Council Statement: Budget 2016-18 Retirement Incentive

In early November, Council approved an Early Retirement Incentive Program for individuals who were eligible to retire or close to being eligible to retire in 2015. The program was to take the form of salary continuation for a specific period of time depending on the level of the position that the individual occupied and was estimated to cost $3.8 million*.
 
Projected savings over the 2016-2018 Three Year Operating Budget are anticipated to be in the range of $8,648,198. It should be noted that the annual and sick leave allowances are items that are contained in each year’s operating budget. The retirement incentive allowance is a one-time, non-budgeted item charged to the 2015 wage budget.
 
Compensation Details
The total compensation paid to each individual, inclusive of a 20 per cent top up for the City’s portion of standard payroll benefit costs, is comprised of a number of elements:

• the value of the individual’s early retirement salary continuation allowance;
• the value of the individual’s accrued annual leave allowance; and
• the value of the individual’s severance pay allowance.

The early retirement salary continuation allowance was calculated on the basis of a specific number of weeks as negotiated between the individual and the City, multiplied by the value of the weekly rate of pay of the individual during the last pay period. It also included any negotiated wage increases that would have been realized during the salary continuation period. The calculation for this type of payout is based on the standard payouts for “dismissal without cause” case law at the provincial level.
 
The total paid as of January 31, 2016 is $3,839,817.
 
All employees, upon retirement, are entitled to the payout of any annual leave that they would have accrued in their vacation leave bank. The annual leave bank is capped at no more than two times their annual leave allowance to a maximum of twelve weeks. As per approved policy, the Deputy City Managers have no cap on the maximum. In addition, for this specific case only, they are entitled to the annual leave they would have accrued while on salary continuation.
 
The total paid as of January 31, 2016 is $1,039,768.
  
All employees, upon retirement, are entitled to severance pay. Employees who were on the City’s payroll prior to December 31, 1979 are entitled to the payout of their unused days of sick leave in their respective sick leave banks up to a maximum of 200 days. The payout is based on the individual’s daily rate as at the last day of pay times the number of unused days in their sick leave bank.
 
The total paid as of January 31, 2016 is $1,002,896.
 
All other employees, upon retirement, are entitled to one week’s pay for each year of service. The payout is based on the individual’s weekly rate as at the last week of pay times the number of years of service, both whole and partial.
 
The total paid as of January 31, 2016 is $1,206,327.
 
Total Allowances Paid Out as of January 31, 2016

Category                              Salary $          Benefits at 20 %          Total
Retirement Incentive           3,199,848           639,970                        3,839,817
Annual Leave                         866,474           173,295                        1,039,768
Retiring Incentive                1,841,019           368,204                        2,209,223
                                            5,907,341        1,181,468                        7,088,809

*CORRECTION  - The first paragraph of the release above has been corrected to show estimated cost $3.8 million.  The previous version of the news release was incorrect, showing $3.7 million.

The detailed retirement incentive list is available here.