HomeMy WebLinkAboutMinutes Fire Pension 080713PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND
MINUTES OF MEETING HELD
August 7, 2013
A meeting of the Board of Trustees was called to order at 1:05PM at Council Chambers,
Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES OTHERS
Rick Rhodes, Chairman Audrey Ross, Administrator
Mark Joyce, Vice Chair Troy Brown, Investment Consultant
Ed Morejon Pedro Herrera, Attorney
Martin Cohen Doug Lozen, Actuary
PUBLIC COMMENTS
N/A
MINUTES
The Board reviewed the minutes of the regular meeting held on July 8, 2013.
A motion was made by Martin Cohen to approve the minutes of the July 8, 2013
regular meeting as amended. The motion was seconded by Ed Morejon and carried
4-0.
ACTUARY REPORT: FOSTER & FOSTER (DOUG LOZEN)
Mr. Lozen stated that he was here today at the boards request although he does have one
item that he would like to address with the board as well. He explained that he received a
request from the Division of Retirement to perform a minimum benefits test due to the
letter know as the “Naples Letter” that was issued to some pension plans. Mr. Lozen
continued to explain in detail what a minimum benefits test entails and what it will
determine. This test will determine the potential impact on the future use of State
monies. He noted that this will not undo the current frozen amount of the State monies
that is in the reserve account and is to be used for additional benefits. Also he stated that
this test will also indicate whether or not this will affect the money that is already
allocated to members share accounts. Mr. Lozen commented that this test will be
required to be reported on page 6a of the State Annual Report next year and the study
will go back to September 30, 2010. The cost for this minimum benefits test will be
between $2K and $10K. The Trustees had a lengthy discussion regarding this test and
noted that since it is now a requirement from the Division of Retirement they must abide.
The Trustees gave Mr. Lozen direction to complete the minimum benefits test as required
by the Division of Retirement.
The Trustees reviewed and discussed the plans current assumptions rates with Mr. Lozen.
The Plan’s current assumed rate of return is set at 8.25% and they have a 5 year
smoothing. Mr. Lozen noted that the Board might want to consider taking a look at
lowering the plans assumed rate of return because currently he thinks 8.25% is too high.
Also the Division of Retirement has been approaching some plans directly, asking them
to reduce their assumed rate of return down from 8%. The Trustees stated that the last
assumption experience stuffy that they had completed was back in 2006 by the prior
Actuary. The board made a couple of changes to a few of the assumptions at that time,
but they think it is time to review them again. Mr. Lozen commented that he can perform
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a mini experience study which looks at some of the assumptions, or the board can do a
full experience study and look at all the assumptions including paying down the plan’s
unfunded liability faster. Mr. Cohen stated that his purpose of serving on the board is to
protect the members and to make sure they receive the benefit they are entitled too, and
therefore the board should start looking into fully funding the plan and paying off the
unfunded liability earlier rather than later. Mr. Morejon explained that the board meets
with their Actuary and Investment Consultant each year to make sure that all the
assumptions that they are making are realistic and are being met. Each year the City is
required to pay the amount that is determined by the Actuary into the pension plan to
make sure that the plan stays funded. Mr. Lozen reminded the board that this is a long
term pension plan and they should not react on one year’s numbers to make radical
changes. He also noted that the pension plan’s funded ration has continued to increase
over the past couple of years, with a huge jump last year. The Trustees continued their
lengthy discussion on what assumptions they would like to take a closer look at and noted
some of the following; the salary scale assumption rate, the assumed rate of return, and
some examples of conservative methods for paying down the plan’s unfunded liability.
Mr. Lozen commented that his study will also look at reducing the plan’s assumed rate of
return over time and not all at once. He also noted that the cost for this assumption study
will be around $3K and it will be completed towards the end of September (the study will
be available for presentation at the November 6, 2013 meeting). The Trustees’
concurred. Lastly Mr. Morejon stated that he would like a letter or email sent over to the
City’s Finance Director letting him know that the board will be doing this study and to
see if there is anything specific the City would like to add to the study as well, in regards
to the plans assumptions. Ms. Ross commented that she will contact Mr. Owens.
A motion was made by Martin Cohen to approve and authorize Foster & Foster to
perform an assumption experience study to look at lowering the plans assumed rate
of return, changing the salary scale assumption, looking at conservative methods of
paying down the plans unfunded liability, and any other request that may come
from the City. This study is not to exceed $3K. The motion was seconded by Mark
Joyce and carried 4-0.
Mr. Lozen noted that his office will be sending out a memo regarding the new GASB
requirements that will be effective October 1, 2014. The memo will explain what the
new requirements entail and how much extra the reporting will cost to the boards.
Lastly Mr. Lozen commented that the Share statements are completed and will be mailed
out by the end of this week.
INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (TROY
BROWN)
Mr. Brown commented that his recommendation regarding the plans assumed rate of
return is to reduce it to7.78% from the current rate of 8.25%. He explained that this is a
drastic change but this is estimation only and is based off his studies. He noted that the
board does not have to go with this recommendation, but if they did he would also
recommend decreasing in increments and not all at once.
Mr. Brown announced that Fiduciary Management Investment (FMI) is now funded and
that they had no issues with the transition from ICC Capital to FMI. ConvergEx handled
the transition and they were able to come down on their trading fees by a penny and a
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quarter, which is now the same fee as CAPIS. He noted that the board now has a
relationship with two transition managers for the same fee for any future use.
Mr. Brown handed out the revised investment policy guidelines (IPG) and reviewed the
revisions. He commented that he added in an addendum for the new manager FMI and
revised a couple of the benchmarks within in the policy itself. Also Dana Investment
Advisors is asking the board’s permission to increase their International exposure to 16%,
which is drafted into the policy as well. Mr. Cohen noted that a couple of typos in the
document.
A motion was made by Mark Joyce to approve the Fiduciary Management
Investment addendum as presented. The motion was seconded by Ed Morejon and
carried 4-0.
A motion was made by Ed More to approve the revised Investment Policy Guideline
changes as amended. The motion was seconded by Mark Joyce and carried 4-0.
Mr. Brown reviewed the June 30, 2013 quarterly report. He noted that fixed income had a
horrible quarter and they experienced negative returns. Equities did slightly better, but
the large and small caps outperformed. Mr. Brown reviewed the asset allocation and
noted that FMI was not included in this report since they were funded right after the end
of the quarter. Also he noted that there is an extra $750K in the plan’s cash account in
which he would like to allocate to Real Estate since they are underweighted in that asset
class by 2% compared to their policy. Mr. Brown recommended allocating $750K to
American Realty and another $750K to Intercontinental, which would then bring their
Real Estate target back up to 10%. Although, he explained that both Real Estate
managers currently have a queue to add more funds, so in the meantime he would like to
allocate the cash to fixed income. Therefore at this time the board can approve to start
the process of getting into the queues for the Real Estate funds and then when the capital
call comes they will move the money over.
A motion was made by Ed Morejon to authorize the fund to enter the queue with
both American Realty and Intercontinental, with a $750K commitment to both
managers as recommended by the Plans Investment Consultant. The motion was
seconded by Mark Joyce and carried 4-0.
Mr. Brown noted that he will make the decision where the $1.5M will come from at the
time of the capital calls and will notify the board as well for approval.
A motion was made by Mark Joyce to authorize and approve the transfer of $750K
from the plans cash account to be allocated to the fixed income accounts as follows;
$300K to Agincourt, $300K to Garcia Hamilton, and $150K to Templeton per the
recommended by the Plans Investment Consultant. The motion was seconded by
Ed Morejon and carried 4-0.
Mr. Brown continued to report for that for the quarter ending June 30, 2013 the fund was
slightly behind the index at 1.05% net of fess versus 1.19%, but for the fiscal year to date
they are ahead net of fees at 9.21% versus the index at 9.11%. All managers
outperformed for the quarter with the exception of the Dana large cap, Manning & Napier
and Agincourt. He also reviewed the funds performance since the quarter ended and July
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was a good month. As of July 31, 2013 they are up another 3.6%, which now puts them
at 13.5% for the fiscal year to date (well above the plans assumed rate of return of
8.25%). Lastly Mr. Brown mentioned that Manning & Napier’s is still on watch for
violating 4 of the IPG rules and if they violate 5, then he will recommend terminating
them from the portfolio. In the meantime Bogdahn is still watching them closely.
ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA)
Mr. Herrera stated that he did review the FMI agreement before the transition started and
he had no issues with it.
Mr. Herrera briefly reviewed his memo regarding the final legislative updates. He noted
that now all pension plans must provide a section for “public comments” on the agenda,
in which this board already does. Also the Legislative implemented a new method for
collecting fines for failure to timely file disclosures of financial interests. The new
method will include wage garnishment, court judgments, or referral to collection
agencies. Lastly he briefly reviewed the new financial requirements under Senate Bill
534, in which Mr. Lozen will be providing more information on.
Lastly Mr. Herrera discussed the new IRS Rule and language that has be pending, but is
not in approved or in place yet. This new rule would state that the variable rates on
DROP accounts would be considered a defined contribution (DC) account, and therefore
all the DC rules and regulations would apply to that particular account. If this were to
pass than there are a couple of resolutions that are available and the board can discuss at a
future meeting. Again, Mr. Herrera noted that this rule has not passed and is not
effective yet, but this is something that he wanted the board to be aware of. He will
provide more information to the board regarding this issue when it becomes available.
ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS)
DISBURSEMENTS
The Board reviewed the disbursements presented for approval by the Administrator.
A motion was made by Ed Morejon to approve the disbursements that were
presented by the Administrator. The motion was seconded by Martin Cohen and
carried 4-0.
Ms. Ross stated that the Division of Retirement sent a letter to the board and the City
asking for some clarification on some items pertaining to the 2012 State Annual Report.
As an update these items have been clarified by the City and the response letter has been
sent back to the Division. We are now just waiting on the approval letter.
OLD BUSINESS
Mr. Herrera noted that the RFP for the self directed DROP and share accounts will be
going out soon. The responses will be back for review by the board at their September
meeting.
NEW BUSINESS
The Trustees tabled the review of the draft summary plan description until next meeting.
There being no further business, the meeting adjourned at 4:48 PM.
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Respectfully submitted,
Tom Murphy, Secretary