needing additional information about the Retirement Board election should contact me at (816) 759-6329 or through the KCPERS office at (816) 482-8138.
Captain Richard Smith
2012 KCPERS Election Director
Retirement Board Election Schedule
Retirement Board Comments on Pension Task Force Recommendations
On February 14 the Retirement Board approved a letter to the City Manager providing comments on the recommendations of the Pension Task Force. The letter was in response to a resolution passed by the City Council seeking comments on the recommendations from each of the Retirement Boards.
Retirement Board Comments
2011 Tax Information and Mailing Schedule for IRS Form 1099R
Below is a link to additional information about how to claim the public pension and Social Security exemptions on your 2011 Missouri income tax return. In 2011 the deductible percentage of public retirement benefits increased to 80% but the exemption amount is capped at $34,141 for each taxpayer.
During the past 10 days, Northern Trust has been mailing tax Form 1099Rs to our retired members. The last of these forms were mailed on January 26. When you receive your 1099R please put it somewhere you can find it when you are ready to complete your 2011 taxes. While the Retirement System can request a duplicate form, Northern Trust charges the Retirement System for each duplicate 1099R we request. If you have not received your 1099R by January 31 it does not mean that your form has not been sent, it just has not been delivered by the post office. We cannot request a duplicate 1099R until the second week of February.
For those retired Police plan members who have their health insurance premium deducted from their monthly benefit check, below you will find a link to additional information about the IRS treatment of insurance premiums for retired public safety officers.
Missouri Income Tax Information
IRS Treatment of Insurance Premiums for Retired Public Safety Officers
Additional Comments on Pension Reform Task Force Recommendations - As part of his role on the Pension Reform Task Force Director Rick Brisbin prepared additional comments to the recommondations of the task force. Below you will find links to his additional comments and supporting documents.
Director Brisbin's Additional Comments
Map of Pension Payments by City Council District
Impact of Missouri State and Local Pension Payments
Pension Reform Task Force Recommendations - Below is a letter from the Chairman of the Pension Reform Task Force to the Mayor and City Council summarizing the recommendations of the task force. Also included is a copy of the 10 recommendations proposed by the task force.
The recommendations were supported by ten of the eleven task force members, with Director Rick Brisbin of the Police Department voting no. Task force members could also provide additional comments to the recommendations, Director Brisbin's comments can be found above.
Pension Task Force Chairman's Letter to the Mayor and City Council
Pension Task Force Recommendations
Follow up information to editorial on Police Retirement System - On October 19 the Kansas City Star ran an editorial about the work of the Pension Reform Task Force and, specifically, the recent actuarial report for the Police Retirement System. The task force has been meeting since late April to review the four City funded retirement systems (our Police and Civilian Employees' plans and the City Employees' and Firefighter's plans).
At the September 20 Retirement Board meeting our actuary, Cavanaugh Macdonald, presented the results of the April 30, 2011 actuarial valuations for the Police plan and Civilian Employees' plan. Those reports are used to show trends in the financial health of the plans, provide information for required financial statements, and determine the contributions required to get the plans to 100% funded over time.
The funded ratio of a plan (assets divided by liabilities) is commonly used to gauge its financial health at the end of a fiscal year. This year the funded ratios of the Police and Civilian Employees' plans are 76% and 75%, respectively. Last year the funded ratios were 79% and 77%, respectively. The reductions were not unexpected for two reasons. First, there were investment losses from 2008 and 2009 to recognize as part of the valuation process. Those losses were greater than the gains we generated in 2010 and 2011 when our investments earned 27% and 13%, respectively.
The second factor was the shortfall in contributions from the City for the past several years. Each year the actuary calculates the contributions that are required to keep the retirement plans on track towards 100% funding if all the actuarial assumptions are met. Those actuarial assumptions include things like investment earnings, rates of retirement, growth in payroll, mortality rates, and cost of living adjustments. For 2011, active Police plan members contributed 10.55% of pay or $9.2 million and the City contributed 19.7% of pay or $16.5 million. The City should have contributed 36% of pay or $34.3 million.
A contribution shortfall also exists for the Civilian Employees' plan. In 2011, active members contributed 5% of pay or $1.4 million and the City contributed 13.14% of pay or $3.2 million. The City should have contributed 19% of pay or $5.4 million to be on track towards 100% funded.
Part of the reason our contribution rates are so high is because we try to pay off the unfunded liability (the difference between plan assets and liabilities) in a conservative time period. The unfunded liability payment is like a home mortgage that we choose to pay off over 15 years. If we decide to lengthen the pay off time to 30 years the annual payment cost would go down. The Retirement board is considering making a change to this actuarial assumption for future valuations.
Over the past few years many cities and states have reviewed their retirement plans and made changes to plan benefits, mostly for future hires. The task force has looked at the impact of various changes to cost of living adjustments, the multiplier used to calculate benefits, and employee and City contribution rates. The task force has not made a decision about any of those options and they have not determined if those options would apply only to new hires or to both new hires and those who are not vested in their respective plan. The task force has not talked at all about how they would recommend implementation of any of their recommendations. Any changes to the laws governing the Police plan or Civilian Employees' plan would require approval by the Missouri General Assembly.
Two items in the editorial warrant further explanation: 1) The comment that all four city funded plans are in peril, and 2) The Police plan never gets to 100 percent funding with two separate changes the panel is considering.
In spite of two market downturns in the past 10 years and in spite of City contributions at a rate lower than the actuary has recommended for several years in a row, our plans are still 75% funded. The tech stock bubble and terrorist attacks of 2001 and the credit crisis of 2009 presented a decade long investment challenge for the retirement plans. During that same period a gap occurred between the actual contributions and required contributions from the City. That gap has continued to widen. In spite of those two factors, pension payments to our members will continue to be met. There are state laws and board policies already in place which will prevent our plans from following the paths of other retirement systems that are truly in peril.
As far as the Police plan never getting to 100% funded with two of the changes the task force has considered...we do not believe that is accurate. We think the baseline data that the consultant has used for the Police plan and Civilian Employees' plan is wrong. It assumes that when the funded ratios drop below 75% we will continue to grant 3% cost of living adjustments. As our members know we have a policy that prevents the board from granting cost of living adjustments under those conditions. With that provision in place, the options being considered for new hires may very well put the plans on track to be 100% funded in 30 years.
The Retirement Board will host an open house on November 8 starting at 5:30pm at the Police Training Academy to meet with active and retired members and answer questions about the Police and Civilian Employees' Retirement Systems. Director Rick Brisbin, who is a member of the Pension Reform Task Force, will also be on hand to provide information about the work of the task force and to answer questions.
Link to The Star's Editorial - Decisive action on KC pensions is imperative
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