title
Recommendation to approve the adoption of the Amended and Restated Chicago Housing Authority Employees’ Retirement Plan.
presenter
Presenter: Michael Moran, Chief Financial Officer
end
Recommendation
It is recommended that the Chicago Housing Authority Board of Commissioners (“Board”) approve the Chicago Housing Authority (“CHA”) Employees’ Retirement Plan and Trust (the “Plan”) as amended and restated effective July 1, 2024. The Plan, as amended and restated, was approved by the Plan’s Board of Trustees at Board meeting of December 20, 2024. The Board of Trustees acts as the Plan Sponsor.
This requested action complies in all material respects with all applicable CHA Board policies and all applicable federal (HUD), state, and local laws. CHA staff have completed all necessary due diligence to support the submission of this initiative
Funding
N/A
Background
The CHA Employees' Retirement Plan and Trust was established in 1951 by the CHA to provide CHA employees with retirement benefits as an additional form of compensation. The Plan has been amended several times over the years (1993, 1997, 2010, 2015, 2017 and 2022) to incorporate various legal, governance and investment revisions.
Note: Most CHA employees participate in Social Security. The Plan does not impact Social Security eligibility or benefits.
Revisions and amendments to the Plan are approved and/or ratified by both the CHA’s Board of Commissioners and the Plan’s Board of Trustees.
Amendment Context
The actuarial firm The Segal Group, Inc., actuary for the Plan, was tasked by the Plan’s Board of Trustees and the Pension Administrator to review the Plan for best practices for the administration of pension plans and evaluate proposed benefit enhancements.
As a result, and in conjunction with The Plan Administrator and staff, certain amendments to the Plan were proposed that enhance benefits and strengthen good governance.
Key Revision Highlights
• For non-retired members, change benefit formula pay average to be highest four years of pay out of the last ten years. Benefit multiplier applied on new pay average will be 2.0%. New calculated benefits guaranteed to be as much as they would be using the outgoing Career Average formula (Grandfathered).
• Add annual COLA (Cost of Living Adjustment) for non-retired members. Retirees or beneficiaries who go into payment status on or after July 1, 2024, will receive annual increases on their payments. COLA will be based on ½ of the CPI-U increase for the year, not lower than 1.00% and not higher than 3.00%. (Terminated vested participants will not receive a COLA.)
• For example, if CPI-U for a year is 4.6%, eligible members receive a 2.30% COLA. If CPI-U is 7.80%, members receive a 3.00% COLA. If CPI-U is 0.20%, members receive a 1.00% COLA.
• A 13th Check for members who are retired as of June 30, 2024, with a minimum of $500 and a maximum of $3,500. If the Plan is at least 80% funded as of the most recent actuarial valuation, checks paid at 100% of amount; if the Plan is less than 80% funded but at least 60% funded, checks paid at 80% of amount; if the Plan is less than 60% funded but at least 40% funded, checks paid at 60% of amount; if the Plan is less than 40% funded, then there will not be a 13th Check.
• Active members will contribute 3.00% of payroll annually for a minimum of two years (from July 1, 2024, until June 30, 2026) to be eligible for the new enhanced benefit structure. Members with 25 years of service are eligible for the enhanced benefit structure without the requirement to contribute for at least two years. Active members who have at least 10 years of service and have attained age 55 have the option to make a one-time lump sum contribution equal to the value of all contributions that the member would be required to make between July 1, 2024, and June 30, 2026, as determined by the Plan actuary.
• A former member who is reemployed following the termination of employment shall be treated as having completed twelve consecutive months of Continuous Service and shall have their Credited Service reinstated, provided they return the contributions and interest, if any, previously paid to him under the Plan, together with additional interest at five percent (5%) per annum from date of payment to date of repayment within ninety (90) days of the date of such reemployment.
• The Plan’s actuarial equivalent tables have been updated as recommended by the Plan actuary.
• Minimum Required Distribution rules haves been updated in accordance with changes to federal law.
• Consistent with changes to State law, add “unexpected childcare obligations” to the list of reasons that Trustees can attend Board meetings remotely and provide that meetings may be held remotely if there is a disaster declaration.
Respectfully Submitted:
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Angela Hurlock
Interim Chief Executive Officer