HomeMy WebLinkAboutAgenda Fire Pension 011314THE RESOURCE CENTERS , LLC
4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410
Phone (561) 624-3277 Fax (561) 624-3278 WWW.RESOURCECENTERS.COM
PALM BEACH GARDENS FIREFIGHTERS’
PENSION FUND
Meeting of Monday, January 13, 2014
Location: City Hall, Council Chambers
Palm Beach Gardens City Hall
10500 North Military Trail
Palm Beach Gardens, FL 33410
Time: 9 AM
AGENDA
1. Call Meeting to Order
2. Public Comments
3. Selection of Chairman, Vice Chair & Secretary
4. Minutes:
• Regular Meeting Held on November 6, 2013
5. ICMA Presentation: (Fernando deAguero, Steven Feigelis, Cary Scaglione)
• Self-Directed DROP Accounts
6. Investment Monitor Report: The Bogdahn Group (Dan Johnson)
7. Attorney Report: Sugarman & Susskind, P.A. (Pedro Herrera)
8. Administrative Report: Resource Centers (Audrey Ross)
• Disbursements
• Benefit Approvals
o 2014 COLA Approval
• Review of 2014 Meeting Dates
9. Old Business
• Review of Draft Summary Plan Description (revised COLA example)
10. New Business
• 9/30/2013 Audit Engagement Letter
11. Other Business
12. Next Scheduled Meeting: Wednesday, February 5, 2014 @ 9AM.
13. Adjourn
PLEASE NOTE:
Should any interested party seek to appeal any decision made by the Board with respect to any matter considered at such meeting or hearing, he will need a
record of the proceedings, and for such purpose he may need to insure that a verbatim record of the proceedings is made, which record includes the testimony
and evidence upon which the appeal is to be based. In accordance with the Americans With Disabilities Act of 1990, persons needing a special accommodation
to participate in this meeting should contact The Resource Centers, LLC no later than four days prior to the meeting.
THE RESOURCE CENTERS , LLC
4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410
Phone (561) 624-3277 Fax (561) 624-3278 WWW.RESOURCECENTERS.COM
PALM BEACH GARDENS FIREFIGHTERS’
PENSION FUND
2014 MEETING DATES
Monday January 13, 2014 @ 9AM
Wednesday February 5, 2014 @ 9AM
Monday March 10, 2014 @ 9AM
Wednesday May 7, 2014 @ 9AM
Monday July 7, 2014 @ 9AM
Wednesday August 6, 2014 @ 9AM
Monday September 8, 2014 @ 9AM
Wednesday November 5, 2014 @ 9AM
800 N. Magnolia Avenue, Suite 1300, Orlando, FL 32803 | P 407.423.7911 | cbh.com
November 6, 2013
Board of Trustees
City of Palm Beach Gardens Firefighters' Pension Fund
Palm Beach Gardens, Florida
Board of Trustees:
This engagement letter between City of Palm Beach Gardens Firefighters' Pension
Fund Palm Beach Gardens Firefighters' Pension Fund(hereafter referred to as the “Fund”)
and Cherry Bekaert LLP (the “Firm” or “CB”) sets forth the nature and scope of the services
we will provide, the Fund’s required involvement and assistance in support of our services,
the related fee arrangements and other Terms and Conditions, which are attached hereto
and incorporated by reference, designed to facilitate the performance of our professional
services and to achieve the mutually agreed upon objectives of the Fund.
SUMMARY OF SERVICES
We will provide the following services to the Fund as of and for the year ended September
30, 2013:
Audit services
1. We will audit the basic financial statements of the Fund as of and for the year ended
September 30, 2013.
2. We will audit the schedule of administrative and investment expenses. As part of our
engagement, we will apply certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used
to prepare the financial statements or the financial statements themselves.
3. We will apply limited procedures to the pension plan information and management’s
discussion and analysis (MD&A)) which will consist of inquiries of management about the
methods of preparing the information and comparing the information for consistency with
management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the financial statements.
Accounting and other services
We will provide the following additional services:
1. Assist in the preparation of the financial statements and footnotes.
YOUR EXPECTATIONS
As part of our planning process, we will discuss with you your expectations of CB, changes
that occurred during the year, your views on risks facing you, any relationship issues with CB,
and specific engagement arrangements and timing. Our services plan, which includes our
audit plan, is designed to provide a foundation for an effective, efficient, and quality-focused
approach to accomplish the engagement objectives and meet or exceed your expectations.
Our service plan will be reviewed with you periodically and will serve as a benchmark against
which you will be able to measure our performance. Any additional services that you may
request, and that we agree to provide, will be the subject of separate written arrangements.
Town of Jupiter Police Officers' Pension Fund
November 6, 2013
Page 2
The engagement will be led by Jim Burdick, who will be responsible for assuring the overall
quality, value, and timeliness of the services provided to you.
AUDIT SERVICES
The objective of our audit is the expression of opinions as to whether your basic financial
statements are fairly presented, in all material respects, in conformity with U.S. generally
accepted accounting principles and to report on the fairness of the additional information
referred to in the Summary of Services section when considered in relation to the basic
financial statements taken as a whole. The objective also includes reporting on:
Internal control related to the financial statements and compliance with the provisions
of applicable laws, regulations, contracts, agreements and grants, noncompliance
with which could have a material effect on the financial statements in accordance
with Government Auditing Standards.
The reports on internal control and compliance will each include a paragraph that states that
the purpose of the report is solely to describe (1) the scope of testing of internal control over
financial reporting and compliance and the result of that testing and not to provide an opinion
on the effectiveness of internal control over financial reporting or on compliance, and (2) that
the report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering internal control over financial reporting and compliance. The
paragraph will also state that the report is not suitable for any other purpose.
Our audit will be conducted in accordance with auditing standards generally accepted in the
United States of America; Government Auditing Standards, issued by the Comptroller
General of the United States; and will include tests of accounting records and other
procedures as deemed necessary to enable us to express such opinions and to render the
required reports. If any of our opinions resulting from the procedures described above are
other than unqualified, we will fully discuss the reasons with you in advance. If, for any
reason, we are unable to complete the audit or are unable to form or have not formed
opinions, we may decline to express opinions or issue a report as a result of this
engagement.
ACCOUNTING AND OTHER SERVICES
Accounting services
We will advise Management about the application of appropriate accounting principles, and
may propose adjusting journal entries to the Fund’s financial statements. Management is
responsible for reviewing the entries and understanding the nature of any proposed entries
and the impact they have on the Fund’s financial statements. If, while reviewing the journal
entries, Management determines that a journal entry is inappropriate, it will be Management’s
responsibility to contact us to correct it.
Financial statement preparation
We will assist in the preparation of the Fund’s financial statements and notes, based on
information in the Fund’s accounting records. However, the responsibility for the Fund’s
financial statements and notes remains with Management. This responsibility includes
establishing and maintaining adequate records and effective internal controls over financial
reporting, the selection and application of accounting principles, the safeguarding of assets,
and adjusting the financial statements for any material misstatements as well as reviewing
and approving for publication the draft financial statements prepared with our assistance.
Town of Jupiter Police Officers' Pension Fund
November 6, 2013
Page 3
Management’s responsibilities related to accounting and other services
For all nonattest services we perform in connection with the engagement, you are
responsible for designating a competent employee to oversee the services, make any
management decisions, perform any management functions related to the services, evaluate
the adequacy of the services, and accept overall responsibility for the results of the services.
Prior to the release of the report, Management will need to sign a representation letter
acknowledging your responsibility for the results of these services.
FEES
The estimated fee contemplates only the services described in the Summary of Services
section of this letter. If Management requests additional services not listed above, we will
provide an estimate of those fees prior to commencing additional work.
The following summarizes the fees for the services described above:
Description of Services Estimated Fee
Audit services
Audit of the financial statements, including assistance with
Preparation of financial statements $14,050
If the foregoing is in accordance with your understanding, please sign a copy of this letter in
the space provided and return it to us. If you have any questions, please call Jim Burdick at
(407)423-7911.
Sincerely,
CHERRY BEKAERT LLP
ATTACHMENT – Engagement Letter Terms and Conditions
City of Palm Beach Gardens Firefighters' Pension Fund
ACCEPTED BY: ____________________________________________________________
TITLE: ________________________________________ DATE: ___________________
Attachment ‐ Page 1
Cherry Bekaert LLP
Engagement Letter Terms and Conditions
The following terms and conditions are an integral part of the attached engagement letter and should be
read in their entirety in conjunction with your review of the letter.
LIMITATIONS OF THE AUDIT REPORT
Should the Fund wish to include or incorporate by reference these financial statements and our report
thereon into any other document at some future date, we will consider granting permission to include our
report into another such document at the time of the request. However, we may be required by generally
accepted auditing standards (“GAAS”) to perform certain procedures before we can give our permission
to include our report in another document such as an annual report, private placement, regulator filing,
official statement, offering of debt securities, etc. You agree that you will not include or incorporate by
reference these financial statements and our report thereon, or our report into any other document
without our prior written permission. In addition, to avoid unnecessary delay or misunderstandings, it is
important to provide us with timely notice of your intention to issue any such document.
LIMITATIONS OF THE AUDIT PROCESS
In conducting the audit, we will perform tests of the accounting records and such other procedures as we
consider necessary in the circumstances to provide a reasonable basis for our opinion on the financial
statements. We also will assess the accounting principles used and significant estimates made by
Management, as well as evaluate the overall financial statement presentation.
Our audit will include procedures designed to obtain reasonable assurance of detecting misstatements
due to errors or fraud that are material to the financial statements. Absolute assurance is not attainable
because of the nature of audit evidence and the characteristics of fraud. For example, audits performed in
accordance with GAAS are based on the concept of selective testing of the data being examined and are,
therefore, subject to the limitation that material misstatements due to errors or fraud, if they exist, may not
be detected. Also, an audit is not designed to detect matters that are immaterial to the financial
statements. In addition, an audit conducted in accordance with GAAS does not include procedures
specifically designed to detect illegal acts having an indirect effect (e.g., violations of fraud and abuse
statutes that result in fines or penalties being imposed on the Fund) on the financial statements.
Similarly, in performing our audit we will be aware of the possibility that illegal acts may have occurred.
However, it should be recognized that our audit provides no assurance that illegal acts generally will be
detected, and only reasonable assurance that illegal acts having a direct and material effect on the
determination of financial statement amounts will be detected. We will inform you with respect to errors
and fraud, or illegal acts that come to our attention during the course of our audit unless clearly
inconsequential. In the event that we have to consult with the Fund’s counsel or counsel of our choosing
regarding any illegal acts we identify, additional fees incurred may be billed to the Fund. You agree to
cooperate fully with any procedures we deem necessary to perform with respect to these matters.
If, for any reason, we are unable to complete the audit, or are unable to form, or have not formed an
opinion on the financial statements, we may decline to express an opinion or decline to issue a report as
a result of the engagement. We will notify the appropriate party within your organization of our decision
and discuss the reasons supporting our position.
MANAGEMENT’S RESPONSIBILITIES RELATED TO THE AUDIT
Management is responsible for the fair presentation of the financial statements in conformity with GAAP,
including the appropriate basis of accounting is applied by all component units, if applicable, for making
all financial records and related information available to us, for ensuring that all material information is
Attachment ‐ Page 2
disclosed to us, and for identifying and ensuring that the Fund complies with the laws and regulations
applicable to its activities and with the provisions of contracts and grant agreements.
Management is responsible for the preparation of the supplementary information in conformity with
GAAP. Management agrees to include our report on the supplementary information in any document that
contains and indicates that we have reported on the supplementary information. Management also
agrees to include the audited financial statements with any presentation of the supplementary information
that includes our report thereon or make the audited financial statements readily available to users of the
supplementary information no later than the date the supplementary information is issued with our report
thereon.
Management is also responsible for adjusting the financial statements to correct material misstatements,
informing us of events that occurred subsequent to the balance sheet date until the date of the auditors’
report that might affect the financial statements or related disclosures and informing us of any discovery
of facts related to items that existed at the financial statement date that might affect the financial
statements or related disclosures.
Management is responsible for informing us of its views regarding the risk of fraud at the Fund.
Management must inform us of their knowledge of any allegations of fraud or suspected fraud affecting
the Fund received in communications from employees, former employees, regulators, or others and for
informing us about all known or suspected fraud affecting the Fund involving (a) Management, (b)
employees who have significant roles in internal control, and (c) others where the fraud could have a
material effect on the financial statements.
Management is responsible for the design and implementation of programs and controls over financial
reporting and to prevent and detect fraud. Appropriate supervisory review procedures are necessary to
provide reasonable assurance that adopted policies and prescribed procedures are adhered to and to
identify errors and fraud or illegal acts. As a part of our audit, we will consider the Fund’s internal control
structure, as required by GAAS, sufficient to plan the audit and to determine the nature, timing, and extent
of auditing procedures necessary for expressing our opinion concerning the financial statements. An audit
is not designed to provide any assurance on internal controls. As part of our consideration of the Fund’s
internal control structure, we will inform you of matters that come to our attention that represent significant
deficiencies or material weaknesses in the design or operation of the internal control structure.
Management is responsible for establishment and maintenance of a process for tracking the status of
audit findings and recommendations. Management is also responsible for identifying to us previous audits
or other engagements or studies related to the objectives discussed in the Audit Objectives section of this
letter. This responsibility includes relaying to us corrective actions taken to address significant findings
and recommendations resulting from those audits or other engagements or studies. You are also
responsible for providing management’s views on our current findings, conclusions and
recommendations, as well as your planned corrective actions, and the timing and format related thereto.
At the conclusion of the engagement, Management will provide to us a representation letter that, among
other things, addresses (1) Management’s responsibilities related to the audit and confirms certain
representations made to us during the audit, including, Management’s acknowledgement of its
responsibility for the design and implementation of programs and controls to prevent and detect fraud; (2)
Management’s responsibilities related to the monitoring of internal control over financial reporting; and (3)
Management’s knowledge, directly or from allegations by others, of fraud or suspected fraud affecting the
Fund. The representation letter will also affirm to us that Management believes that the effects of any
uncorrected misstatements, if any, pertaining to the financial statements are immaterial, both individually
and in the aggregate, to the financial statements taken as a whole. The Firm will rely on Management
providing these representations to us, both in the planning and performance of the audit, and in
considering the fees that we will charge to perform the audit.
Attachment ‐ Page 3
AUDIT PROCEDURES – GENERAL
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve professional judgment about the number of
transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain
reasonable rather than absolute assurance about whether the financial statements are free of material
misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or
(4) violations of laws or governmental regulations that are attributable to the Fund or to acts by
management or employees acting on behalf of the Fund. Because the determination of abuse is
subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of
detecting abuse.
Because an audit is designed to provide reasonable, but not absolute assurance and because we will not
perform a detailed examination of all transactions, there is a risk that material misstatements or
noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect
immaterial misstatements or violations of laws or governmental regulations that do not have a direct and
material effect on the financial statements or major programs. However, we will inform you of any material
errors and fraud, or illegal acts that come to our attention during the course of our audit. We will also
inform you of any violations of laws or governmental regulations that come to our attention, unless clearly
inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not
extend to any later periods for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts, and may include tests of the physical existence of inventories and direct confirmation of
receivables and certain other assets and liabilities by correspondence with selected individuals, creditors
and financial institutions. We will request written representations from your attorneys as part of the
engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will
also require certain written representations from you about the financial statements and related matters.
AUDIT PROCEDURES – INTERNAL CONTROLS
Our audit will include obtaining an understanding of the Fund and its environment, including internal
controls, sufficient to assess the risks of material misstatement of the financial statements and to design
the nature, timing and extent of further audit procedures. Tests of controls may be performed to test the
effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud
that are material to the financial statements and to preventing and detecting misstatements resulting from
illegal acts and other noncompliance matters that have a direct and material effect on the financial
statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on
internal control and, accordingly, no opinion will be expressed in our report on internal control issued
pursuant to Government Auditing Standards.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies.
However, during the audit, we will communicate to management and those charged with governance
internal control related matters that are required to be communicated under professional standards, and
Government Auditing Standards.
AUDIT PROCEDURES ‐ COMPLIANCE
As part of obtaining reasonable assurance about whether the basic financial statements are free of
material misstatement, we will perform tests of the Fund's compliance with applicable laws and
regulations and the provisions of contracts and agreements, including grant agreements. However, the
objective of those procedures will not be to provide an opinion on overall compliance and we will not
express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.
Attachment ‐ Page 4
Communications
At the conclusion of the audit engagement, we may provide Management and those charged with
governance a letter stating any significant deficiencies or material weaknesses which may have been
identified by us during the audit and our recommendations designed to help the Fund make
improvements in its internal control structure and operations related to the identified matters discovered in
the financial statement audit. As part of this engagement we will ensure that certain additional matters are
communicated to the appropriate members of the Fund. Such matters include (1) our responsibility under
GAAS; (2) the initial selection of and changes in significant accounting policies and their application; (3)
our independence with respect to the Fund; (4) the process used by Management in formulating
particularly sensitive accounting estimates and the basis for our conclusion regarding the reasonableness
of those estimates; (5) audit adjustments, if any, that could, in our judgment, either individually or in the
aggregate be significant to the financial statements or our report; (6) any disagreements with
Management concerning a financial accounting, reporting or auditing matter that could be significant to
the financial statements; (7) our views about matters that were the subject of Management’s consultation
with other accountants about auditing and accounting matters; (8) major issues that were discussed with
Management in connection with the retention of our services, including, among other matters, any
discussions regarding the application of accounting principles and auditing standards; and (9) serious
difficulties that we encountered in dealing with Management related to the performance of the audit.
OTHER MATTERS
Access to working papers
The working papers and related documentation for the engagement are the property of the Firm and
constitute confidential information. We have a responsibility to retain the documentation for a period of
time to satisfy legal or regulatory requirements for records retention. Except as discussed below, any
requests for access to our working papers will be discussed with you prior to making them available to
requesting parties.
We may be requested to make certain documentation available to regulators, governmental agencies
(e.g., SEC, PCAOB, HUD, DOL, etc.) or their representatives (“Regulators”) pursuant to law or
regulations. If requested, access to the documentation will be provided to the Regulators. The Regulators
may intend to distribute to others, including other governmental agencies, our working papers and related
documentation without our knowledge or express permission. You hereby acknowledge and authorize us
to allow Regulators access to and copies of documentation as requested. In addition, our Firm, as well as
all other major accounting firms, participates in a “peer review” program covering our audit and
accounting practices as required by the American Institute of Certified Public Accountants. This program
requires that once every three years we subject our quality assurance practices to an examination by
another accounting firm. As part of the process, the other firm will review a sample of our work. It is
possible that the work we perform for you may be selected by the other firm for their review. If it is, they
are bound by professional standards to keep all information confidential. If you object to having the work
we do for you reviewed by our peer reviewer, please notify us in writing.
Electronic transmittals
During the course of our engagement, we may need to electronically transmit confidential information to
each other, within the Firm, and to other entities engaged by either party. Although email is an efficient
way to communicate, it is not always a secure means of communication and thus, confidentiality may be
compromised. You agree to the use of email and other electronic methods to transmit and receive
information, including confidential information between the Firm, the Fund and other third party providers
utilized by either party in connection with the engagement.
Attachment ‐ Page 5
Subpoenas
In the event we are requested or authorized by you or required by government regulation, subpoena, or
other legal process to produce our working papers or our personnel as witnesses with respect to our
engagement for you, you will, so long as we are not a party to the proceeding in which the information is
sought, reimburse us for our professional time and expense, as well as the fees and expenses of our
counsel, incurred in responding to such a request at standard billing rates.
TERMS AND CONDITIONS SUPPORTING FEE
The estimated fees set forth in the attached engagement letter are based on anticipated full cooperation
from your personnel, timely delivery of requested audit schedules and supporting information, timely
communication of all significant accounting and financial reporting matters, the assumption that
unexpected circumstances will not be encountered during the audit, as well as working space and clerical
assistance as mutually agreed upon and as is normal and reasonable in the circumstances. We strive to
ensure that we have the right professionals scheduled on each engagement. As a result, sudden Fund
requested scheduling changes or scheduling changes necessitated by the agreed information not being
ready on the agreed upon dates can result in expensive downtime for our professionals. Any last minute
schedule changes that result in downtime for our professionals could result in additional fees. Our
estimated fee does not include assistance in bookkeeping or other accounting services not previously
described. If for any reason the Fund is unable to provide such schedules, information and assistance,
the Firm and the Fund will mutually revise the fee to reflect additional services, if any, required of us to
achieve these objectives.
The estimated fees contemplate that the Fund will provide adequate documentation of its systems and
controls related to significant transaction cycles and audit areas.
In providing our services, we will consult with the Fund with respect to matters of accounting, financial
reporting or other significant business issues as permitted by professional standards. Accordingly, time
necessary to effect a reasonable amount of such consultation is reflected in our fee. However, should a
matter require research, consultation or audit work beyond that amount, the Firm and the Fund will agree
to an appropriate revision in our fee.
The estimated fees are based on auditing and accounting standards effective as of the date of this
engagement letter and known to apply to the Fund at this time, but do not include any time related to the
application of new auditing or accounting standards that impact the Fund for the first time. If new auditing
or accounting standards are issued subsequent to the date of this letter and are effective for the period
under audit, we will estimate the impact of any such standard on the nature, timing and extent of our
planned audit procedures and will communicate with you concerning the scope of the additional
procedures and the estimated fees.
In the event of nonpayment of any invoice rendered by us, we retain the right to (a) suspend the
performance of our services, (b) change the payment conditions under this engagement letter, or (c)
terminate our services. If we elect to suspend our services, such services will not be resumed until your
account is paid. If we elect to terminate our services for nonpayment, the Fund will be obligated to
compensate us for all time expended and reimburse us for all expenses through the date of termination.
This engagement letter sets forth the entire understanding between the Fund and the Firm regarding the
services described herein and supersedes any previous proposals, correspondence, and understandings
whether written or oral. Any subsequent changes to the terms of this letter, other than additional billings,
will be rendered in writing and shall be executed by both parties. Should any portion of this engagement
letter be ruled invalid, it is agreed that such invalidity will not affect any of the remaining portions.
CITY OF PALM BEACH GARDENS
FIREFIGHTERS’ PENSION FUND
SUMMARY PLAN DESCRIPTION
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-1-
CITY OF PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND
SUMMARY PLAN DESCRIPTION
INTRODUCTION
The Board of Trustees of the City of Palm Beach Gardens Firefighters' Pension Fund is
pleased to present this booklet which briefly explains the provisions of your
Firefighters' Pension Fund. As a participant in the Fund, you are included in a program
of benefits to help you meet your financial needs at retirement, or in the event of
disability or death.
This booklet can assist you in preparing for your retirement and financial future. If you
need further information on any of the topics presented in this booklet, please contact
any member of the Board of Trustees. They will either answer questions you might
have to help you understand your benefits or otherwise get you an answer to your
questions. However, nothing they may tell you should be construed as advice, which
they will not offer. We urge you to read and understand this booklet in order to become
familiar with the benefits of the Fund and how they contribute to your financial security
and how they will enrich your retirement years.
Claims for benefits should be filed with the office of the Administrative Manager. If a
claim is denied, you will be notified and informed of the procedure to request a hearing
before the Board of Trustees. Claim denials are generally limited to failure to meet the
eligibility requirements for a benefit.
The following summary briefly describes the principle benefits of the Fund. Detailed
benefit conditions and limitations are contained in the Palm Beach Gardens Code,
Division 2 Firefighters’ Pension Fund, which established the Fund. The Internal
Revenue Code, Florida Statutes, and the Palm Beach Gardens Code govern the
operation of the Fund and should be consulted before you take any action concerning
your membership or benefits. In case of any conflict between this Summary and the
provisions of the Palm Beach Gardens Code or other applicable law, the Palm Beach
Gardens Code or other applicable law will prevail. Copies of the Palm Beach Gardens
Code are available at the City Clerk’s office, 10500 North Military Trail, Palm Beach
Gardens, Florida 33410.
Chairman, Board of Trustees,
City of Palm Beach Gardens Firefighters'
Pension Fund
Date
-2-
1. BOARD OF TRUSTEES AND PLAN ADMINISTRATION
A. Administration. The City of Palm Beach Gardens Firefighters’ Pension Fund is a
defined benefit pension plan administered by a Board of Trustees which acts as the administrator of the
Fund. The Board consists of 5 Trustees, 2 of whom are appointed by the City, 2 of whom are full-time
Firefighters who are elected by a majority of the members of the Fund and a fifth Trustee who is chosen
by a majority of the first 4 Trustees. Each Trustee serves a four year term.
B. The names of the current Trustees are:
Tom Murphy
Rick Rhodes
Ed Morejon
Mark Joyce
Marty Cohen
C. The agent for the services of legal process is:
Sugarman & Susskind, P.A.
Suite 750
2801 Ponce De Leon Blvd
Coral Gables, FL 33134-6920
D. The Administrative Manager is:
Audrey Ross
Resource Centers, LLC
4360 Northlake Boulevard, Suite 206
Palm Beach Gardens, Florida 33410
2. ELIGIBILITY FOR PLAN MEMBERSHIP
Each person employed by the City Fire Department as a full-time Firefighter becomes a
member of the Fund as a condition of his employment. All Firefighters are therefore eligible for Fund
benefits as provided for in the Fund document and by applicable law.
3. FUND BENEFITS
All claims for benefits under the Fund shall be made in writing to the Board of Trustees.
A. Normal Retirement Eligibility. You are eligible for retirement upon the attainment of
age 52 and the completion of 10 years of credited service or upon completion of 25 years of credited
service, regardless of age.
B. Amount of Normal Retirement Benefits. The amount of the normal retirement benefit
is based on your credited service and average final compensation:
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“Credited Service” is generally your period of employment as a Firefighter in the Fire
Department measured in years and parts of years. Credited service will include a break in employment for
military service, pursuant to conditions that are required or permitted under state or federal law, as
amended from time to time, provided that you are reemployed within 1 year of discharge under honorable
conditions. Additional credited service time may also be available (See subsection K).
“Average Final Compensation” is 1/12 of your average Salary of the best 5 years of the last
10 years of Credited Service prior to your termination, retirement or death, or the career average as a full-
time firefighter, whichever is greater. A year is defined as 12 consecutive months.
“Salary” is your total compensation for services rendered to the City as a Firefighter
reportable on your W-2 form plus all tax deferred, tax-sheltered or tax exempt items of income derived
from elective employee payroll deduction or salary reduction. For periods on and after September 13,
2012, Salary will not include overtime or payments for unused accrued sick and annual leave. If you
were employed on September 13, 2012, Salary shall include payment for unused accrued sick and annual
leave up to the number of hours of unused sick and annual leaave accrued on September 13, 2012.
The normal retirement benefit is calculated by multiplying 3% times years of Credited
Service times your Average Final Compensation: (3% x CS x AFC = normal retirement benefit).
Provided, however, that the benefit shall not exceed 75% of Average Final Compensation at the time of
commencement. Members with a benefit accrual exceeding 75% as of September 13, 2012 shall retain
the percentage determined on that date. Additionally, Members who were eligible for Normal Retirement
as of September 13, 2012 are not subject to the 75% maximum limitation.
The benefit is paid to you for your life, but you, your beneficiary, or your estate shall
receive at least 120 monthly benefit payments in any event.
C. Deferred Retirement Option Plan (DROP). You are eligible to participate in the
deferred retirement option plan (DROP) once you are eligible for normal retirement and you can perform
the full scope of duties assigned to a firefighter. Election into the DROP is voluntary, but this election is
irrevocable once DROP payments begin. If you elect to enter the DROP, you will cease to accrue a
benefit and you will not be eligible for disability, pre-retirement death benefits, or partial lump sum
distribution benefits, other than the amount held in your DROP account upon termination.
The amount of the DROP benefit is calculated as if you had elected to retire on the date of
election to participate in the DROP, using Credited Service and Average Final Compensation at the date
of election. Your monthly retirement benefits, including any future cost-of-living increases, shall be
deposited in your DROP account. Earnings in your DROP account shall be credited or debited at the end
of each quarter at the actual net rate of investment return achieved by the fund. As an alternative, you
may elect that your DROP account be invested in a fixed rate money market fund. You may also elect
the “self-directed account option”, wherein you choose from a variety of investment options approved by
the Board. If you choose this option, your DROP account will be credited or debited at the end of each
quarter according to the performance of the investment options you chose.
Your member contributions to the Fund cease following election to participate in the
DROP.
You may participate in the DROP for a maximum of 60 months, at which point you must
terminate employment. If you terminate employment earlier than 60 months, your participation in the
DROP ceases.
Upon termination of employment, the balance in your DROP account will become payable.
You would have the following options of payment:
(1) A single lump sum payment.
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(2) An eligible rollover distribution to a qualified plan or IRA.
(3) A combination of a partial lump sum and rollover.
Should you pass away during your participation in the DROP, your beneficiary or estate
receives the same payout options as above. DROP payments to your beneficiary or estate will be in
addition to any retirement benefits payable by the Fund.
D. Early Retirement. You are eligible for early retirement upon the attainment of age 50
and the completion of 10 years of credited service.
E. Amount of Early Retirement Benefits. The amount of the early retirement benefit is
calculated in the same manner as for normal retirement and is available as follows:
(1) A deferred monthly retirement benefit which shall commence on the first day of
the month following attainment of age 52; or
(2) Beginning immediately upon retirement, but if beginning immediately, the
amount of the monthly benefit is reduced by 3% for each year by which the
commencement of benefits precedes age 52.
F. Cost-of-Living Adjustments (COLA). All members receiving benefits, excluding
Disability Retirees, shall receive an age based cost-of-living increase each January 1. The amount will be
a 1.0% increase of the prior year’s benefit for members who are age 53, 2.0% for members who are age
54, and 1.5% for members who are age 55 or greater, for benefits based on Credited Service earned on
and after September 13, 2012. Members eligible for Normal Retirement as of September 13, 2012 shall
retain an annual 3.0% COLA on the total benefit after attainment of age 55.
G. Optional Forms of Retirement. In lieu of the amount and form of retirement income
payable under normal and early retirement, you may elect to receive a retirement benefit in a different
form so long as the form you elect is of equal actuarial value as the normal benefit. The optional forms of
benefits which are available are:
(1) A retirement income of a monthly amount payable to you for your lifetime
only.
(2) A retirement income of a modified monthly amount, payable to you during your
lifetime and following your death, 100%, 75%, 66 & 2/3% or 50% of such
monthly amount payable to a joint pensioner for his or her lifetime. (3) If you
retire prior to the time at which social security benefits are payable, you may
elect to receive an increased retirement benefit until such time as social security
benefits shall be assumed to commence and a reduced benefit thereafter in order
to provide, to as great an extent as possible, a more level retirement allowance
during the entire period of retirement.
() Upon retiring under a normal retirement (after attaining Normal Retirement
eligibility, but excluding DROP retirement), you may receive a partial lump
sum payment equal to complete months of credited service earned after normal
retirement eligibility times the monthly benefit amount payable under the
standard form of payment. If you elect to receive a partial lump sum payment,
your monthly benefit will be reduced by an actuarially equivalent amount.
H. Termination of Employment and Vesting. If your employment is terminated prior to
retirement, either voluntarily or involuntarily, the following benefits are payable:
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monthly benefit, your monthly benefit
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accounting for the partial lump sum
payment.
-5-
(1) If you have less than 5 years of Credited Service upon termination, you shall be
entitled to a refund of your accumulated contributions or you may leave it
deposited with the Fund.
(2) If you have 5 or more years of Credited Service, you will be entitled to a
monthly retirement income to commence at age 52 provided your accumulated
contributions remain in the System. If you so request in writing, filed with the
Board, payment may commence on the first day of any month on or after the
date on which you attain age 50. Such monthly retirement income payable to
you under the provisions of this subsection (2) shall be equal to the product of
your vested percentage at the date of your termination of service as provided in
subsection (3) and the accrued benefit which you have accrued to the date of
your termination of service. If your monthly retirement income is to commence
on or after the date on which you attain age 50, but prior to the attainment of
age 52, your benefit in this subsection shall be reduced as for early retirement.
If you do not withdraw your accumulated contributions and do not survive to
age 50, your designated beneficiary shall be entitled to a benefit as described in
subsection J. (2).
(3) Except as otherwise provided herein, if you are not otherwise fully vested, you
shall have a minimum vested interest in the amount of your accrued benefit
equal to the percentage, applicable to the number of your years of Credited
Service:
less than 5 years: 0%
5 years but less than 6: 25%
6 years but less than 7: 40%
7 years but less than 8: 55%
8 years but less than 9: 70%
9 years but less than 10: 85%
10 years or more: 100%.
Provided, however, if you meet the early retirement provisions or the normal retirement
provisions, you shall be 100% vested regardless of the above schedule.
You shall at all times and in all events have a fully vested interest in your accumulated
contributions. Your vested interest shall not be reduced as a result of any amendment to this section;
however, any increase in your vested interest will be determined by the vesting schedule in effect at the
time of your separation from service.
The Internal Revenue Code provides that certain eligible lump sum distributions from the
Fund may be directly rolled over into qualified individual retirement accounts, annuities or certain other
pension plans. A 20% withholding shall be required on taxable portions of such lump sum distributions
not directly transferred to a new custodian.
I. Disability Retirement. You are considered disabled when you become totally and
permanently unable to perform useful and efficient service as a Firefighter. A written application is made
to the Board of Trustees for a disability pension and the Board of Trustees receives evidence of the
disability and decides whether or not the pension is to be granted. If the pension is granted, the benefit
amount shall be:
(1) If the injury or disease is service connected, you shall be entitled to a monthly
pension equal to 60% of your Average Final Compensation, not less than 2%
per year of Credited Service.
-6-
(2) If the injury or disease is not service connected, you shall be entitled to a
monthly pension equal to 2.5% of your Average Final Compensation multiplied
by your total years of Credited Service, but in any event, the maximum amount
paid to you shall be 50% of your Average Final Compensation. This non-
service connected benefit is only available if you have at least 10 years of
Credited Service.
Terminated persons, either vested or non-vested, are not eligible for disability benefits,
except that those terminated by the City for medical reasons may apply for a disability within 30 days
after termination.
Your disability benefit terminates upon the earlier of death, with 120 payments guaranteed,
or recovery.
Your benefit will be reduced if you receive worker’s compensation and/or social security
disability benefits and your combined benefit exceeds 100% of your final Salary. The pension benefit will
be reduced so that the total does not exceed 100%.
Any condition or impairment of health caused by tuberculosis, heart disease or
hypertension resulting in total or partial disability or death is presumed to be service connected, unless the
contrary is shown by competent evidence; provided that you have successfully passed a physical
examination on entering into service and there is no evidence of the condition at that time.
Any condition or impairment of health caused by hepatitis, meningococcal meningitis, or
tuberculosis resulting in total or partial disability or death is presumed to be service connected, unless the
contrary is shown by competent evidence as provided for in Section 112.181, Florida Statutes. As of
May, 2011, there has been a commission formed to review this section of the Statutes. Please contact the
administrator promptly if you believe you are exhibiting any of these conditions to receive an up to date
summary of presumptive conditions.
To receive disability benefits, you must establish to the satisfaction of the Board, that such
disability was not occasioned primarily by:
(1) Excessive or habitual use of any drugs, intoxicants or narcotics.
(2) Injury or disease sustained while willfully and illegally participating in fights,
riots or civil insurrections or while committing a crime.
(3) Injury or disease sustained while serving in any branch of the Armed Forces.
(4) Injury or disease sustained after your employment as a Firefighter with the City
of Palm Beach Gardens has terminated.
As a disabled pensioner, you are subject to periodic medical examinations as directed by
the Board to determine whether a disability continues.
J. Death Before Retirement. If you die prior to retirement from the Fire Department,
your beneficiary shall receive the following benefit:
(1) Prior to Vesting or Eligibility for Retirement. If you were not receiving monthly
benefits or were not yet vested or eligible for early or normal retirement, your
beneficiary shall receive a refund of 100% of your accumulated contributions.
-7-
(2) After Vesting or Eligibility for Retirement. If you die and, at the date of your
death were vested or eligible for early or normal retirement, your beneficiary
shall be entitled to a benefit as follows:
a. If you were partially or fully vested, but had not attained at least age 50,
your beneficiary shall receive a benefit payable for 10 years, beginning on
the date that you would have attained age 52 for a normal retirement
benefit or age 50 for an early retirement benefit, at the option of your
beneficiary. Your benefit shall be calculated as for normal retirement based
on your Credited Service, Average Final Compensation and vested
percentage as of the date of your death and reduced as for early retirement,
if applicable. Your beneficiary may also elect to receive an immediate
benefit, payable for 10 years, which is actuarially reduced to reflect the
commencement of benefits prior to age 50.
b. If you were eligible for normal (age 52) or early (age 50) retirement, your
beneficiary shall receive a benefit payable for 10 years, beginning on the
first day of the month following your death or at the date you would have
attained age 52, at the option of your beneficiary. Your benefit shall be
calculated as for normal retirement based on your Credited Service and
Average Final Compensation as of the date of your death and reduced as
for early retirement, if applicable.
c. Your beneficiary may, in lieu of any benefit provided for in (a) or (b)
above, elect to receive a refund of your accumulated contributions.
K. Additional Credited Service. In addition to credited service actually earned in the
employment of the Fire Department, you may also receive credited service as follows:
(1) “Buy-Back” of Time Lost Due to Absences Authorized by the Family and
Medical Leave Act. If you are absent on unpaid leave under the Family &
Medical Leave Act, you may purchase lost Credited Service by making an
actuarially determined contribution to the Fund, such that there is no cost to the
Fund in allowing such Credited Service, within strict time periods provided for
in Applicable Law as referenced in item 6 on page 9.
(2) “Buy-Back” for Military Service Prior to Employment. The time that you serve
or have served on active duty in the active military service of the Armed Forces
of the United States or the United States Merchant Marine, voluntarily or
involuntarily, honorably or under honorable conditions, prior to first and initial
employment with the City shall be added to your years of Credited Service
provided that:
a. You contribute to the Fund a sum of money equal to:
(i) the amount you would have contributed to the fund had you worked
for the City for the years you are requesting credit, plus
(ii) an additional amount to be determined by the Board’s actuary so that
there is no cost to the fund in giving you the additional years of
Credited Service, plus
(iii) the amount charged by the actuary for determining the amount you
must contribute.
b. Multiple requests to purchase credited service pursuant to this section may
be made at any time prior to retirement, but no purchase is permitted for
-8-
periods of less than one year.
c. Payment of the required amount shall be made within 3 months of your
request for credit and shall be made in one lump sum payment upon receipt
of which Credited Service shall be given.
d. The maximum credit under this section shall be 4 years.
e. Credited Service purchased pursuant to this section shall count only for
calculation of benefit amounts and shall not count toward vesting or toward
eligibility for retirement.
(3) “Buy-Back” for Prior Firefighter Service. The time that you previously served
as a Firefighter with the City of Palm Beach Gardens during a period of
previous employment and for which period accumulated contributions were
withdrawn from the Fund, or the time that you served as a Firefighter for any
other municipal or special district fire department in the State of Florida shall
be added to your years of Credited Service provided that:
a. You contribute to the Fund a sum of money equal to:
(i) the amount you would have contributed to the fund had you worked
for the City for the years you are requesting credit, plus
(ii) an additional amount to be determined by the Board’s actuary so that
there is no cost to the fund in giving you the additional years of
Credited Service, plus
(iii) the amount charged by the actuary for determining the amount you
must contribute.
b. Multiple requests to purchase Credited Service pursuant to this section may
be made at any time prior to retirement, but no purchase is permitted for
periods of less than one year.
c. Payment of the required amount shall be made within 3 months of your
request for credit and shall be made in one lump sum payment upon receipt
of which Credited Service shall be given.
d. The maximum credit under this section shall be 10 years of Credited
Service and shall count only for calculation of benefit amounts and shall
not count toward vesting or eligibility for retirement.
e. In no event, however, may Credited Service be purchased pursuant to this
section for prior service with any other municipal or special district fire
department, if such prior service forms or will form the basis of a
retirement benefit or pension from another retirement system, plan or fund.
L. Supplemental Benefit; Chapter 175, Share Accounts. In addition to the benefits
provided for in the previous sections, you shall also be entitled to an additional supplemental benefit to be
funded solely and entirely by certain state premium tax monies received pursuant to Chapter 175, Florida
Statutes. This benefit shall represent your allocated share of the premium monies received by the Fund
and payable in one lump sum payment upon retirement, death, disability and some terminations.
M. Contributions and Funding. The State contributes premium tax monies are first used
as a 6.8% contribution of Salary and credited as member contributions to the Fund (but not exceeding
$507,634 for all contributing Members). Any remaining premium tax monies are allocated once a year
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into individual Share Accounts. The City contributes for the cost of all other benefits over and above
member contributions from Salaries and Share Accounts. You contribute 6% of your Salary to your
accumulated contribution account. The 6.8% of your Salary from premium tax monies will be maintained
separately and is only refundable upon termination to the extent you are vested as described in subsection
H(3). Your contributions will be excluded from your gross income for withholding purposes so you will
realize income tax benefits. Your 6% contributions are guaranteed refundable in any event.
N. Minimum Benefits. In no event will the benefits paid from this Fund be any less than
your accumulated contributions.
O. Maximum Benefits. In no event will the non-member funded annual benefits paid
from this Fund exceed limitations established by Section 415 of the Internal Revenue Code, subject to
certain cost-of-living adjustments thereafter and actuarial reductions, under certain circumstances, as set
forth in Section 415 of the Internal Revenue Code.
P. Forfeiture of Pension. If you are convicted of certain crimes committed prior to
retirement referred to in the Fund Ordinance, or if your employment is terminated by reason of your
admitted commission, aid or abetment of these crimes, you shall forfeit all rights and benefits under the
Fund, except for the return of your contributions as of the date of your termination.
Q. Claims Procedure Before the Board. You may request, in writing, that the Board
review any claim for benefits under the Fund. The Board will review the case and enter a decision as it
deems proper within specific time periods.
The Board’s decision on your claim will be contained in an order which will be in writing
and will include:
(1) The specific reasons for the Board’s action;
(2) A description of any additional information that the Board feels is necessary for
you to perfect your claim;
(3) An explanation of the review procedure next open to you which
includes a formal evidentiary hearing.
4. NON-FORFEITURE OF PENSION BENEFITS
A. Liquidation of Pension Fund Assets. In the event of repeal, or if contributions to the
Fund are discontinued by the City, there will be a full vesting of benefits accrued to date of repeal.
B. Interest of Members in Pension Fund. At no time prior to the satisfaction of all
liabilities under the Fund shall any assets of the Fund be used for any purpose other than for the
Firefighters’ exclusive benefit. In any event, your contributions to the Fund are non-forfeitable.
5. VESTING OF BENEFITS
Your retirement benefits are partially vested after 5 years of credited service and fully
vested after 10 years of credited service.
6. APPLICABLE LAW
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-10-
The Fund is governed by certain federal, state and local laws, including, but not limited to
the following:
A. Internal Revenue Code and amendments thereto.
B. Part VII, Chapter 112, Florida Statutes, “Actuarial Soundness of Retirement
Systems”.
C. Chapter 175, Florida Statutes, “Marvin B. Clayton Firefighters Pension Trust
Fund Act”.
D. Ordinances of the City of Palm Beach Gardens.
E. Administrative rules and regulations adopted by the Board of Trustees.
7. PLAN YEAR AND PLAN RECORDS
The Plan year begins on October 1 of each year and ends on September 30 of the following
year. All records of the Fund are maintained on the basis of the Plan year.
8. APPLICABLE PROVISIONS OF COLLECTIVE BARGAINING AGREEMENTS
The current collective bargaining agreement between the City and the Firefighters contains
no provisions which deal directly with pension benefits. However, pension benefits may be bargained.
9. FINANCIAL AND ACTUARIAL INFORMATION
A report of pertinent financial and actuarial information has been prepared by the Fund’s
Actuary, Foster & Foster, Inc., and is available at the office of the Administrative Manager.
As of October 1, 2012, the date of the most recent actuarial valuation, there were 7 Retired
Members, 5 Disability Retirees, 1 Beneficiary of a deceased member receiving benefits from the Fund, 6
DROP Members, and 2 Terminated, Vested Members, eligible for future benefits. Active members
totaled 108 with an annual payroll of $9,720,044. As of September 30, 2012, there were 120 members
with Chapter 175 Share Account balances totaling $7,175,953.18.
Palm Beach Gardens, the employer, contributed $3,974,487 representing approximately
43.5% of Total Annual Payroll. Member contributions totaled $564,117, in addition to $188,039 in State
Monies, calculated as 2% of the total Salary of all Members. The $188,039 was utilized by the City for
meeting its minimum funding obligation. $558,214 in additional State Monies was allocated to the Share
Plan.
The October 1, 2012 actuarial valuation report indicated that the actuarial accrued liability
for defined benefits under Governmental Accounting Standard No. 25 was 71.9% funded for past service
liabilities, and the Share Accounts were 100% funded.
Contributions to the Fund during the year were equal to or greater than the actuarially
determined amount needed to comply with the provisions of Chapter 112, Florida Statutes.
It is the actuary’s opinion that the required contribution rates determined by the most
recent actuarial valuation are sufficient to meet the funding objective of the Fund, presuming continued
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receipt of required contributions when due.
A copy of the annual audit report is available for inspection at the office of the
Administrative Manager.
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accounting of the last two most recent
completed fiscal years.¶
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ACCOUNTING INFORMATION SUBMITTED FOR VALUATION
Revenues and Expenditures
Year Ended
9/30/2012
REVENUES:
a. Member contributions $ 564,117.27
b. City contributions 3,974,487.00
c. Chapter 175 receipts to member contributions 188,039.09
d. Chapter 175 receipts to Share Accounts 558,214.37
e. Interest and dividends 1,435,601.53
f. Net realized and unrealized gain (loss) 6,719,870.33
g. Miscellaneous Income 2,290.29
h. Total revenues 13,442,619.88
EXPENDITURES:
a. Investment expenses 268,486.07
b. Administrative expenses 96,825.33
c. Benefit payments 570,434.07
d. Lump sum DROP distributions 0.00
e. Lump sum share distributions 213,843.82
f. Termination payments 24,061.13
g. Total expenditures 1,173,650.42
CHANGE IN NET ASSETS AVAILABLE FOR BENEFITS:
Net Assets Beginning of Year1 $38,451,339.47
Total revenues minus total expenditures $12,268,969.46
Audit adjustment 0.00
TOTAL NET ASSETS END OF YEAR $50,720,308.93
1Net Assets include DROP and Share account balances at the beginning of the year.
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ACCOUNTING INFORMATION SUBMITTED FOR VALUATION
SUMMARY OF ASSETS
ASSETS
September 30, 2012
Market
Cash and Cash Equivalents:
Prepaid Expenses
Money Market
650.00
3,019,096.82
Total Cash and Equivalents $3,019,746.82
Receivables:
State Contributions
Accrued Income
133,939.95
138,166.09
Total Receivable (Payable) 272,106.04
Investments:
US Government/Agency/Corporate Bond /CMOs
Corporate Stocks/REITs
Mutual Funds:
International Fixed Income
International Equity
Pooled/Common/Commingled Funds:
Equity
International Equity
12,332,996.17
25,542,109.50
1,559,550.51
2,070,279.86
3,667,547.00
2,318,352.00
Total Investments 47,490,835.04
TOTAL ASSETS $ 50,782,687.90
LIABILITIES AND NET ASSETS
Liabilities:
Payable:
Unpaid Investment Expenses
62,378.97
Total Liabilities 62,378.97
Net Assets, including DROP and Share Balances 50,720,308.93
TOTAL LIABILITIES AND NET ASSETS $ 50,782,687.90
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REVENUES:
a.Member contributions
b.City contributions
c.Chapter 175 receipts to member contributions
d.Chapter 175 receipts to Share Accounts
e.Interest and dividends
f.Net appreciation in fair value of investments
g.Miscellaneous income
h.Total revenues
EXPENDITURES:
a.Benefits paid
b.Share Account benefits paid
c.Administrative expenses
d.Investment expenses
e.Total expenditures
NET INCOME:
Total revenues minus total expenditures
Audit Adjustment
SHARE ACCOUNT NET CHANGE
ASSETS(Defined Benefits) BEGINNING OF YEAR
ASSETS(Share Accounts) BEGINNING OF YEAR
ASSETS (Defined Benefits) END OF YEAR
ASSETS (Share Accounts) END OF YEAR
TOTAL ASSETS END OF YEAR
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vested terminated members eligible for future benefits.
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Summary of Assets
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Cash & Equivalents $ 3,019,7493,574,524 $
Receivables/(Payables) 272,106(117,101) 582,7598
Corporate Bonds/Government Securities 12,332,9969,174,500 10,736,5808,080,865
Common Stocks 25,542,11014,222,217 17,791,45912,813,663
Real Estate 3,667,5472
,269,135
3,175,3787
56,753 International 2,318,3525,223,393 4,748,5751,234,890
Miscellaneous 0 0
Mutual Funds 3,629,8300 1,264,8030
Total Assets $34,346,668 $37,906,384$27,839,949
September 30, 20102012
Market
September 30, 200911
Market
Cash & Equivalents $ 3,574,524 $ 2,842,499
Receivables/(Payables)(117,101)846,476
Corporate Bonds/Government Securities 9,174,500 8,080,865
Common Stocks 14,222,217 12,813,663
Real Estate 2,269,135 756,753
International 5,223,393 1,234,890
Miscellaneous 0 0
Mutual Funds 0 1,264,803
Total Assets $34,346,668 $27,839,949
September 30, 2010
Market
September 30, 2009
Market
PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND
MINUTES OF MEETING HELD
November 6, 2013
A meeting of the Board of Trustees was called to order at 1:01PM at Council Chambers,
Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES OTHERS
Rick Rhodes, Chairman Scott Baur, Administrator
Mark Joyce, Vice Chair (departed 4:41PM) Audrey Ross Administrator
Tom Murphy, Secretary Troy Brown, Investment Consultant
Ed Morejon Dan Johnson, Investment Consultant
Martin Cohen Bob Sugarman, Attorney
Doug Lozen, Actuary
PUBLIC COMMENTS
N/A
MINUTES
The Board reviewed the minutes of the regular meeting held on September 9, 2013.
A motion was made by Martin Cohen to approve the minutes of the September 9,
2013 regular meeting as amended. The motion was seconded by Ed Morejon and
carried 5-0.
INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (TROY BROWN
& DAN JOHNSON)
Mr. Brown announced that he was recently promoted to the Director of Consulting for
the Bogdahn Group. Due to this new position, Mr. Brown explained that he will need to
scale back on the amount of client meetings that he attends because traveling has become
an issue for him. He introduced Mr. Dan Johnson to the board and stated that Mr.
Johnson will be attending the future board meetings in his place. Mr. Brown explained
that he and Mr. Johnson have worked together since Merrill Lynch, and now as Director
of Consulting Mr. Brown has personally chose Mr. Johnson to serve this plan. He
commented that he will still be involved with this plan in a lot of ways behind the scene,
but just not physically attending the meetings anymore. Mr. Johnson personally
introduced himself to the board and stated that he is very excited to be working with this
plan.
Mr. Brown reviewed the September 30, 2013 report and noted that this plan is his highest
return client for the fiscal year end at 14.56% net of fees. American Realty was the only
manager that underperformed for the fiscal year. Mr. Brown reviewed the market
outlook during the quarter and stated that overall it was a very strong. He briefly
discussed the government shut down and how it actually drove the market higher. For
the quarter ending September 30, 2013 they slightly underperformed that index net of
fees at 4.90% versus 5.14%. Mr. Brown noted that they are keeping their cash account at
$350K, which is used to pay out benefits and disbursements. He reviewed the funds
financial reconciliation for the fiscal year and noted a total gain of $7.5M, and the plans
assets are now up to $57.8M. Fixed income is still a volatile place to be in and Mr.
Brown commented that this plan has done very good job in trimming back in that area as
2
much as they can. Overall this portfolio had a very great fiscal year ending September
2013.
Mr. Brown briefly reviewed the funds performance as of October 31, 2013 and noted that
they are up 3% for the new fiscal year (which is a gain of $1.7M). He commented that
both American Realty and Intercontinental will be issuing their capital calls soon. Lastly
he noted that he does have a recommendation in regards to rebalancing and stated that he
would like to transfer the additional $140K from the cash account to the Templeton
Global Bond account to be back inline with the policy.
A motion was made by Mark Joyce to approve and authorize the transfer of $140K
from the Plan’s cash account (R&D account) to the Templeton Global Bond account
per the recommendation of the plan’s investment consultant. The motion was
seconded by Ed Morejon and carried 5-0.
Mr. Brown explained that the Templeton Global Bond Mutual fund account has launched
a new share class. The new R6 shares (retirement class) are exactly the same underlying
fund as what is currently in the portfolio, however, the R6 share class is offered at a
lower cost. Mr. Brown stated that he has no objection to this share class transfer because
there are no costs associated with the transfer, it has the same benefits of the share class
that we are currently in, and the new share class will actually save the plan some money.
A motion was made by Mark Joyce to approve and authorize the transfer of the
Templeton Global Bond Mutual Fund’s share classes, from the current “advisor
shares” to the new “R-6 class shares” as recommended by the plans investment
consultant. The motion was seconded by Tom Murphy and carried 5-0.
ACTUARY REPORT: FOSTER & FOSTER (DOUG LOZEN)
Mr. Lozen stated that he was here today to present the two reports that he completed for
the board per their request. The first report is the experience study in regards to the plans
investment rate of return and also the salary increase assumption rate. Mr. Cohen noted
that the experience study is not in depth as he would have liked to seen. Mr. Lozen stated
that he only researched the items that were requested by the board and did not do a full
blown experience study (as it was not requested). Mr. Lozen also commented that the
two assumptions that they are reviewing today have the largest impact on the plan.
-INVESTMENT RATE OF RETURN ASSUMPTION: Mr. Lozen explained that the
Division of Retirement has come out and stated that the assumption rate of return of
8.25% is not a reasonable anymore and is too high. The Trustees had a lengthy
discussion on what rate they would feel comfortable with and Mr. Lozen stated that his
recommendation is to lower it to at least 7.75%; that is where the Division of Retirement
feels comfortable at and the is what the FRS currently has.
-SALARY INCREASE ASSUMPTION RATE: Mr. Lozen stated that he would
recommend lowering the salary increase assumption rate from the current of 5.1% to
4.6% because that has been more practical in the past.
The Trustees reviewed the different scenarios which reflect lowering the investment rate
of return as well as lowering the salary increase assumption rate. When decreasing both
components at the same time, it can cause an increase to the City’s contributions so that
is something the Trustees should be aware of when discussing. Mr. Lozen stated that
finding a practical investment rate of return can be difficult because it involves historical
data and a lot of service providers input as well. Mr. Brown commented that at the end of
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every fiscal year he reviews the fund and has spoken to the board a couple of times
regarding their investment rate of return. He has relayed to the board more than once that
he does think the current rate of return of 8.25% is too high. Mr. Brown’s
recommendation to the board would be to decrease their assumed rate of return down to
7.78%, and he explained that he got to this number solely based off his calculations that
he did using the plans historical data. He noted that if the plan did go down to 7.75% or
even a little lower, then it still would have no impact on the investments. Mr. Lozen
explained that if the plan lowered their investment rate of return to 7.75% and also
lowered their salary rate of return to 4.6%, then it would save the City about $100K per
year; although it would increase the plan’s funded ratio to 72.5% (from 71%) for the
short term. He noted that all the scenarios discussed would also tie into the plan’s
unfunded actuarial accrued liability (UUAL). The Trustees had a very lengthy discussion
on what they should reduce the rate of return too as well as the salary assumption
increase, noting that they know they have to make some changes. Mr. Brown
recommended reducing the rate of return over a period of time (ex. 1/10 per year) no
matter what number they go with. Mr. Rhodes explained that he has done a lot of
research and calculations in regards to these topics and stated that he would recommend
reducing the investment rate of return to 7.25% over 5 years and also lowering the salary
increase assumption rate to 4.6%. The Trustees also discussed lowering the amortization
schedule and Mr. Lozen stated that they will already be lowering it from 25 years to 20
years with the changes discussed above, but only for the current UUAL and not going
forward. The Board will discuss changing the amortization schedule for the future gains
and losses in the next part of the report that Mr. Lozen compelted. Lastly Mr. Lozen
stated that whatever changes are made today, he will need clarification as to when they
should be implemented (with the October 1, 2012 valuation that he would have to revise
if so, or going forward with the October 1, 2013 valuation).
A motion was made by Tom Murphy to approve and authorize lowering the plans
investment rate of return to 7.25% (from 8.25%) in increments over 5 years, leaving
the salary assumption rate at 5.1%, and reducing the amortization schedule to 20
years (from 25 year) for the current UUAL effective the October 1, 2013 Actuarial
Valuation. The motion was seconded by Mark Joyce and carried 5-0.
Mr. Lozen explained that now that he has direction in regards to the current UUAL, he
will now need the board’s direction in regards to the future gain and losses and how they
should be posted against the account. Currently the plans amortization schedule period is
25 years and he thinks that is too long. Mr. Lozen commented that he would like to see
the board lower the period to somewhere between 10-15 years. This change has to do
with how long the plans new losses and gains will be amortized each year. Lowering the
schedule may cause larger contributions if there is a loss to the plan, but paying down the
UUAL quicker causes less interest to be paid. Mr. Lozen reminded the Trustees that this
change would apply to all future gain and losses only, not past ones. The Trustees had a
very lengthy discussion on how long they should shorten the amortization period too and
what impact it can have on the plan and the City.
A motion was made by Martin Cohen to approve and authorize lowering the plans
UAAL amortization schedule from 25 years to 10 years for all future gains and
losses. The motion was seconded by Ed Morejon and carried 4-1.
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ATTORNEY REPORT: SUGERMAN & SUSSKIND (BOB SUGARMAN)
Mr. Sugarman explained that the Plan’s current class action Attorney, Jane Goldstein, has
changed monitoring firms and is now at Pomerantz, Grossman, Hufford, Dahlstrom &
Gross LLP. Therefore it is his recommendation that the Board of Trustees’ retain Ms.
Goldstein and sign an agreement with her new firm.
A motion was made by Tom Murphy to continue their class action monitoring
services with Jane Goldstein at her new frim; Pomerantz Grossman Hufford
Dahlstrom & Gross LLP. The Trustees’ also authorized the Chairman to execute
the new agreement on behalf of the board. The motion was seconded by Mark
Joyce and carried 5-0.
Mr. Sugarman stated that the IRS determination letter that the plan received a couple of
months ago is going to expire by the end of 2016. Therefore the board will need to
reapply for their determination letter before it expires in 2016 (the 2016 letter will be
effective for 5 years). He noted that the Attorney’s fee to reapply for the letter now is
$5,100 (with an additional $2,500 payable to the US Treasury for the filing fee), but if
they wait closer to 2016 to reapply then the fee will only increase. The Trustees had a
lengthy discussion on whether or not they wanted to reapply for the IRS determination
letter now or closer to 2016.
A motion was made by Tom Murphy to authorize Sugarman & Susskind to file the
Plan’s 2016 IRS Determination letter now, for a fee of $5,100 with an additional
$2,500 to the US Treasury. The motion was seconded by Mark Joyce and carried 5-
0.
Mr. Sugarman stated that another bill was filed by the Senator ring for the 2014
legislative session regarding 175/185 plans. This bill would repel Senate Bill 538 that
was passed last year. He commented that the legislative session has not begun yet, so he
will updated the board as more information does becomes available.
Mr. Sugarman explained to the board that the Division of Retirement has yet again
changed their interpretation regarding the “Naples letter”. The Division of retirement is
now saying that the City’s and pension plans can now have the right to determine what
interpretation they want to use in regards to keeping the Chapter 175 money. Mr. Lozen
stated that the September 30, 2013 valuation will remain the same as if the plan had never
received the “Naples letter” to begin with.
ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS &
SCOTT BAUR)
DISBURSEMENTS
The Board reviewed the disbursements presented for approval by the Administrator.
A motion was made by Mark Joyce to approve the disbursements as presented by
the Administrator. The motion was seconded by Martin Cohen and carried 5-0.
BENEFIT APPROVALS
The Board reviewed the application for distribution of DROP (final payout) for Peter
Bergel.
5
A motion was made by Martin Cohen to approve the application for final
distribution of DROP Peter Bergel. The motion was seconded by Tom Murphy and
carried 5-0.
Ms. Ross passed out the 2014 meeting dates.
OLD BUSINESS
Mr. Morejon explained that he meet with Mr. Baur & Ms. Ross in between meetings
regarding the self directed DROP accounts. They came up with some additional options
in regards to the investment rate of return. Some alternative options where to set up an
account at Regions and have them host a model for the portfolio as recommended by
Bogdahn’s office. If Regions were to host this model for the plan then they would make
the DROP deposits each month for the plan, but they would also charge $350 per year for
each additional account they set up (each DROP member would have their own
individual account). Mr. Morejon stated that the other investment alternative they came
up with was a mutual fund account. Mr. Baur explained that he knows of a product out
there through Met-Life which is a stable mutual fund account; similar to an annuity
account. This product offers a fixed rate with a guaranteed stable value return. He
reviewed the funds recent performance and noted that for the last 12 months the return
was 2.35%, and for 3 years they were up 3.25%. Mr. Baur commented that this is a more
conservative fund compared to the plans return, and it also has daily liquidity and is held
in a QUSIP. Mr. Baur explained that he did speak to Mr. Sugarman in advance regarding
this investment because in the past some Attorney’s did have some legal issues with the
provisions of the investments. Mr. Sugarman briefly shared his thoughts on this product
and stated that at this time he has no objection because it would be hosted at Regions
Bank. Mr. Brown stated that he has not had time to review this product but he does not
think this investment is allowed under the plan due to the investment provisions that are
outlined in the Plan’s Ordinance. The Trustees discussed some other alternatives and Mr.
Johnson stated he will reach out to his contact at ICMA to see if there is anything that
they may be able to offer to this fund (Mr. Johnson noted that he was aware that the plan
had previously done and RPF for self-directed DROP accounting and that ICMA did not
respond). Mr. Johnson commented that he has a contact at ICMA that has offered
products to other plans of this size in the past. He stated that he will ask ICMA to come
to the next meeting to present their product. The Trustees concurred. Mr. Johnson
commented that we will work on setting up the self directed DROP account and then they
will move on to the Share accounts. The Trustees concurred and tabled the Share account
discussions until further notice.
Ms. Lozen stated that he will revise the COLA example in the proposed summary plan
description to make it less complicated. He will have this to Ms. Ross for the next
meeting.
NEW BUSINESS
N/A
OTHER BUSINESS
N/A
There being no further business, the meeting adjourned at 5 PM.
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Respectfully submitted,
Tom Murphy, Secretary
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City of Palm Beach Gardens
(plan sponsor)
Firefighters’ Pension Trust Fund
Investment Policy Statement
I. PURPOSE OF INVESTMENT POLICY STATEMENT
The Pension Board of Trustees (Board), as named fiduciaries of the City of Palm Beach Gardens
Pension Trust Fund (Fund), maintains that an important determinant of future investment returns is the
expression and periodic review of the Fund's investment objectives. To that end, the Board has adopted
this statement of Investment Policy and direct that it apply to all assets under their control.
In fulfilling their fiduciary responsibility, the Board recognizes that the Fund is an essential vehicle for
providing income benefits to retired participants or their beneficiaries. The Board also recognizes that
the obligations of the Fund are long-term and that investment policy should be made with a view
toward performance and return over a number of years. The general investment objective, then, is to
obtain a reasonable total rate of return - defined as interest and dividend income plus realized and
unrealized capital gains or losses - commensurate with the Prudent Investor Rule and any other
applicable statute.
Reasonable consistency of return and protection of assets against the inroads of inflation are
paramount. However, the volatility of interest rates and securities markets make it necessary to judge
results within the context of several years rather than over short periods of two years or less.
The Board will employ professional Investment Management firms to invest the assets of the Fund.
Within the parameters allowed in this IPS, the Investment Managers have full discretion, including
security selection, sector weightings and investment style.
The Board, in performing their investment duties, shall comply with the fiduciary standards set forth in
Employee Retirement Income Security Act of 1974 (ERISA) at 29 U.S.C. s. 1104(a) (1) (A) – (C). In
case of conflict with other provisions of law authorizing investments, the investment and fiduciary
standards set forth in this section shall prevail.
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II. TARGET ALLOCATIONS
The Board has established the following target asset allocation for the total Fund:
Asset Class Target Range Benchmark
Domestic Equity Securities 55% 45% - 65% Russell 3000
Foreign Equity Securities 10% 5% - 15% MSCI ACWxUS
Composite Equity Portfolio 65% 55% - 75%
Broad Market Fixed Income 10% 5% - 15% Barclays U.S. Aggregate
Intermediate Fixed Income 10% 5% - 15% Barclays Interm Aggregate
Global Fixed Income 5% 0% - 10% Citigroup World Govt
Composite Fixed Income Portfolio 25% 15% - 35%
Direct Real Estate 10% 5% - 15% NCREIF-ODCE (eqwt)
Cash & Cash Equivalents 0% 0% - 5% Citigroup 3-mth U.S. T-bill
The Board will monitor the aggregate asset allocation of the Fund, and will take action to rebalance
portfolio within the stated ranges under certain conditions at the next committee meeting. If at the end
of any calendar quarter, the allocation of an asset class falls outside of its allowable range, barring
extenuating circumstances such as pending cash flows or allocation levels viewed as temporary, the
asset allocation will be rebalanced into the allowable range. To the extent possible, cash contributions
into and withdrawals from the portfolio will be executed proportionally based on the most current asset
allocation available. The Board does not intend to exercise short-term changes to the target allocation.
Specific assignments and additional guidelines for each investment manager will be outlined in
addenda to this overall Investment Policy Statement. These specific investment manager addenda,
which are signed and authorized by the Board, may contain additional restrictions or more flexibility
than the guidelines detailed below. The following guidelines and restrictions apply to all Fund
investments.
III. INVESTMENT PERFORMANCE OBJECTIVES
The following performance measures will be used as objective criteria for evaluating effectiveness of
the investment managers.
A. Total Fund Performance
1. The performance of the total Fund will be measured for rolling three and five year periods.
These periods are considered sufficient to accommodate the market cycles experienced with
investments. The performance of this portfolio will be compared to the return of a portfolio
comprised of 55% Russell 3000 index, 10% MSCI ACWxUS index, 10% Barclays U.S.
Aggregate Bond index, 10% Barclays Intermediate Aggregate Bond index, 5% Citigroup World
Government Bond index, and 10% NCREIF-ODCE equal-weighted index.
2. On a relative basis, it is expected that the total fund performance will be in the top 40% of the
appropriate peer universe over trailing three to five year periods.
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3. On an absolute basis, it is expected that total return of the combined equity, fixed income, and
cash portfolio, should equal or exceed the higher of the actuarial earnings assumption (8.25%)
or the Consumer Price Index plus 3 percentage points over three to five year periods.
B. Equity Performance
The combined equity portion of the portfolio, defined as common stocks and convertible bonds,
is expected to perform at a rate at least equal to a weighted benchmark of 85% Russell 3000
index and 15% MSCI ACWxUS index. Individual components of the equity portfolio will be
compared as outlined in the manager addendums. All portfolios are expected to perform in the
top 40% of an appropriate peer universe over trailing three to five year periods.
C. Fixed Income Performance
The overall objective of the fixed income portion of the portfolio is to add stability, consistency
and safety to the total fund. The fixed income portion of the portfolio, defined as fixed income
and preferred stocks, is expected to perform at a rate at least equal to a weighted benchmark of
40% Barclays U.S. Aggregate, 40% Barclays Intermediate Aggregate index, and 20%
Citigroup World Government Bond index. Individual components of the fixed income
portfolio will be compared as outlined in the manager addendums. All portfolios are expected
to perform in the top 40% of an appropriate peer universe over trailing three to five year
periods.
D. Alternatives (Real Estate)
The overall objective of the alternative portion of the portfolio is to provide an attractive level
of income with minimal volatility to the fund. This portion of the fund is expected to provide
an absolute rate of return and will be benchmarked to the NCREIF-ODCE equal-weighted
index.
IV. INVESTMENT GUIDELINES
A. Authorized Investments
Pursuant to the investment powers of the Board as set forth in the Florida Statutes and local
ordinances, the Board sets forth the following investment guidelines and limitations:
1. Equities:
a. Must be traded on a national exchange or electronic network; and
b. Not more than 3% of the Fund’s assets, at the time of purchase, shall be invested in the
common stock, capital stock or convertible stock of any one issuing company, nor shall
the aggregate investment in any one issuing company exceed 3% of the outstanding
capital stock of the company; and
c. Additional criteria may be outlined in the manager’s addendum.
2. Fixed Income:
a. All fixed income investments shall have a minimum rating of investment grade or higher
as reported by a major credit rating service; and
b. The value of bonds issued by any single corporation shall not exceed 3% of the total
fund; and
c. Additional criteria may be outlined in the manager’s addendum.
d. Fixed income pooled funds must have an average quality of investment grade or higher to
qualify for investment by the Fund.
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3. Money Market:
a. The money market fund or STIF options provided by the Fund’s custodian; and
b. Have a minimum rating of “A1” or its equivalent by a major credit rating service.
4. Pooled Funds:
Investments made by the Board may include pooled funds. For purposes of this policy pooled
funds may include, but are not limited to, mutual funds, commingled funds, exchange-traded
funds, limited partnerships and private equity. Pooled funds may be governed by separate
documents which may include investments not expressly permitted in this Investment Policy
Statement. In the event of investment by the Fund into a pooled fund, the Board will adopt the
prospectus or governing policy of that fund as the stated addendum to this Investment Policy
Statement.
B. Trading Parameters
When feasible and appropriate, all securities shall be competitively bid. Except as otherwise
required by law, the most economically advantageous bid shall be selected. Commissions paid
for purchase of securities must meet the prevailing best-execution rates. The responsibility of
monitoring best price and execution of trades placed by each manager on behalf of the Fund
will be governed by the Portfolio Management Agreement between the Fund and the
Investment Managers.
C. Limitations
1. Investments in corporate common stock and convertible bonds shall not exceed seventy-five
(75%) of the market value of Fund assets.
2. Foreign securities shall not exceed twenty-five percent (25%) of the market value of Fund
assets. For the purposes of this Investment Policy Statement, foreign securities are defined as
bonds, stocks, or other evidences of indebtedness issued or guaranteed by a company that is not
organized under the laws of the United States, any state or organized territory of the United
States, or the District of Columbia.
3. All equity and fixed income securities must be readily marketable. Commingled funds must be
independently appraised at least annually.
4. Real Estate investments shall not exceed fifteen percent (15%) of the market value of Fund
assets.
D. Absolute Restrictions
No investments shall be permitted in:
1. Any investment not specifically allowed as part of this policy.
2. Illiquid investments, as described in Chapter 215.47, Florida Statutes.
3. Direct investment in ‘Scrutinized Companies’ identified in the periodic publication by the State
Board of Administration (“SBA list”, updated on their website www.sbafla.com/fsb/ ), is
prohibited. Any security identified as non-compliant on or before January 1, 2010 must be
divested by September 1, 2010. Securities identified after January 1, 2010, are subject to the
- 5 - Palm Beach Gardens –1/13/2014
provisions of section V. (c) below. However, if divestiture of business activities is
accomplished and the company is subsequently removed from the SBA list, the manager can
continue to hold that security. Indirect investment in ‘Scrutinized Companies’ (through pooled
funds) are governed by the provisions of Section V (G) below.
V. COMMUNICATIONS
A. On a monthly basis, the custodian shall supply an accounting statement that will include a
summary of all receipts and disbursements and the cost and the market value of all assets.
B. On a quarterly basis, the Investment Managers shall provide a written report affirming
compliance with the security restrictions of Section IV (as well as any provisions outlined in
the Investment Manager’s addendum). In addition, the Investment Managers shall deliver a
report each quarter detailing the Fund’s performance, forecast of the market and economy,
portfolio analysis and current assets of the Fund. Written reports shall be delivered to the
Board within 30 days of the end of the quarter. A copy of the written report shall be submitted
to the person designated by the City, and shall be available for public inspection. The
Investment Managers will provide immediate written and telephone notice to the Board of any
significant market related or non-market related event, specifically including, but not limited to,
any deviation from the standards set forth in Section IV or their Investment Manager
addendum.
C. If the Fund owns investments, that complied with section IV at the time of purchase, which
subsequently exceed the applicable limit or do not satisfy the applicable investment standard,
such excess or noncompliant investments may be continued until it is economically feasible to
dispose of such investment in accordance with the prudent man standard of care, but no
additional investment may be made unless authorized by law or ordinance. An action plan
outlining the investment ‘hold or sell’ strategy shall be provided to the Board immediately.
D. The Investment Consultant shall evaluate and report on a quarterly basis the rate of return net
of investment fees and relative performance of the Fund.
E. The Board will meet periodically to review the Investment Consultant performance report. The
Board will meet with the investment manager and appropriate outside consultants to discuss
performance results, economic outlook, investment strategy and tactics and other pertinent
matters affecting the Fund on a periodic basis.
F. At least annually, the Board shall provide the Investment Managers with projected
disbursement needs of the Fund so that the investment portfolio can be structured in such a
manner as to provide sufficient liquidity to pay obligations as they come due. To this end the
Investment Managers should, to the extent possible, attempt to match investment maturities
with known cash needs and anticipated cash-flow requirements.
G. The Investment Consultant, on behalf of the Fund, shall send a letter to any pooled fund
referring the investment manager to the listing of ‘Scrutinized Companies’ by the State Board
of Administration (‘SBA list’), on their website www.sbafla.com/fsb/. This letter shall request
that they consider removing such companies from the fund or create a similar actively managed
fund having indirect holdings devoid of such companies. If the manager creates a similar fund,
the Fund shall replace all applicable investments with investments in the similar fund in an
- 6 - Palm Beach Gardens –1/13/2014
expedited timeframe consistent with prudent investing standards. For the purposes of this
section, a private equity fund is deemed to be an actively managed investment fund. However,
after sending the required correspondence, the Fund is not required to sell the pooled fund.
VI. COMPLIANCE
A. It is the direction of the Board that the Fund assets are held by a third party custodian, and that
all securities purchased by, and all collateral obtained by the Fund shall be properly designated
as Fund assets. No withdrawal of assets, in whole or in part, shall be made from safekeeping
except by an authorized member of the Board or their designee. Securities transactions
between a broker-dealer and the custodian involving purchase or sale of securities by transfer
of money or securities must be made on a "delivery vs. payment" basis to insure that the
custodian will have the security or money in hand at conclusion of the transaction.
B. The investment policy shall require all approved institutions and dealers transacting repurchase
agreements to execute and perform as stated in the Master Repurchase Agreement. All
repurchase agreement transactions shall adhere to the requirements of the Master Repurchase
Agreement.
C. At the direction of the Board operations of the Fund shall be reviewed by independent certified
public accountants as part of any financial audit periodically required. Compliance with the
Board’s internal controls shall be verified. These controls have been designed to prevent losses
of assets that might arise from fraud, error, or misrepresentation by third parties or imprudent
actions by the Board or employees of the plan sponsor, to the extent possible.
D. Each member of the Board shall participate in a continuing education program relating to
investments and the Board’s responsibilities to the Fund. It is suggested that this education
process begin during each Board member’s first term.
E. With each actuarial valuation, the Board shall determine the total expected annual rate of return
for the current year, for each of the next several years and for the long term thereafter. This
determination shall be filed promptly with the Department of Management Services, the plan
sponsor and the consulting actuary.
F. The proxy votes must be exercised for the exclusive benefit of the participants of the Fund.
Each Investment Manager shall provide the Board with a copy of their proxy voting policy for
approval. On a regular basis, at least annually, each manager shall report a record of their
proxy vote.
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VII. CRITERIA FOR INVESTMENT MANAGER REVIEW
The Board wishes to adopt standards by which judgments of the ongoing performance of a portfolio
manager may be made. Upon violation of any of the following, the portfolio manager will be warned
of the Board's serious concern for the Fund's continued safety and performance. Violation of three
individual guidelines shall result in a probation recommendation. Violation of five individual
guidelines shall results in a termination recommendation:
4 consecutive quarters of relative under-performance verses benchmark index
3 and 5 year trailing returns below the 40th percentile and underperforming the index.
Downside volatility greater than index, measured by up/down market capture ratio.
Style Consistency or purity drift from the mandate.
Management turnover in portfolio team or senior management.
Investment process change, including varying the index or benchmark.
Failure to adhere to the IPS or other compliance issues.
Investigation of the firm by the SEC.
Significant asset flows into or out of the company.
Merger or sale of firm.
Fee increases.
Servicing issues – Key personal stop servicing the account without proper notification.
Nothing in this section shall limit or diminish the Board’s right to terminate the manager at any time
for any reason. Benchmark index as referenced above in this section shall refer to the index outlined
in the investment manager addendum.
VIII. CRITERIA FOR INVESTMENT TOTAL FUND REVIEW
A. Four consecutive quarters of total Fund performance below the 50th percentile in Fund
performance rankings.
B. Four consecutive quarters of total Fund performance below the established benchmark.
C. Standard deviation for the total Fund in excess of 150% of the assigned benchmark.
XI. FLORIDA STATUTES 112, 175 and APPLICABLE CITY ORDINANCES
If at any time this document is found to be in conflict with the City Ordinances or applicable Florida
Statutes, the Ordinances and Statutes shall prevail.
- 8 - Palm Beach Gardens –1/13/2014
X. REVIEW AND AMENDMENTS
It is the Board’s intention to review this document at least annually subsequent to the actuarial report
and to amend this statement to reflect any changes in philosophy, objectives, or guidelines. In this
regard, the Investment Manager's interest in consistency in these matters is recognized and will be
taken into account when changes are being considered. If, at any time, the Investment Manager feels
that the specific objectives defined herein cannot be met, or the guidelines constrict performance, the
Board should be notified in writing. By initialing and continuing acceptance of this Investment Policy
Statement, the Investment Managers concur with the provisions of this document. By signing this
document, the Chairman attests that this policy has been recommended by the Investment Consultant,
reviewed by the Fund’s legal counsel for compliance with applicable law, and approved by the Board.
XI. FILING OF THE INVESTMENT POLICY
Upon adoption by the Board, the investment policy shall be promptly filed with the Florida
Department of Management Services, the City, and the Fund’s actuary. The effective date of the
Investment Policy shall be the 31 days following the filing date with the City.
CITY OF PALM BEACH GARDENS FIREFIGHTERS’ PENSION TRUST FUND
As recommend by Investment Consultant
__________________________________ Date: ________________________
The Bogdahn Group
As reviewed by Legal Counsel
__________________________________ Date: ________________________
Sugarman & Susskind
As approved by the Board
__________________________________ Date: ________________________
Chairman, Board of Trustees