The City of Beverly Hills implemented the Alternative Retiree Medical Program (ARMP) as one of the components of the City’s five-point employee wages and benefits cost containment plan. 

What is the ARMP?

The ARMP is an elective program that allows eligible staff to receive an alternative benefit in lieu of current retiree medical benefits.  Based on several different factors, employees are provided with an actuarially determined amount with which they have the option of disbursing to several tax advantaged accounts as well as a cash lump sum option.  Following are key attributes of the program:

1.       The City retained benefits experts, financial advisors and actuaries to help design an OPEB cost-containment program.

2.       We met with our deferred compensation plan provider (ICMA-RC) to explore defined contribution options not currently offered.

3.       City goals were to cut costs, lower unfunded OPEB liabilities and change the benefits structure from a defined benefit to a defined contribution without devaluing employees’ accrued benefit amounts.

4.       Legal experts determined that we could use proceeds from a debt issue to fund a replacement defined contribution plan and to "buy out" employees from their existing traditional defined benefit OPEB plan following strict IRS guidelines.

5.       City staff presented to the City Council a plan to institute a new defined contribution plan for OPEB benefits for current and future employees.  This included an issuance to lease revenue bonds to finance a voluntary program for current employees.  This would then convert their accrued OPEB benefits into a combination of tax-free defined contributions, retiree health savings accounts, and cash and tax-deferred savings plans through 457(b), 401(k) and 415(m) accounts on an individual basis.

6.       All future non-safety employees hired after January 1, 2010 are eligible for defined contribution plans only.  The ARMP was only offered to employees that were hired prior to this date.

7.       Actuaries calculated the actuarial equivalents of employees' accrued benefits, and the City's cost savings.

8.       Labor negotiations were undertaken and bargaining units approved the new plan and employee options.

9.       Employees were given nine months to decide whether to opt in to the program, and 58% accepted the exchange feature.  This was well above our original estimate of 35% participation.

10.    Cumulative reduction in unfunded liabilities over 40 years is projected to be $91 Million.

For additional information feel free to contact the team that developed this program:

Scott G. Miller, Ph.D
City of Beverly Hills
Chief Financial Officer / Director - Administrative Services
sgmiller@beverlyhills.org
(310) 285-2411

Bradley Au (ARMP Actuary)
AonHewitt
Senior Vice President
brad.au@aonhewitt.com
(213) 996-1729

Marcus Wu (ARMP Attorney)
Hanson Bridgett
Partner
mwu@hansonbridgett.com
(415) 995-5829

John Kim (ARMP Bond Underwriter)
De La Rosa & Company
Partner
jkim@ejdelarosa.com
(310) 207-1975

Matt Pruitt (ARMP Retirement Options)
ICMA-RC
Director of Strategic Relations
mpruitt@icmarc.org
(202) 679-7752