Council adopts temporary 'Rule of 77' retirement window for defined-benefit participants

The Yukon City Council on July 15 adopted ordinance 1477 to amend the city’s defined-benefit retirement plan and provide a temporary special retirement option — described at the meeting as a “Rule of 77” window — for eligible employees. The council also approved an emergency clause so the ordinance would take effect immediately.

Human Resources Director Tamara Vickery and finance staff explained the window applies only to current participants in the closed defined-benefit plan, not to employees in the city’s defined-contribution plan. Council members said roughly 34 employees remain in the defined-benefit plan and the window could allow approximately a dozen of those participants to elect retirement under modified age/service criteria.

City staff explained the mechanics: the Rule of 77 requires that an employee’s age plus years of service total 77 (staff also noted employees must be at least 55 to be eligible), and the ordinance adds two years of service to the calculation for the window. The window requires employees to notify the city by specified dates: election paperwork is due by Sept. 15 and take effect by Sept. 30 in the timeline discussed.

Finance staff estimated the present-value pension liability would increase by about $2 million under full use of the window, and said payroll savings could follow depending on whether positions are backfilled and at what staffing levels. Finance Manager Chris and other staff noted the city already carries accrued vacation and sick-leave liabilities for those employees and that some near-term costs relate to leaving accrued balances.

Council approved both the ordinance amendment and the emergency clause by recorded vote. Council members said the emergency clause was necessary to give eligible employees time to consult with pension advisers and make an informed election within the stated window.