DATE: June 5, 2018
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Kristine Tallent, Assistant City Administrator/CFO
Kevin Townsel, Human Resources Director
SUBJECT:
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Discussion of Transition of Monthly Payment Dates for the City of Franklin Employee Pension Plan
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Purpose
The purpose of this memorandum is to provide information to the Franklin Board of Mayor and Aldermen (BOMA) concerning an issue related to the transition of monthly payment services from the City's custodial bank, U.S. Bank, to the Tennessee Consolidated Retirement System ("TCRS").
Background
In October 2016, the Board of Mayor and Aldermen voted to close the City of Franklin Employee Pension to full time employees hired on or after January 1, 2017. This group of employees, conversely, became members of the TCRS Legacy Defined Benefit Plan upon hire. In December 2016, BOMA adopted an agreement between the City and TCRS allowing for the co-investment of assets for the closed pension plan in accordance with the TCRS Investment Policy. At that time, staff of the City and TCRS began to develop a plan to transition additional administrative aspects of the closed City plan to TCRS.
The primary action item for transition of payment services is the date in which retirees and beneficiaries are paid. The City has historically paid on the first business day of the month while TCRS pays on the last business day. At the time of transition, if no intervening steps are taken, the City's custodial bank will make its final payment to retirees on the first day of the month while TCRS, as the City's incoming paying agent, will distribute its first payment on the final business day of the next month- a span of approximately 60 days between payments.
Another option in managing this transition in the payment schedule would be to provide the retirees with an additional payment at the end of December of 2018 (assuming TCRS takes over the management of r...
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