Chapter 2.60
HEALTH BENEFITS FOR RETIREES
Sections:
2.60.010 Health benefits for retirees.
2.60.020 Retirement medical benefits plan VEBA trust investment policy.
2.60.010 Health benefits for retirees.
A. Retired employees hired on or before December 18, 2002, and are at least 55 years of age with at least 10 years of service to the district, and their spouse, shall benefit from the same or equivalent medical plan offered to active employees pursuant to California Government Code Sections 53201, 53205, and 53205.1. The district shall pay per month, per retired employee, up to a sum equal to the cost of the same or equivalent lowest cost group medical plan offered to active employees for employee and one dependent; not to include high deductible medical plans for purposes of this cost calculation. The benefit shall continue for the later of the life of either the retired employee or the dependent.
B. Retired employees hired after December 18, 2002, and are at least 55 years of age with at least 10 years of service to the district, shall receive a medical benefit the same or equivalent to that offered to active employees for up to the cost of the lowest cost group medical plan for employee only coverage, not to include high deductible medical plans for purposes of this calculation. The retired employee’s spouse or registered domestic partner may participate in coverage at the expense of the retired employee. The benefit shall continue for the later of the life of either the retired employee or the dependent.
C. These benefits shall extend at least for the life of the 2012-2017 memorandum of understanding, and may continue thereafter, subject to availability of coverage and consistent with fiscal constraints, as the district in its sole discretion is able to provide them. However, these benefits are subject to termination by any present or future board of directors pursuant to law, and should not be regarded as vested rights.
D. Pursuant to Government Code Section 53201, members of the board of directors must have been first elected to their own term of office before January 1, 1995, to be eligible for the district’s retiree health benefits. Members of the board of directors must have also served in office after January 1, 1981, to be eligible for the district’s retiree health benefits. Any member of the board of directors first elected to their term of office on or after January 1, 1995, or who served in office before January 1, 1981, shall not be eligible for the district’s retiree health benefits. (Amended by district 9/2013; Res. 2426, 2006)
2.60.020 Retirement medical benefits plan VEBA trust investment policy.
A. Investment Philosophy. Western Municipal Water District (“district”) established a voluntary employees’ beneficiary association (VEBA) trust (“trust”) to receive funding and pay out benefits according to the district’s retirement medical benefits plan (“plan”). Trust assets are to be invested to provide long-term growth in a portfolio diversified among various asset classes in order to provide a payment stream for benefits payable under the plan. Investments will conform to permitted investments as defined in plan and trust documents.
B. Investment Guidelines. In accordance with the trust, the district as plan administrator shall appoint an investment manager to direct the investment of plan assets by the trustee. In investing the trust’s assets, the investment manager will conform to the long-term asset allocation targets stated below:
|
Asset Class |
Acceptable Range |
|---|---|
|
Equities |
25 – 75% |
|
Domestic |
20 – 75% |
|
International |
5 – 50% |
|
Real Estate |
0 – 25% |
|
Domestic |
0 – 25% |
|
International |
0 – 10% |
|
Commodities |
0 – 25% |
|
Bonds |
25 – 75% |
|
Domestic |
15 – 75% |
|
International |
0 – 35% |
|
Cash |
0 – 10% |
C. Eligible Investments. Investment vehicles for trust assets will generally be limited to exchange-traded funds (ETFs), mutual funds or other vehicles that strive to replicate the return of defined market indexes at low cost. In addition to their low cost, ETFs and indexed mutual funds offer broadly diversified exposure within each asset class, thereby reducing or eliminating risks associated with overexposure to any specific company or country.
Over the long term, the target allocation selected by the plan administrator, as set forth above, will be maintained by the investment manager. The investment manager will monitor the asset allocation, and will rebalance to the target allocation at the end of any quarter when any asset class deviates from its target by more than five percent.
D. Performance Standards. Portfolio performance will be compared to market benchmarks. It is anticipated that the portfolio will achieve returns comparable to market indices, net of costs associated with owning the investment vehicles, throughout market cycles.
E. Reporting. The investment manager will provide monthly portfolio reports to the trustees, and will meet with the trustees on a semi-annual basis. (Res. 2848 § 1 (Exh. A), 2013; Res. 2641 § 1 (Exh. A), 2009)