COUNCIL AGENDA ITEM
SUBJECT:
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Authorization to accept $69,287.13 in full and complete settlement of PGIT Claim # 393584.
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DEPARTMENT:
City Attorney
SUMMARY:
In 2022, it came to the attention of City staff that errors had been made in the administration of the City’s Defined Contribution Plan (401(a) Plan) relating to vesting determinations as to certain former City employees. Specifically, it was determined that $197,879.68 in funds were improperly forfeited by 16 employees at the time of their separation from the City and that the total amount of net investment gains that the 16 affected accounts would have realized but for the improper forfeiture was $69,287.13. Combined, these amounts total $267,166.81. In 2023, the City paid $267,166.81 to Mission Square Retirement to reimburse the 16 former employees who forfeited their interest in the City’s Defined Contribution Plan due to mistakes in administering the Plan by the Plan administrator, Mission Square Retirement. The City then filed a claim with Preferred Governmental Insurance Trust under the Employee Benefits Liability Coverage endorsement to its General Liability Coverage for reimbursement of the $267,166.81.
In reviewing the claim, PGIT determined that the only damages incurred by the City are the investment gains, or $69,287.13, which the City would not have had to contribute but for the improper forfeitures. PGIT has offered to reimburse the City for those corrective contributions, with the understanding that it reserves the right to subrogate against Mission Square Retirement for any amounts paid on the claim.
BUDGETED ITEM: ☐ Yes ☐ No ☒ Not Applicable
BUDGET AMENDMENT REQUIRED: ☐ Yes ☐ No ☒ Not Applicable
RECOMMENDED ACTION:
Motion to accept settlement offer of $69,287.13 in settlement of Claim #393584.