PURPOSE

The purpose of this report is to request City Council adoption of a resolution establishing a 401(A) Plan for the Burbank Fire Fighters (BFF) and the Burbank Fire Fighters � Chief Officers Unit (BFF-COU) Local No. 778.

BACKGROUND

As part of the 2006 � 2009 Memorandum of Understanding between the BFF and the BFF-COU approved in October 2006, the City agreed to match a $15.00 per month contribution to a Post Employment Health Plan (PEHP) and a $15.00 per month contribution to a 401(a) Plan from Nationwide Retirement Solutions.   Both of these plans are unique programs authorized by the Internal Revenue Code to give employees the ability to set aside money for the payment of post employment benefits. 

Employees may elect to have their contributions and earnings directed to an investment option of their choice.  There are currently ten investment options available to the participants.  The investment options enable the participants to make selections based on their personal objectives and risk tolerance and are designed to provide diversification, ranging from conservative to aggressive, across several types of investment classes by investing in multiple underlying funds.

The City has previously established the PEHP and is now in the process of establishing the 401(a) Plan.

ANALYSIS & CONCLUSION

Like the PEHP the 401(a) plan will be sponsored by the City and administered by the Nationwide Retirement Solutions.  The Trustee for this plan will be the LaSalle National Bank.  The Trust is a multi-employer trust comprised of over 800 public sector entities across the United States.  As the sponsor, the City has the authority to appoint and remove the Trustee and the Administrator; as well as amend the provisions of the Plan, subject to the terms of the BFF and BFF-COU MOUs.  It is worth noting that while the PEHP and 401(a) plan have been requested by the BFF, Local No. 778, this program can be made available to all other represented and unrepresented employees in the City if they so desire.

The 401(a) will be effective February 15, 2007.  The City will begin deducting the required employee contribution from each association member on that date and depositing that amount in their individual accounts with Nationwide.  The proposed resolution provides administrative authority for the contribution amounts to be changed annually if necessary as determined by the unions.

FISCAL IMPACT

Council approved the City�s matching portion of the PEHP and 401(a) contribution when the 2006 � 2009 BFF and BFF-COU MOUs were adopted in October, 2006.  As such, there is no further fiscal impact to the City to establish this 401(a) Plan as any new monies to be deposited will come from the employee�s salary.  Furthermore, all administrative costs and asset fees will be charged to the individual employees account.  The only responsibility the City has is to wire transfer the established contribution amount to Nationwide on a regular basis.

RECOMMENDATION

Staff recommends that the City Council adopt the proposed resolution adopting the Plan Agreement for the 401(a) for the Burbank Fire Fighters and the Burbank Fire Fighters � Chief Officer Unit - Local No. 778.

Respectfully submitted,

Judie Sarquiz

Management Services Director