Council OKs Retirement System Language

At its Jan. 18, 2011 meeting, the Ann Arbor city council gave final approval to revisions in the city’s ordinance language that spells out how the retirement system works. The changes were administrative, aimed to ensure compliance of the plan with tax-qualification requirements of the Internal Revenue Code and to improve exactness and clarity of language. Other changes were made at the suggestion of the city retirement system’s board of trustees. [.pdf of ordinance as revised] [.pdf of changes and reasons].

The ordinance change does not change the city’s basic retirement plan from a defined benefit plan to a defined contribution plan. The language changes also do not change the composition of the retirement system’s board of trustees. In 2005, a “blue ribbon” commission – tasked to make recommendations about the city’s retirement board and the city’s pension plan – had called for a change in the board’s composition to be a majority of trustees who are not beneficiaries of the retirement plan and, in particular, to remove the city administrator’s position from the board.

In 2008, a member of the retirement system’s board of trustees, Robert N. Pollack, Jr., resigned from the board in part due to the city’s failure to enact recommendations of the blue ribbon panel. The change in composition of the pension board would require a city charter amendment, which the city council could decide to place before voters. [.pdf of blue ribbon panel report] [.pdf of Pollack's resignation letter]

The city’s retirement program is supported in part by the levy of a retirement benefits millage [labeled CITY BENEFITS on tax bills], currently at a rate of 2.056 mills, which is the same rate as the city’s transit millage. A mill is equal to $1 for every $1,000 of taxable value of a property.

This brief was filed from the boardroom in the Washtenaw County administration building, where the council is meeting due to renovations in the city hall building. A more detailed report will follow: [link]