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HomeMy WebLinkAboutMinutes Fire Pension 011215PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD JANUARY 12, 2015 A meeting of the Board of Trustees was called to order at 1:04PM at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Rick Rhodes, Chair Audrey Ross, Administrator Martin Cohen, Vice Chair Dan Johnson, Investment Consultant Tom Murphy, Secretary Pedro Herrera, Attorney Mark Joyce Doug Lozen, Actuary Ed Morejon Allan Owens, City of PBG Finance Director Chris Long, Investment Manager Greg Woodard, Investment Manager PUBLIC COMMENTS N/A MINUTES The Board reviewed the minutes of the regular meeting held on November 5, 2014. A motion was made by Ed Morejon to approve the minutes of the November 5, 2014 regular meeting as amended. The motion was seconded by Mark Joyce and carried 5-0. SELECTION OF CHAIRMAN, VICE CHAIR & SECRETARY Ms. Ross stated that the board needs to select a Chair, Vice Chair, and Secretary according to their policy. A motion was made by Tom Murphy to nominate Rick Rhodes as Chair. The motion was seconded by Marty Cohen and carried 5-0. Mr. Rhodes accepted the nomination as Chair. A motion was made by Tom Murphy to elect Rick Rhodes as Chair. The motion was seconded by Marty Cohen and carried 5-0. A motion was made by Mark Joyce to nominate Martin Cohen as Vice Chair. The motion was seconded by Tom Murphy and carried 5-0. Mr. Cohen accepted the nomination as Vice Chair. A motion was made by Tom Murphy to elect Martin Cohen as Vice Chair. The motion was seconded by Ed Morejon and carried 5-0. A motion was made by Ed Morejon to nominate Tom Murphy as Secretary. The motion was seconded by Mark Joyce and carried 5-0. Mr. Murphy accepted the nomination as Secretary. 2 A motion was made by Mark Joyce to elect Tom Murphy as Secretary. The motion was seconded by Ed Morejon and carried 5-0. INVESTMENT MANAGER REPORT: MANNING & NAPIER (CHRIS LONG & GREG WOODARD) Mr. Long and Mr. Woodard introduced themselves. Mr. Long commented that there have been no changes to the firm since they were last here in 2009. He explained that he is aware that his firm was asked to attend today’s meeting to discuss their recent underperformance. Mr. Long reviewed the funds historical performance and noted that since inception they are up 8.24% versus the index at 5.94%, but as of more recent they have started to underperform. For the most recent quarter ending December 30, 2014 the fund was down -4.73% versus the index at -3.87%. He explained that during the last quarter they had an overweight to energy and Europe and that really hurt them because those were two of the worst performing sectors during the quarter especially due to gas prices dropping. Mr. Woodard reviewed the portfolio’s asset allocation by sector and Region and noted that they are comfortable with their European exposure at this time, but commented that overall International is just not doing as good as well as domestic. The Trustee’s discussed the index that they are measuring themselves against and if it is an accurate one. Mr. Woodard stated that they are using the all country world index (ACWI) and commented that he does think that it is the correct one to be using. Mr. Johnson agreed. Since the end of the quarter they have trimmed back their exposure to energy. Mr. Long reviewed some characteristics of the portfolio and commented that they underperform about 40% of the time and outperform the other 60%. Lastly they reviewed Manning & Napier’s market outlook and noted that they have already started to see small improvement in the Europe markets but they still have a way to go. The portfolio is positioned well going forward. INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (DAN JOHNSON) The Trustees discussed the Manning & Napier presentation. Mr. Johnson stated that his Firm is meeting with their analyst soon so by the next meeting he will have more answers and information. He also noted that Manning & Napier is on Bogdahn’s internal watch list as well as the Boards. The Board discussed other ways of generating International returns without active management and noted that International index funds would perform more in line with the index since they are not actively managed. Mr. Johnson stated that he will update the Board at the next meeting in regards to his firm’s meeting with Manning & Napier. Mr. Johnson briefly reviewed the Plan’s preliminary December 31, 2014 flash performance report and noted that the Plan is up 3.15% versus the index at 6.64%. Mr. Johnson reviewed the international equity review report as of September 30, 2014 and compared it to the Plan’s current managers RBC and Manning & Napier. He explained that both of the current Plan managers are volatile and that there are other mangers that would blend well with RBC. Mr. Johnson reviewed a couple of different international equity managers and noted that the index funds have lower fees and more diversification. The Trustees has a lengthy discussion on active management versus index funds as well as all the different equity international managers. The Trustees agreed to table this discussion until the next meeting after the Bogdahn Group has had time to meet with Manning & Napier’s team. 3 Mr. Johnson notified the Board that ICMA is not properly coding the DROP accounts. The DROP accounts are supposed to be coded as tax exempt because they are part of the pension plan assets. Mr. Johnson spoke to the ICMA rep and stated that the City, as the Plan sponsor, will need to write a letter to ICMA asking them to include Palm Beach Gardens Fire on their exemption list. Mr. Rhodes asked Mr. Johnson to draft the letter for the City Finance Director to execute and send to ICMA. Lastly Mr. Johnson briefly updated the Board on the recent internal change of control at the Bogdahn Group. In the past Joe Bogdahn had main ownership of the firm, but now it is employee owned. Mr. Johnson explained that this change is not for Bogdahn to go public, but rather just a change in ownership from family to employees. Also this change is in preparation of Joe Bogdahn’s retirement and for making sure that the business remains employee owned in the future. PRESENTATION OF THE 9/30/2014 ACTUARIAL VALUATION REPORT: FOSTER & FOSTER (DOUG LOZEN) Mr. Lozen reviewed the September 30, 2014 Valuation Report and noted that the funding requirements remain about the same as year. The City’s funding slightly increased from 39.81% to 40.64%, but dollar wise it remains the same. During the fiscal year the Plan’s assumed rate of return decreased from 8.05% to 7.85% and by 2017 they will be at their goal of 7.25%. As of September 30, 2014 there were a total of 136 members in the Plan. For the fiscal year the Plan had an actuarial gain of $2.6M, which was primarily due to less than expected salary increases. Mr. Lozen explained that due to the new GASB requirements the funded ratio is no longer available in the report, but on a side note the ratio increased this year from 77% to 80%. Mr. Lozen reviewed the Plan’s unfunded liability and explained that at the beginning of the year the balance was at $16.8M and then they applied the gain of $2.6M from this year leaving the new unfunded liability balance at $15.7M. Mr. Cohen stated that he thought we changed the amortization schedule from 20 years to 15 years. Mr. Lozen commented that his understanding is that the changes were for all future gains and losses after this valuation. Lastly Mr. Lozen also commented that the GASB 67 reports will be completed separately and should be available shortly. A motion was made by Ed Morejon to approve and accept the September 30, 2014 Actuarial valuation Report as presented. The motion was seconded by Ed Morejon and carried ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA) Mr. Herrera noted that he has the revised PRC agreement with him here today to be executed. Mr. Herrera explained that the IRS has finally come to a decision regarding DROP plans and whether or not they are considered to be defined contributions accounts or not. The IRS has now changed their position on DROP Plans and the Code now views DROP accounts as a defined benefit plan (and not a defined contribution plan). Therefore DROP accounts are not subject to the defined contribution rules and regulations and this Board does not need to make any changes or take any action. Mr. Herrera commented that so far two Bills have been filed for the 2015 Legislative session regarding pensions. He briefly reviewed the Bills and noted that one of the Bills 4 is a refile from last year. Mr. Herrera stated that he will keep the Board updated as progression is made (if any). Mr. Herrera and Mr. Morejon discussed the DROP and Share accounts and whether or not members can leave their money in their accounts after they separate service. Mr. Herrera stated that members can leave their money in their DROP and Share accounts after they separate service, however once a member has elected to take a distribution from their Share account then they must take the full balance according to the current language in the Ordinance (the DROP account still needs to be addressed in regards to distributions as there is not specific language in the Ordinance). ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS) DISBURSEMENTS The Board reviewed the disbursements presented for approval by the Administrator. The Trustees noted that they could not approve the PRC December 2013 invoice until some additional backup information is provided. A motion was made by Tom Murphy to approve the disbursements as presented by the Administrator with the exception of the December 2013 PRC invoice. The motion was seconded by Ed Morejon and carried 5-0. BENEFIT APPROVALS The Board reviewed the application to enter the DROP for Richard Raynor. A motion was made by Tom Murphy to approve the application to enter the DROP for Richard Raynor. The motion was seconded by Mark Joyce and carried 5-0. The Board reviewed the 2015 COLA increases for the retirees and active DROP members that was effective January 1, 2015. Ms. Ross noted that the schedules were prepared by the Plan’s Actuary. A motion was made by Tom Murphy to approve the 2015 COLA increases for the retirees and active DROP members effective January 1, 2015 as presented. The motion was seconded by Mark Joyce and carried 5-0. NEW BUSINESS N/A OLD BUSINESS N/A OTHER BUSINESS N/A There being no further business, the meeting adjourned at 4:11PM. Respectfully submitted, Tom Murphy, Secretary