HomeMy WebLinkAboutMinutes Fire Pension 051714PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND
MINUTES OF MEETING HELD
MAY 7, 2014
A meeting of the Board of Trustees was called to order at 9:03AM at Council Chambers,
Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES OTHERS
Rick Rhodes, Chairman Audrey Ross, Administrator
Martin Cohen, Vice Chair Pedro Herrera, Attorney
Tom Murphy, Secretary Dan Johnson, Investment Consultant
Ed Morejon Cary Scaglione, ICMA
Mark Joyce Allan Owens, Finance Director
Doug Lozen, Actuary
PUBLIC COMMENTS
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MINUTES
The Board reviewed the minutes of the regular meeting held on January 13, 2014.
A motion was made by Ed Morejon to approve the minutes of the January 13, 2014
regular meeting. The motion was seconded by Mark Joyce and carried 5-0.
The Board tabled the minutes of the regular meeting held on March 10, 2014.
ICMA – CARY SCAGLIONE
Mr. Scaglione discussed the fee that ICMA is presenting to the board in regards to
administering the self-directed DROP accounts. He explained that since ICMA is
offering a reduced fee they cannot remove the language in the contract that locks the Plan
in with them for 10 years. Also this board is piggy backing off the City’s plan with
ICMA and that same language is included in the City’s contract as well. Mr. Herrera
commented that he would like to see that language removed but ICMA is saying it cannot
be removed so now the board needs to make a business decision in which he will respect
either way. Mr. Johnson concurred with Mr. Herrera’s comment. Mr. Scaglione clarified
that the 10 year lock in is with cause which does allow the board to opt out earlier if
certain events happen (such as an IRS change, State Law change, etc). Also this 10 year
lock up applies to the contract between ICMA and the Plan, and does not apply to each
individual DROP member. The Trustees had a lengthy discussion on the contract
language, specifically the 10 year lock in. Ultimately the Trustees concluded that they
would like to move forward with the contract and directed Mr. Herrera and ICMA to
continue with the process.
A motion was made by Marty Cohen to authorize the Chair to execute the contract
with ICMA in between meeting once reviewed and signed off on by legal council.
The motion was seconded by Ed Morejon and carried 5-0.
Mr. Johnson wanted to address the DROP members that are currently invested in the
money market option. Those members need to be moved out of the money market
account and moved over into the ICMA default account (the plus fund account) so that
they money market account/option can be closed out and removed from the Plan.
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A motion was made by Ed Morejon to authorize the Plan to close out the money
market account and to move all the current DROP members that are invested in the
money market account over to ICMA’s default account (the plus fund account).
The motion was seconded by Mark Joyce and carried 5-0.
Mr. Herrera stated that since we are now moving forward with ICMA, he has revised the
IPG to add in self-directed DROP accounts to the Plan. He briefly reviewed the
investment options menu from ICMA and noted that they are the same options that the
City has for their 457 Plan. There are a total of 11 different funds, including the default
account.
A motion was made by Mark Joyce to approve and accept the ICMA DROP
investment options menu as presented. The motion was seconded by Marty Cohen
and carried 5-0.
A motion was made by Ed Morejon to approve and accept the addendum to the IPG
as presented regarding the addition of self-directed DROP accounts with ICMA .
The motion was seconded by Marty Cohen and carried 5-0.
PRESENTATION OF THE 9/30/2013 ACTUARIAL VALUATION REPORT:
FOSTER & FOSTER (DOUG LOZEN)
Mr. Lozen stated that the report he is going to presents reflects the contributions for the
fiscal year beginning October 1, 2014 (and ending September 30, 2015). He commented
that during the year there were no benefit changes to the Plan, but there was still a lot of
activity going on. Mr. Lozen explained that the City contributes based off the amount of
payroll and for next year that percentage has increased from 36.17% to 39.81%, but
although the percentage went up there will probably be an actual decrease in the dollar
amount that needs to be contributed because payroll has decreased so much. Mr. Lozen
reviewed the Plan’s unfunded liability and noted that it is starting to decrease even with
lowering the Plan’s assumed rate of return. During the fiscal year there was a credit of
$3.5M paid to the unfunded liability. The Board discussed the State money and how it
was applied. They also discussed the DROP and Share monies and how they are being
reflected in this report. Mr. Lozen stated that currently there is about $9M in DROP and
Share assets and they are considered a liability to the Plan, but in this report they are
reflected as plan assets. Mr. Lozen explained that they do include the DROP and Share
account balances when they are calculating the investment rate of return. Mr. Cohen
stated that he does not understand how Foster calculates out future benefits in regards to
the assumptions. Mr. Lozen stated that Foster does not project benefits for the future, but
rather they calculate the present value of the future benefits. When they are calculating
the present value of benefits they remove the DROP and Share monies and they also do
this when calculating the Plan’s funded ratio as well. Lastly Mr. Cohen stated that he is
very pleased with the results and thinks that this Board has a very solid approach to
paying down the unfunded liability.
A motion was made by Tom Murphy to approve and accept the September 30, 2013
Actuarial Valuation Report as presented . The motion was seconded by Mark Joyce
and carried 5-0.
The board discussed the timing and the delivery of the share accounts statements as well
as the valuation. Mr. Lozen explained that next year things will move a lot faster (the
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valuation and the share account statements) because Foster can do their own financial
statements and therefore they will not need to wait on the audit to be completed. Mr.
Owens also noted that the City will automatically send the Actuary the data information
each October to get the ball started as well.
Lastly Mr. Johnson commented that they Plan needs to set their future rates of returns as
required by the Division of Retirement each year.
A motion was made by Marty Cohen to approve the investment assumed rate of
return of 8.05% for all time periods. The motion was seconded by Tom Murphy
and carried 5-0.
INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (DAN
JOHNSON)
Mr. Johnson reviewed the March 31, 2014 quarterly report. He briefly reviewed the
Plan’s investments from 2007 thru current and stated that the Plan has made a total of
$20.6M during that time. He also reviewed the Plan’s current asset allocation and noted
that the Plan is pretty much inline with the policy, but does have an underweight to the
Real Estate target. Mr. Johnson discussed the financial reconciliation and commented
that during the quarter the Plan made $1.5M and for the fiscal year the Plan gained a total
of $5.5M. For the quarter ending March 31, 2014 the fund out performed the index net of
fees at 2.33% versus 1.83% and for the fiscal year to date they are in the same position at
9.20% net of fees versus the index at 8.21%. All the managers and all the sectors have
also outperformed for the quarter and now for the fiscal year to date as well. Mr. Johnson
briefly discussed some of the managers and noted that GHA won an award for fixed
income manager of the year. American Realty still has one more capital call before all
the money that was committed to them is invested. Lastly Mr. Johnson stated that he
would recommend increasing their initial commitments to American Realty and
Intercontinental by $500K each because the Plan’s total real estate allocation is
underweighted and also because real estate has been doing great.
A motion was made by Tom Murphy to approve and authorize the increase of the
initial commitments made to American Realty and Intercontinental by $500K each.
The motion was seconded by Marty Cohen and carried 5-0.
Mr. Johnson updated the board on ICMA and where they stand with the contract. Mr.
Herrera stated that he has reviewed the ICMA contract and made some minor revisions to
it and then sent it back to ICMA to review and sign off on. He explained that the original
contract had an 8-10 year lock up so Mr. Herrera removed that language. He commented
that he will keep the board posted when he receives more information. The Trustees also
tabled the revised IPG until the ICMA contract is signed.
Lastly Mr. Johnson commented that per his recommendation he will need the board to
authorize Intercontinental to automatically reinvest the dividends back into the fund
instead of paying them out.
A motion was made by Tom Murphy to direct Intercontinental to automatically
reinvest the Plan’s dividends back into the fund instead of paying them out. The
motion was seconded by Marty Cohen and carried 5-0.
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ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA)
Mr. Herrera stated that the Legislative session ended last week and there were no bills
that were passed that have any affect on defined benefit plans.
Mr. Herrera reminded the Trustees that their annual Form 1 Disclosures are due Juy1,
2014.
Mr. Herrera stated that he does not have any update on the IRS determination letter as it
is still pending. Also he has not heard anything else from the IRS regarding variable
rates on DROP accounts and if they are being considered a defined contributions account.
Lastly Mr. Herrera commented that he has not heard anything back from AmSouth yet
either.
ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS)
DISBURSEMENTS
The Board reviewed the disbursements presented for approval by the Administrator.
A motion was made by Tom Murphy to approve the disbursements as presented by
the Administrator. The motion was seconded by Mark Joyce and carried 5-0.
BENEFIT APPROVALS
The Board reviewed the applications for distribution of Share accounts (final distribution)
for Peter Bergel and Scott Fetterman.
A motion was made by Tom Murphy to approve the applications for distribution of
Share accounts (final distribution) for Peter Bergel and Scott Fetterman. The
motion was seconded by Mark Joyce and carried 5-0.
The Board reviewed the applications to enter the DROP for Jerry Brown and Tim Jarrell.
A motion was made by Tom Murphy to approve the applications to enter the DROP
for Jerry Brown and Tim Jarrell. The motion was seconded by Mark Joyce and
carried 5-0.
The Board reviewed the application for an early retirement for Shawn Reid.
A motion was made by Tom Murphy to approve the application for an early
retirement for Shawn Reid. The motion was seconded by Mark Joyce and carried
5-0.
The Board reviewed the application to exit the DROP for Mark Olsen.
A motion was made by Tom Murphy to approve the application to exit the DROP
for Mark Olsen. The motion was seconded by Mark Joyce and carried 5-0.
Ms. Ross passed out the revised 2014 meeting dates for the reminder of the year.
NEW BUSINESS
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OLD BUSINESS
Ms. Ross presented the board with the final revised summary plan description which now
reflects a simpler COLA example.
A motion was made by Ed Morejon to approve the revised Summary Plan
Description as presented. The motion was seconded by Tom Murphy and carried 5-
0.
*Ms. Ross noted that she will distribution copies of the revised SPD to all the active
members*
OTHER BUSINESS
Ms. Ross provided the board with the service provider contract review chart. Today the
board is reviewing the Actuary and the Auditor contracts. The Trustees noted that they
are pleased with Foster & Foster and will stay with them. The Board asked Ms. Ross to
issue an RFP for auditors as they want to see what other prices are out there.
Lastly Ms. Ross stated that she has contacted Mr. Zace regarding his Share account
balance and he is filling out the paperwork. Mr. Morejon stated that Mr. Ritz is also
owed the remaining balance in his share account. Ms. Ross commented that she will get
in contact with him to distribute the money. Mr. Morejon asked Mr. Herrera to have a
legal opinion for the next meeting regarding the payouts of Share accounts for terminated
and vested members.
There being no further business, the meeting adjourned at 3:42PM.
Respectfully submitted,
Tom Murphy, Secretary