Consulting Agreement with Transition - DOC by mtc10132

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									                                                                          Agenda Item No.: E.2.a.

Actuarial Consulting Services Contract                                                                  E
                                                                                                        2
Recommendations:                                         On July 18, 2003, the Request for             a
                                                          Proposal for Actuarial Services was sent
1. That the City enter into an agreement
                                                          to five actuarial firms selected by the
   with Aon Consulting for actuarial
                                                          Pension Committee.
   services as per the Terms and Conditions
   outlined in Attachments 1 and 2 of the                The Pension Committee evaluated the
   November 13, 2003, Corporate Services                  proposals and is recommending the
   Department report.                                     appointment of Aon Consulting.
2. That the final agreement be approved as               Aon’s ongoing proposal was more
   to form by Corporate Services                          competitive than other proponents.
   Department (Law Branch) and as to                      Also Aon Consulting has been providing
   content by the General Manager of                      actuarial services to the City for several
   Corporate Services Department.                         years, and therefore no transition costs
                                                          will be incurred.
Report Summary                                           The term of the contract is for period of
  In accordance with the City                            three years beginning January 1, 2004,
   Administration Bylaw 12005, final                      with an annual renewal option for up to a
   expenditure authority shall be obtained                maximum of seven years.
   from Executive Committee for all                      Aon Consulting has significant
   contracts awarded in excess of $250,000.               knowledge and direct experience in
  The contract will be self-funding as all               providing actuarial services to meet
   costs are paid from the appropriate                    accounting, funding and regulatory
   benefit plan (i.e. Pension Fund, Long                  requirements for the Pension Fund
   Term Disability Plan, or Income                        (which includes the FFSPP), Long Term
   Replacement Plan).                                     Disability (LTD) and Income
                                                          Replacement (IR) Plans.
Report                                                   Actuarial services for the three other
  Under Article 19 of Part III (Pension                  pension plans in the Pension Fund, LTD
   Plan Agreement) of the Collective                      and IR Plans are required on an ongoing
   Agreement between the City and the                     basis. Given the competitive pricing
   Edmonton Fire Fighters’ Union, the                     offered by Aon, the Administration
   Pension Committee is to select the                     would intend to negotiate with Aon
   actuary to carry out actuarial valuations              Consulting to include all required
   for the Fire Fighters’ Supplementary                   actuarial services under a single contract.
   Pension Plan (FFSPP) and generally
                                                      Budget / Financial Implications
   advise the Committee.
  Article 19.11.012 of the Pension Plan              The actuarial services are self-funded as the
   Agreement states that the Administrator            costs are paid from the appropriate plan
   agrees to appoint the actuary selected by          fund. For example, actuarial services for the
   the Pension Committee.                             FFSPP are paid for by the FFSPP.



Routing:              Executive Committee
Delegation:           J. MacPherson/J. Seve
Written By:           J. McCarthy
November 13, 2003     Corporate Services Department
File: 2003COH020      (Page 1 of 2)
Actuarial Consulting Services Contract




Justification of Recommendations
1. Actuarial services are required on an
   ongoing basis to meet collective
   agreement, accounting, funding and
   regulatory compliance for the Pension
   Fund, Long Term Disability Plan and
   Income Replacement Plans.
2. Authorizing the Administration to
   execute the Agreement based on the
   Terms and Conditions approved by
   Executive Committee, will expedite this
   matter.

Background Information Attached
1. Consultant Agreement Between the City
   of Edmonton and AON Consulting
   Agreement - Terms of Payment.
2. Consultant Agreement Between the City
   of Edmonton and AON Consulting
   Agreement - Description of Work.




                                         (Page 2 of 2)
                                                                                     Attachment 1

Consultant Agreement Between The City of Edmonton and AON Consulting Agreement
Terms of Payment



1.0   Payment

1.1   The City agrees to pay the Consultant for fees and disbursements as outlined below.
2.0   Consultant Fees
2.1   The maximum billable amount, including GST, is:
      Pension Fund Accounting:      $34,000 (with a maximum fee of $17,000 for the FFSPP)
      LTD Plan Accounting:          $12,000
      IR Plan Accounting:           $10,000
      FFSPP & FCSPP Funding & Related Services:                  $26,000 (with a maximum fee of
      $18,000 for the FFSPP)
      LTD Funding and Related Services: $34,000
      The maximum billable amounts specified above are guaranteed until completion of the
      December 31, 2005 funding and accounting valuations.

2.2   For work outside the scope of the projects identified in Clause 2.1 as listed below, the
      fees will be based on hourly rates in effect at the time the services are rendered plus GST,
      as applicable.

      Accounting
      Pension Fund
        supplementary actuarial or consulting services related to the completion of the City's
         financial statements, as requested
      LTD and Income Replacement Plans
        supplementary actuarial services or consulting services related to the preparation of
         the City's financial statements, as requested
      Funding and Related Services
      FFSPP & FCSPP
        supplementary actuarial or consulting services related to data, funding, plan design,
         regulatory issues, as requested
      LTD and Income Replacement Plans
        perform the actuarial calculations and provide the present value amounts required
         under the provisions of the collective agreements where an employee has received or
         will receive a lump sum payment for which the City has the right of subrogation
        supplementary actuarial services or consulting services, as requested




                                    Attachment 1 - Page 1 of 2
                                                                                            Attachment 1

Consultant Agreement Between The City of Edmonton and AON Consulting Agreement
Terms of Payment



      Plan Administration
        prepare actuarial calculations, commuted values, benefit payment calculations under
         the FFSPP and FCSPP
        supplementary actuarial services or pension consulting services related to the day-to-
         day operation of the supplementary pension plans
      Other
       additional actuarial or consulting services as approved by the Branch Manager,
         Human Resources

3.0   Disbursements

3.1   The City may reimburse all reasonable disbursements incurred by the Consultant when
      carrying out the Services defined in the Description of Work at cost.

3.2   Disbursements may include:
      3.2.1   printing;
      3.2.2   photocopying;
      3.2.3   courier services;
      3.2.4   long distance telephone and fax charges; and
      3.2.5   other costs (e.g. travel) approved in advance by the City’s representative.

4.0   Application for Payment

4.1   The Consultant will submit invoices with respect of Services rendered on a monthly
      basis. Each invoice shall:

      4.1.1   refer to the purchase order number;
      4.1.2   list the Services and expenses, by plan, for which payment is being claimed;
      4.1.3   list the number of work-hours spent and the various rates used to calculate the
              invoice; and
      4.1.4   show the GST as a separate amount.
4.2   2The Consultant shall submit the invoice to, Benefits and HR Support Supervisor, 10th Floor, Century
      Place, 9803 – 102A Avenue, Edmonton, Alberta, T5J 3A3.2




                                        Attachment 1 - Page 2 of 2
                                                                                   Attachment 2

Consultant Agreement Between The City of Edmonton and AON Consulting Agreement
Description of Work



1.     General Description of Project

1.1.   The Project involves providing actuarial and consulting Services to meet accounting, and
        funding requirements for the City of Edmonton’s LTD Plan and Income Replacement Plan.
2.     Consultant Services
2.1.   The Consultant will provide actuarial and consulting Services which include, but are not
       limited to:
       Accounting
           Under the direction of the Director, Corporate Accounting, Budgets and Reporting:
           provide advice in the development of best estimate actuarial assumptions for
            accounting purposes
           undertake an extrapolation/valuation and provide the appropriate reports for financial
            statement purposes for the Long Term Disability Reserve Fund on a corporate basis
            which embodies the relevant assertions of paragraph 5300.17 of the CICA Handbook
            and Section PS 3255
           undertake an actuarial valuation for the Income Replacement Plan pursuant to Section
            PS 3255 and provide the appropriate report
           undertake an accounting valuation/extrapolation for the Income Replacement Plan
            using current data
           supplementary actuarial services or consulting services related to the preparation of
            the City’s financial statements, as requested
       Funding and Related Services
           Under the direction of the Benefits Planner:
           undertake a funding valuation for the Long Term Disability Plan for each employee
            group to review the financial experience, calculate reserves and premium rates
           provide advice in the development of actuarial assumptions for funding purposes
           assist in data preparation and review
           provide the cost implications of various cost-of-living adjustments on the financial
            health of the plan by employee group
           meet with each of the five (5) LTD Advisory Committees to review the actuarial
            report, recommended premium rate and cost-of-living implications
           perform the actuarial calculations and provide the present value amounts required
            under the provisions of the collective agreements where an employee has received or
            will receive a lump sum payment for which the City has the right of
            subrogation1supplementary actuarial services or consulting services, as requested 1




                                      Attachment 2 - Page 1 of 1

								
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