January 11, 1999

To:Corporate Services Committee

From:Chief Financial Officer & Treasurer

Subject:Benevolent Fund Wind-up - North York Professional Fire Fighters Association

Purpose:

To seek authority to accept a lump sum from the Benevolent Fund of the North York Professional Fire Fighters Association for application to premium costs owed by certain fire fighter employees and retirees, and to enter into an agreement accordingly.

Funding Sources, Financial Implications and Impact Statement:

None

Recommendations:

It is recommended that:

(1)the City accept funds from the Trustees of the North York Professional Fire Fighters Benevolent Fund in accordance with the directions of the Court, for the purposes of paying, until such sum is exhausted, the premiums, or share of premiums, for medical (dental/hospital/drug) coverage with respect to the fire fighters receiving long-term disability (LTD) benefits, and the fire fighters, who retired prior to January 1, 1991;

(2)the City enter into a written agreement with such Trustees and all other appropriate parties documenting the details of the payment of the said sum and the manner of its application.

Background:

The North York Professional Fire Fighters Benevolent Fund was established pursuant to written rules in 1971 to provide Association members with employment-termination benefits, pre-retirement death benefits and premium payments for life and medical insurance during receipt of LTD benefits and during retirement. Administered by five Trustees, the Fund has been financed by the contributions of active North York fire fighters, supplemented by donations from the public and proceeds from events sponsored by the Association.

The amalgamation of the former Metropolitan municipalities on January 1, 1998, has made continued operation of the Fund impractical. Its Trustees therefore resolved, and representatives of the Association (both active and retired) agreed, that the Fund should, subject to Court approval, be wound up effective December 31, 1997 and its assets distributed on an equitable basis to the active members, LTD members and retired members. The most recent audit of the Fund was as of March 31, 1998, by David W. Dunphy Chartered Accountant.

At the instance of the Trustees, the Court made an interim Order on November 26 appointing representatives for both the active members and the retired members and setting February 2, 1999, as the date for hearing the issues concerning the wind-up of the Fund and the distribution of its assets.

Discussion:

The 1993/94 collective agreement between the North York Professional Fire Fighters Association and The Corporation of the City of North York provides for a portion of the benefit premiums for retired fire fighters to be paid by the Association, and premiums for those receiving LTD benefits were handled the same way. Those payments were made to North York by the Benevolent Fund until the end of 1997, and in 1998 through the Association to the new City of Toronto.

Executives of the Association approached the City in the fall of 1998 to discuss the options available to continue to provide benefits to retired and disabled North York fire fighters. It is proposed that upon the wind-up of the Benevolent Fund, a lump sum be paid to the City for the purpose of temporary continued payment of the premiums for the same benefits to those recipients. When the lump sum is exhausted, after approximately 36 months (estimated), the City would invoice the retirees and LTD members directly for their portion of the benefit premiums. The City's benefit costs would not increase as a result of this arrangement.

There are 107 fire fighters who retired prior to January 1, 1991, for whom the City pays 50% of the health insurance premiums. The other 50% has been paid for by the Association through the Benevolent Fund. The City will begin invoicing these retirees for their portion of the health premiums once the money available from the proposed lump sum has been exhausted.

The City already invoices a number of retired employees directly for the portion of health premiums under various arrangements. Therefore, the increase in administrative effort once the lump sum runs out will be minimal.

Conclusion:

The North York Professional Fire Fighters Association intends to wind up its Benevolent Fund in accordance with Court approval. Acceptance of a lump sum for application to the share of premiums payable by Association members and former members will be administratively convenient and permit a smoother transition to direct member billing.

Contact Name:

Ivana Zanardo

Director

Pension, Payroll & Employee Benefits

397-4143

Chief Financial Officer & Treasurer