Presented by Robert Ridley, Controller Finance Committee/City Council October 22, 2012 LIUNA PENSION FUND WITHDRAWAL LIABILITY

Background 1997 Pasadena Association of Clerical and Technical Employees (PACTE) began participation in supplement pension benefit 2010 LIUNA Pension Fund determined to be in “critical status” requiring:  Rehabilitation plan  Potential changes in benefit levels  Lump sum payment restrictions  Employer contribution surcharges 2

Background Rehabilitation Plan:  10 year plan to address critical status  Imposed employer surcharges and increased contributions  Potential changes to benefits Negotiated Withdrawal from LIUNA Pension Fund:  June 18, 2012 City Council approved successor MOU that provided for City withdrawal and payment of withdrawal liability.  June 27, 2012 was established as the last paycheck with contributions to LIUNA Pension Fund.  Final actuarial study completed. Withdrawal liability set at $3,373,620. 3

Payment Options Three Payment Options Available  Pay quarterly to LIUNA Pension Fund from November 1, 2012 to February 28, Interest cost $714,000.  Finance Externally - Interest and closing costs-twice the cost of an internal borrowing.  Finance Internally - Interest cost under $100,000. Internal Borrowing from Benefits Fund  Avoids impact to General Fund  Lowest cost option available  City Benefits Fund made whole through interest income  Repayment through an hourly charge to Departments/Funds with PACTE employees 4

Recommendation Approve $3,373,620 lump sum payment to LIUNA Pension Fund Adopt resolution approving and stating terms of internal borrowing from the City’s Benefits Fund.  To be repaid over three years through hourly charge to Departments/Funds with PACTE employees  Interest to be at the annual average annual rate of return for the City’s pooled cash portfolio 5