Questions You Might Have

Plan Comparisons
Eligibility and Choice
Disability Program
Making My Decision

Plan Comparisons

How will the Defined Benefit (DB) and Defined Contribution (DC) plans be similar?

• Both plans provide a monetary benefit to employees upon retirement.
• The city and the employee (pre-tax) each contribute to both plans.
• Both plans allow for the distribution of funds when an employee terminates employment before retirement, i.e. funds may be 'rolled over' to another tax qualified plan, such as another employer's 401(k) or an Individual Retirement Account (IRA).

How will the city's DB and DC plans differ?

The Defined Benefit “DB” plan benefits are determined by a formula using three factors:

• Length of service
• Age at retirement, and
• Salary during the highest-paid 78 consecutive pay periods in the 10 years prior to retirement.
  ** An actuary determines how much money must be contributed by the city to the fund in order to pay the expected benefits**

The Defined Contribution “DC” plan benefits are determined by three factors:

• Amount of money contributed and invested
• Length of time invested
• Rate of return on invested funds

Termination Prior to Vesting

• An employee in the DB plan who leaves employment with the city before vesting (employees are 100 percent vested after five years), will only receive a distribution equal to his/her contributions. The employee will not receive any of the contributions made by the city, or any earnings or interest on either the employee's contributions or those made by the city.

• An employee in the DC plan, who leaves employment with the city, after full or partial vesting, will receive a distribution equal to the amount of the employees' contributions plus the city's contributions for time vested (see chart for vesting information), as well as the investment earnings on both contributions.

(Note: the distribution may be 'rolled over' into another qualified plan without paying income taxes. Otherwise, the distribution counts as ordinary income for tax purposes and certain penalties may apply.)

Termination After Vesting

An employee in the DB plan who leaves employment after vesting (100 percent after five years) but before retirement eligibility, has these choices:

• Receive a pension benefit for life beginning at age 65
• Receive an immediate distribution of an amount equal to only the employee's contributions

An employee in the DC plan who leaves employment, after full or partial vesting, will receive a distribution equal to the amount of employees' contributions plus the city's contributions in time vested (see chart for vesting information), as well as the investment earnings on both.

(Note: the distribution may be 'rolled over' into another qualified plan without paying income taxes. Otherwise, the distribution counts as ordinary income for tax purposes and certain penalties may apply.)

Contribution Rate

DB Plan

• Employees contribute 9.7 percent to the DB + 0.3 percent to the Disability Program, for a total contribution of 10 percent.
• City contributes 0.3 percent and will have the actuarial risk to the Disability Program and will continue to contribute the amount deemed necessary by the plan's actuary to ensure adequate funding is available to pay pension benefits.

DC Plan

• Employees contribute 7.7 percent to the DC plan + 0.3 percent to the Disability Program, for a total contribution of 8 percent. (Note: This is NOT the same contribution amount currently being made by employees to the GEPP).
• City contributes 11.7 percent + 0.3 percent to the Disability Program, for a total contribution of 12 percent and assumes the actuarial risk for the disability plan.

NOTE: Information about the Disability Program is provided below.

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Eligibility and Choice

Who is Eligible to Participate?
An employee can participate in the DB Plan if he or she

• is currently a member or is eligible to participate in the GEPP; or
• is employed BEFORE October 1, 2017 and chooses to NOT participate in the DC Plan.

An employee can participate in the DC plan if he or she

• is currently a member or is eligible to participate in the GEPP and chooses to transfer to the DC Plan while still actively employed.
• ALL full time employees who commenced employment on or after October 1, 2017 will have the DC Plan as their sole, mandatory retirement plan option.

Who is not eligible to participate in the DC plan?
Employees categorized as PART TIME are ineligible to participate in the DC Plan as described above.

When will employees be able to choose between the two plans?
Employees must be employed before October 1, 2017 to be able to switch between plans. The ability to transfer from the DC Plan to the DB Plan ended at the point of reaching 5 years of service.

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Disability Program

What do I have to do to participate in the Disability Program?
All participants of both the DB and DC plans are covered by the Disability Program.

If I am not currently in the GEPP, will I have to pass a medical exam to participate in either the DB or DC Plan?
No.

How will disability benefits be handled with the new plan?
Disability benefits will not change. For DC Disability requests, the Pension Office will provide completed applications for retirement disability to a Disability and Survivor Panel, who will determine benefits.

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Making My Decision

What are the risks and benefits in switching to the DC plan if I am eligible (employed before October 1, 2017)?

Factors to consider include:

• Age and spouse's age
• How long you have participated in the DB plan  
• How long you plan to remain employed with the city
• How long until you plan to retire
• Other sources of retirement income
• Comfort level in making investment decisions

The DC plan gives participants increased control over the investment of their retirement funds. However, this control comes with increased responsibility for investment decisions and the risk associated with those decisions. The DC plan participant bears the entire risk – and reward – of his or her individual investment decisions. (Note: Because individual investment choices and market performance are factors, a specified level of retirement income is not guaranteed.)

For participants who are unaccustomed to making investment decisions, options known as 'Model Portfolios' or 'Lifecycle Portfolios,' where the asset allocations are already determined, are offered and can be discussed further with the provider.

DC plan assets are portable - meaning employees can roll over their income and earnings into another qualified plan at their next job, into an Individual Retirement Account (IRA) or leave their assets with the city's provider after termination of employment.

How will my investment be managed under the DC plan?
The individual employee will make the investment decisions choosing from a range of portfolios offered by the city's plan provider. 

Will I lose any of my pension contributions if I convert from the DB to the DC plan?
No. If the employee has more than 5 years of service, individual accounts will be credited with an amount equal to the actuarial present value of the benefit accrued as of the transfer date as determined by the plan's actuary.

How will employees switching to the DC Plan affect the value of the GEPP, and, ultimately, my retirement?
Retirement benefits will not be affected.  By law, the city must contribute any additional amounts necessary to fund expected benefits in accordance with the actuary's valuation.

Where can I get more information?

• The provider for the DC plan is Empower Retirement and will provide additional information about portfolios offered. In addition, the City will host educational classes on these retirement options.
• Continue to check this website and employee portal for more information.
• For specific questions about the DC Plan, contact Empower Retirement at City Hall – St. James, 117 West Duval Street, Suite 150, Jacksonville, FL 32202.