What: At the March MERS Retirement Board Meeting, the Board voted to amend the plan termination policy for the defined benefit, defined contribution and hybrid plans.
Action Required: No
Key Dates: Effective Date of New Policy: March 15, 2018
Impacted Audiences: Municipalities with a MERS Defined Benefit Plan, Defined Contribution Plan or Hybrid Plan
For More Information: Your MERS Benefit Plan Coordinator – 800.767.6377 (MERS)
Key Information:
It is important to ensure a fair and transparent process that protects the integrity of our entire pool of customers. The previous process for electing to terminate participation, specifically in the MERS Defined Benefit Plan, was established over 70 years ago, presumably in an effort to protect the volatility a small pool of municipalities. Today that pool has grown and MERS serves over 700 defined benefit customers with over $11B in assets. MERS Retirement Board evaluated and amended the process for electing to terminate the Defined Benefit plan. The updated process ensures:
- The process is reasonable and transparent
- Must be an agenda item at two consecutive meetings
- The local government must notify MERS of its intention to address the topic of termination at least one month prior to the first meeting
- A two-thirds majority vote of the governing body is required
- Plan participants (members and retirees) are notified and have the opportunity to provide feedback prior to vote to exit MERS
- There are adequate timeframes to transition all assets and plan participants to the receiving plan in place
- From the date of the governing body’s decision through the date of transfer, there are various timeframes and check points built into the process, with a minimum of 120 days from start to finish
- Adequate safeguards are in place to uphold state and federal laws
- Ensures successor plan is a qualified pension plan under federal and state law (e.g. acknowledgements from the local government for the transfer of all fiduciary duties are taken)
- Addressed emergency manager concern that was raised by many
Through internal policy changes, we were able to account for many variables that a mandated state policy change couldn’t anticipate to protect the integrity of the pool and uphold our fiduciary role through any transition
Resources Available: Click to view.