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HomeMy WebLinkAboutCAO-06-052 - End of Mandatory Retirement1 R fhiefAdministrator's Office REPORT Report To: Finance & Corporate Services Committee Date of Meeting: September 5, 2006 Submitted By: Doug Paterson Prepared By: Doug Paterson wards} Involved: n/a Date of Report: August 23, 2006 Report No.: CAO-06-052 Subject: END OF MANDATORY RETIREMENT RECOMMENDATION: That Human Resource Policy II-250, Retirement, and Policy II-145, Group Insurance and Pension Plans, be amended as suggested; and, That employees who work beyond age 65 continue to accrue service for vacation purposes, sick leave and vacation, in the same manner as employees under the age of 65; and further, That premium based insurance benefits cease for employees after the normal retirement age of 65. REPORT: In May of this year, I tabled a "for information" report (copy attached) with the Finance & Corporate Services Committee, listing the implications of ending mandatory retirement, which is effective December 12, 2006. This report now identifies the changes and decisions that need to be made for implementation later this year. The following changes need to be addressed: 1. Policy -Two policies are affected by ending mandatory retirement. The first is Policy 11- 250 Retirement. The proposed changes eliminate what would previously have been called "compulsory" retirement. It is recommended that normal retirement be retained within the policy and there are two approaches in the draft revision that can be contemplated. The first, which was indeed the original policy definition, defines normal retirement age as the end of the month in which the employee reaches the age 65. The second defines normal retirement as the end of the calendar half-year in which the employee reaches the age 65, and is the definition that previously defined "compulsory retirement". The definition of the calendar half-year is a unique approach that this Corporation has taken for at least the past 25 years and is not the definition one would normally expect to encounter in areas such as Canada Pension Plan, WSIB, Ontario Health Benefits coverage and Old Age Security. The second policy is Policy II-145 Group Insurance and Pension Plans. The only change is found on the second page, which describes when LTD recipients cease to have benefits as outlined in the policy. 2. Service Dates - It is recommended that employees who continue to work beyond age 65 continue to accrue service for vacation purposes without interruption. Note that seniority under collective agreement is within the purview of the respective bargaining units and the Corporation can reasonably anticipate that unions will mirror the position recommended on service. 3. Sick Leave - It is recommended that sick leave continues for employees working beyond 65 in the same manner as it currently applies to employees under age 65. That is, the employee would continue to accrue sick leave and could draw from the accumulated bank until actual retirement. With respect to the gratuity payment, the current by-law provides for retirement post age 65 and therefore, it is recommended that the gratuity payment coincide with the point at which the employee actually retires from the Corporation. 4. Vacation - It is recommended that vacation continue to accrue and be utilized in the same manner as for employees under age 65. 5. Benefits - It is recommended that insurance benefits cease for employees after normal retirement. This includes extended health care, dental, group life and long term disability which are premium-based benefits. This position is recommended for the following reasons: • The Ontario Drug Benefit program covers the cost of most prescription drugs for individuals who have reached 65; • Post age-65 extended health care plans are extremely costly, with escalating costs regardless of changes in plan design; • Retiree dental coverage can be expensive as there is higher utilization of the more expensive procedures (eg: bridges, crowns); • The City's Administrative Services Only (ASO) agreement with the insurer renders us responsible for the claim costs under Extended Health Care and Dental plans, as well as for an administration fee. As the workforce ages, utilization increases under these plans will result in additional costs; • Providing life insurance post 65 becomes more expensive as the mortality risk is greater; and, • Cost of disability claims coverage, both liability and premiums, will increase. Should the Corporation wish to consider some form of extension of benefits to employees 65 or older, it is recommended that the Corporation consider providing a percentage on top of salary in lieu of benefits. Respectfully submitted, Doug Paterson Director, Human Resources 1 ~hiefAdministrator's Oii"ice REPORT Report To: Finance and Corporate Services Committee Date of Meeting: May 15, 2006 Submitted By: Doug Paterson Prepared By: Doug Paterson Wards} Involved: n/a Date of Report: April 20, 2006 Report No.: CAO-06-029 Subject: BILL 211 ENDING MANDATORY RETIREMENT RECOMMENDATION: For information only. REPORT: On December 12, 2005, Bill 211 ending mandatory retirement was given Royal Assent by the Ontario Legislative Assembly. The legislation amends the Ontario Human Rights Code and other legislation so as to prohibit employers from forcing employees to retire upon reaching a specific age. One year following Royal Assent, from December 12, 2006, it will be unlawful to compel employees to retire at a specific age. This 12 month window provides time for employers to evaluate and amend policies and contractual agreements to remove any reference to mandatory retirement. It should be noted that any residual language concerning mandatory retirement existing after December 12, 2006, is deemed to be null and void. At the present time, the City has two mandatory retirement ages. Age 65 applies to the majority of our workforce including the civilian section of the Fire Department. Age 60 applies to the uniformed sections -Fire Suppression, Fire Prevention - of the Fire Department. It is presumed that a mandatory retirement age of 60 will still be considered legal because it is a bona fide occupational requirement for these groups of the Fire Department. A bona fide occupational requirement is an employment requirement that is discriminatory on certain grounds, including age, but that is allowed under the Ontario Human Rights Code because of the nature of the employment. The legislation has been drafted to maintain the status quo with respect to a number of benefits related issues. While it is unlikely that major changes will take place in the workplace immediately following the end of mandatory retirement, Human Resources staff have been studying the anticipated impacts on the City in order to be prepared for any changes. a) WSIB continues to function the same as pre the passage of Bill 211. Employees' entitlement to WSIB loss of earnings benefits ends upon reaching age 65, unless the worker is 63 years of age or older on the date of injury, in which case he or she is entitled to receive loss of earnings benefits for up to two years from the date of injury. b) Extended health care, dental, short term and long term wage replacement plans are not required to be provided to employees beyond the 65th birthday. c) Under OMERS legislation, an individual can contribute beyond age 65 but contributions must cease and pension must be paid when the employee turns 69 years of age. d) In recruitment, we are precluded from discriminating against an individual 18 years of age or older; therefore, employees could be recruited beyond age 65. (At present, this is a situation that occurs with respect to crossing guards and some of our "9000" part time staff, particularly at the Auditorium). e) With respect to retention, employees cannot be terminated simply because they reach the age of 65 and can continue to work with no mandatory retirement or fixed termination date. In considering the impact of the legislation, Human Resources staff have identified a number of areas for which there may be future risk to the Corporation. The amount of risk is difficult to quantify and the likelihood of the risk materializing is equally unknown. The legislation purports to provide an "out" for an employer being obliged to provide benefits after age 65. While that is clear in the legislation, staff are unconvinced that the legislation will stand the test of courts or perhaps the Human Rights Code. Another area of concern is that employees working beyond 65 are not entitled to coverage beyond two years under WSIB, which raises the possibility of employees potentially suing their employer should they experience a work related injury. Further to this, the duty to accommodate under the Human Rights Code will apply and we are uncertain as to how we will deal with this in the absence of WSIB infrastructure and adjudication mechanisms. Statistical Trends Staff have reviewed retirement data for 2000 to 2005 inclusive, and have identified that, of the 110 employees who retired, the average age at retirement was 57. Looking at the City's workforce for the next five years (2006 to 2011), Human Resources anticipates 28 full-time staff will reach the age of 65 (cumulatively). Currently the City employs 56 part-time staff older than 65 (the majority as crossing guards and in the 9000 series jobs, such as event attendants and course instructors). FINANCIAL IMPLICATIONS Unknown at this time. CONCLUSION In the fall of this year, Human Resources will table a report with Council recommending changes to policies and operating procedures which will bring the City into compliance with the legislation. Staff anticipate a number of housekeeping changes to bring collective agreements and City policies into alignment with the intent of the legislation. Respectfully submitted, Doug Paterson, Director Human Resources COUNCIL POLICY RESOLUTION Draft revision POLICY NUMBER: II-250 POLICY TYPE: HUMAN RESOURCES SUBJECT: RETIREMENT D_: DECEMBER 17,1990 amended: DECEMBER 10, 2001 OCTOBER 25, 2004 POLICY APPLIES TO THE FOLLOWING EMPLOYEE CLASSIFICATION(S) UNION MANAGEMENT X PERMANENT FULL-TIME PERMANENT FULL-TIME X TEMPORARY TEMPORARY X PART-TIME PART-TIME X STUDENT PIIRPC~~F~ To define dates of retirement and group insurance coverage. DEFINITION; A retiree of the City of Kitchener is a former employee who is in receipt of a retirement pension. POLICY STATEMENT; Early Retirement: Early retirement date is the date on which an employee elects to retire that precedes the normal retirement date (as defined bythe pension plan). Normal Retirement: Normal retirement date shall be defined as the end of the calendar half year (June 30t" or December 31St) after the employee attains age 65. Normal retirement date shall be defined at the end of the month in which the employee attains age 65. OR ('nmr~i il~nrv Rotiromont• (`nmr~i il~nrv rotiromont rl~to ~h~ll ho rl~finorl ~~ h1° onrl of ~~ r+~Ir~nrJ~r half vr~~r / li ino '~~1~ nr rlor+omhor ~21~ ~~ omr~lnvr~~~~ . Continuation of Insurance Coverage for Early Retirees: (Full time permanent employees) Coverage will be extended to those electing early retirement (as defined by the O.M.E.R.S. Act and Regulation) until ~~e-0-5. normal retirement. 1. The following general conditions applyto the above: a) This program is not extended to employees in receipt of any other group insurance benefits including WSIB (Workers' Safety and Insurance Board). b) The City will pay one hundred per cent (100%) of the cost. The group insurance benefits are subject only to the conditions of the carrier. c) The retiring employee must have a minimum of ten (10) years of continuous service with the City at the time of early retirement. d) In the event of the retiree's death prior to age 65, group insurance coverage will cease. 2) Group insurance coverage includes: a) Extended Health Care Plan b) Dental Plan #9 or equivalent (O.D.A. Fee Schedule 2 year lag) c) Group Life Insurance Plan -The amount of insurance to be fixed at a sum equivalent to two times the dollarvalue of the pension provided through the City's carrier. RETIREMENT, CONT'D 3) Part-time employees retiring early are eligible for group insurance coverage. Coverage is limited to those benefits in force while actively employed with premiums paid on a 50% cost shared basis. 4) Any future enhancements or additions to the group insurance coverage will be at the discretion of Council. COUNCIL POLICY RESOLUTION D_: DECEMBER 17,1990 amended: JUNE 1,1992 MAY 21, 1996 DECEMBER 10, 2001 POLICY NUMBER: II-145 POLICY TYPE: HUMAN RESOURCES SUBJECT: GROUP INSURANCE AND PENSION PLANS POLICY APPLIES TO THE FOLLOWING EMPLOYEE CLASSIFICATION(S) UNION MANAGEMENT X PERMANENT FULL-TIME X PERMANENT FULL-TIME X TEMPORARY X TEMPORARY X PART-TIME X PART-TIME X STUDENT X DI IRD~1~~~ To provide staff with comprehensive group insurance coverage. POLICY STATEMENT: Group Insurance Coverage Subject to terms and conditions of the carrier, the City will pay one hundred per cent (100%) of the cost of premiums for: Permanent Full-time Employees Enrolment a) Group Life Insurance Plan b) Extended Health Care Plan - Date of H i re Draft revision Earliest -1St of the month following hire or 1St of the month following transfer tofull-time status c) Dental Plan - same as "b)" above GROUP INSURANCE AND PENSION PLANS, CONT'D d) Long Term Disability (LTD) Insurance Plan - 791 /Non-Union - 6 months from date of hire All other Unions -1 year from date of full-time hire or 1 year from last temporary start date where there has been no break in service. Extension To Other Than Permanent Full-time Employees Coverage: a) Group Life Insurance Plan b) Extended Health Care Plan c) Dental Plan Eligibility: 700 service hours with the City in the prior calendar year. Once enrolled, 500 service hours are required annually to maintain eligibility. Earliest The following January 1St, if the employee has met the required eligibility Enrollment: criteria. An eligible employee initially declining the option to enroll may do so the following January providing they still meet the eligibility criteria. Cost: Part-time Employees - 50% of regular premiums via payroll deduction Temporary Employees -100% City paid Note: Eligibility rules and cost sharing may be waived where an employee self identifies that the employee's need for social assistance can be reduced or eliminated. Extension to LTD Recipients The City will pay one hundred per cent (100%) of the cost of the following benefits for the first twenty-four monthswhile on LTD. a) Extended Health Care Plan b) Dental Plan c) Life Insurance Plan Benefits will be provided beyond 24 months if the employee has 10 or more years of continuous service. Thov ,mill ho r+n~iororJ i intil nnrm~l ro ' Benefits as described in this policy shall cease upon the employee reaching normal retirement as defined by policy. GROUP INSURANCE AND PENSION PLANS, CONT'D Pension Plan (O.M.E.R.S.~ All permanent employees must become members of the ONTARIO MUNICIPAL EMPLOYEES RETIREMENT SYSTEM (O.M.E.R.S.) immediately upon hire. Basic retirement benefits are determined by O.M.E.R.S. Benefits to supplement the Basic Plan are included in two Supplementary Agreements described below: 1. Type 1 Supplementary- credited service prior to employer's participation in O.M.E.R.S. 2. Type 3 Supplementary-for members who are permanently, partially disabled as defined by the City and who are within 10 years of normal retirement. 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