Hollywood City to add defined-contribution and hybrid pension options; employees get one-time, irrevocable choice

Hollywood City pension staff and trustees presented details of two new retirement options — a defined-contribution (DC) plan and a hybrid plan combining a reduced defined-benefit (DB) multiplier with a DC component — and said employees will have a one-time, irrevocable 30-day election window to choose whether to move from the current DB plan.

The presentation, led by Dave Keller, a pension office presenter, and Christine, the pension fund administrator, explained the mechanics, timeline and consequences of the change and answered employees’ questions. "It's completely voluntary," Keller said. "You don't have to change anything." The effective date for the new options is Jan. 1, 2026.

Why it matters: The two new options, negotiated during collective bargaining with AFSCME, give employees more portability and individual control over investments while the pension board says moving some members into DC accounts would reduce the DB plan's unfunded liability and increase its funded ratio more quickly. "To the extent that anyone leaves the plan and goes to the defined contribution plan, the plan becomes stronger," Keller said.

Key details

- Options and timing: Current employees may remain in the existing DB plan or choose either a DC plan or a hybrid plan. Officials said they expect a roughly 30-day election window in October or November 2025; that choice is irrevocable for the employee's career at the city.

- Contributions and mechanics by group: The city divides employees into three groups based on hire date. Under the current DB plan, Group 1 and Group 2 members contribute 9% of pay; Group 3 contributes 8%. For employees who choose the DC plan, current employee contributions will be redirected to the DC account and the city will increase the employee's paycheck by the same percentage (an 8% offset for Group 3, 9% for Groups 1 and 2), described in the presentation as a net wash for affected employees. Under the hybrid plan, Group 3 employees would contribute 5% to DB and 3% to DC; the city would add a 2% contribution to the DC portion, producing a 5% DC plus 5% DB net contribution pattern described by staff.

- Vesting, rollovers and retirement timing: DB vesting remains seven years; DC vesting is immediate. Pension office staff said nonvested employees who switch will have their accumulated DB contributions (plus interest) rolled into the DC component of the new plan. Retirement payments from a DB account begin when an employee separates from city employment; DC participants may take distributions governed by IRS rules (staff noted 59½ as the threshold for avoiding the 10% early-withdrawal penalty).

- DROP and buybacks: The city commission earlier this year passed a resolution allowing all members to participate in the Deferred Retirement Option Program (DROP) and permitting employees who finish DROP and continue working — with city manager approval — to withdraw DROP funds while remaining employed. The proposed ordinance also revises buyback language so rehired employees buying prior service buy back into the plan that applies to currently employed members and changes buyback payroll-deduction tax treatment (post-tax for payroll-deduction buybacks). The ordinance includes other cleanups: title changes ("pension coordinator" to "administrator") and clarifying tax wording; staff said the ordinance text and a staff summary are posted on the city and pension websites.

- Investment managers and fees: The pension board will issue a solicitation for a recordkeeper (the DC record-keeping vendor) and an evaluation committee will hold public meetings to review responses; staff said firms under consideration may include familiar vendors such as MissionSquare and Voya but no firm had been selected at the time of the presentation. Officials said investment options (7–11 choices) and fee disclosures will be provided during the selection/30-day election period; the board will monitor fees annually as a fiduciary duty.

- Membership scope: The change applies to AFSCME-represented general employees and nonrepresented employees; presenters said police and fire pension members are not affected by these proposals.

Questions and administration

Staff and trustees answered numerous employee questions about vesting timing, how credited service and DROP limits apply, whether employees can contribute beyond the city contribution, and options for rolling funds to or from other qualified plans. Christine, the pension fund administrator, reiterated that staff will provide informational sessions during open enrollment, a member self-service portal for individual estimates and the pension office will schedule one-on-one appointments on request. "Once the record keeper is on board, you can also reach out to them with questions," she said.

The pension presenters also told employees that an internal vote on whether to offer the three plans (DB, DC and hybrid) was under way: early voting was available at the pension office and a final election was scheduled for Aug. 12 (no outcome was reported at the meeting). Staff said implementation materials — the ordinance, staff summary, fact sheet and slides — would be posted by the end of the day at www.hollywoodpension.com and the city's website.

What the presentation did not resolve

Record-keeper selection, the final set of DC investment options, and specific fee and historical-performance numbers were not available at the time of the presentation; staff said those will be published and discussed in open meetings before the election window so employees can evaluate choices. Several employees asked whether the city would allow future election windows; staff answered that the choice would be a one-time, irrevocable election for current employees.

Ending

Pension trustees said they will provide materials and informational sessions and urged employees to consult personal financial advisers for individualized recommendations. "We are here as the trustees. We have a fiduciary responsibility to manage your pension," Phyllis, chair of the pension board, told the audience. The presentation closed with staff offering ongoing appointments and online resources for employees who want individualized projections before the October–November election window.