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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 N/A 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. 2 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 3 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. 4 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 N/A 5 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