04-10-85 Personnel & Finance - Laserfiche WebLink

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Page 3. PEBSCO offers insurance which permits individuals to sign up for coverage even if they are terminally ill. They offer insurance with a salary guarantee for monthly benefits of $300 minimum or $1, 500 maximum. There is a $12. 00 per year basic administrative charge . The company provides semi-annual statements and a toll free number; and would be willing to provide quarterly statements with the administrative charge being $15 . 00 rather than the $12.00. Deferred compensation programs either have a front-end fee or a surrender fee. PEBSCO has a surrender fee of 4% however if an employee is with the program for 16 years the fee is waived. PEBSCO offers a hold-harmless clause in the event that the City would ever be sued PEBSCO would defend at their own cost. The City would be receipted on every transaction with quarterly and annual breakdowns being provided. A descriptive handout was then presented to the Committee. ADMINISTRATIVE SERVICES Mr. Ralph Costello and Mr. Bob Grossnickle gave the presentation, with the latter individual representing Bankers Life of Des Moines , Iowa. He noted that they have been in business since 1879 and as of 1984 offer deferred compensation programs . They outlined the 401K income deferral plan which permits 25% of your income or $30, 000 (whichever is less) to be deferred. They have tentative approval from the IRS however each plan is custom made and must be submitted to the IRS for approval. There are "discrimination tests" which must be met for contributions with the top 1/3 of salaried employees not contributing more than the bottom 2/3 . The City would have to make the discrimination test with an average 3 months in preparing the plan for submission to the IRS. The basic advantages are permitting higher contributions and pay-outs in lump sums which would permit 10 year forward averaging. The basic disadvantage is the ongoing "discrimination tests". They offer five types of funding vehicles plus life insurance which include: guaranteed interest accounts , private market bonds , common stock, money market, and real estate . They do allow contributions to be split . Besides the cost involved for the "discrimination tests", there would be a record-keeping expense with the annual charge being dependent on the number of participants . A packet of information was presented to the Committee for review.