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HomeMy WebLinkAboutMinutes Fire Pension 092718PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND MINUTES OF MEETING HELD September 27, 2018 Chair Ed Morejon called a meeting of the Board of Trustees to order at 9:04 AM in the Council Chambers located at City Hall for Palm Beach Gardens, Florida. Those persons present included: TRI lcT[:Pq OTHERS Ed Morejon, Chairman Scott Baur & Denise McNeill, Administrator Jan Currier, Secretary John Thinnes, Investment Consultant Tom Murphy Pedro Herrera, Attorney Rick Rhodes Eric Leventhal & Liedhe Carpio Auditors Doug Lozen, Actuary Sean O'Brien, City of PBG Finance Department PUBLIC COMMENTS No members of the public had any comment. MINUTES The Board reviewed the minutes of the regular meeting held on May 2, 2018. The Trustees noted minor corrections. Rick Rhodes made a motion to approve the Minutes of May 2, 2018 as amended. Jonathan Currier seconded the motion, approved by the Trustees 4-0. The Trustees then reviewed the minutes for the regular meeting of August 1, 2018. Rick Rhodes made a motion to approve the Minutes of August 1, 2018. Tom Murphy seconded the motion, approved by the Trustees 4-0. ATTORNEY REPORT (Bob Sugarman, Sugarman & Susskind) Mr. Sugarman stated that the Share Account Policy should always acknowledge a possible market loss when paying a distrihution to a member. Per the ordinance, the Pension Fund updates member Share Account balances annually. Mr. Sugarman reviewed the provisions of the Ordinance governing distributions. Member accounts are valued as of the valuation date each year, with 30 days from October 1 to distribute account balances following separation of a member from employment at the City. The Trustees considered issues with the timing for distributions, since the Board cannot typically update account balances within 30 days due to the normal reporting cycle on plan assets. The current Board policy allows members to keep balances invested with the plan assets following retirement, until the member requests a distribution. With an annual distribution, 2 member lose flexibility to access their accounts. After some discussion, the Board concluded that the current policy allowing distributions during the year should continue, valuing the accounts annually on October 1, holding back 10% of the balance available at distribution against possible market losses, and 20% for mandatory federal income tax withholding on lump -sum distributions from qualified plans_ Members then receive any remainder after account balances are updated with any gains or losses in a subsequent distribution after October 1. The Trustees discussed issues with reported payroll to the Division of Retirement that limited distributions of Chapter 175 premium tax receipts to the plan. The City failed to report the full annual calendar year payroll for the Fire Department on the Annual Report, thereby limiting premium tax receipts to 6% of reported pay by the allocation formula used by the state. Doug Lozen, actuary for the Pension f=und, reported on the amounts received starting in 2012, compared to amounts that the Pension Fund should have received and allocated to member Share Accounts. Mr. Lozen further noted a discrepancy on the amount allocated to member Share Accounts in 2015, when the administrator started posting allocations to accounts on October 1 each year instead of September 30. White the difference in a day between the end of one quarter and the start of the next quarter has no impact on earnings subsequently posted to member accounts, the shift resulted in some confusion regarding $12,147.52 of voided earnings on 4 member accounts as of October 1, 20115 that the plan distributed the prior year. The actuary provided his own accounting of the annual allocations since 2012. The actuary reported that, based on Chapter 175 premium tax receipts from the state, the accounts were potentially shorted $349,080.06 in 2015 and 2016. He also reported a final difference of $12,149.50 compared to the $12,147.52 adjustment to earnings posted to member accounts as of October 1, 2015, the $2.28 due to rounding on the annual allocations of Chapter 175 premium tax receipts to member accounts. Mr. Lozen stated that he wanted to further review the annual allocation methodology. Once the Division of Retirement approved the Annual Reports for 2015 and 2016 prepared by the City, the Board has no further recourse to correct the total calendar year departmental payroll reported by the City that resulted in the shortage. The Board considered the possible experience to the plan if the same amount was allocated from plan assets to member accounts. The City unfunded liability would increase by $349,080.06 unless the City deposited a separate contribution to the plan. The Board received only one response to the recent Request for Proposal for audit services. The administrator will resent the Request to an updated auditor list with a new submission deadline, anticipating additional responses from qualified audit firms. The Board designated Tom Murphy and Jonathan Currier as a subcommittee to shortlist responses and invite firms to make presentations at the previously scheduled November 7 regular quarterly meeting. The Trustees considered the timing of the September 30, 2018 audit based on the City timeline to produce the CAFR. ADMINISTRATIVE REPORT Scott Baur& Denise McNeill Resource Centers The Board reviewed the annual administrative expense budget updated by the administrator. The Board considered the expense categories and amounts. j Rick Rhodes made a motion to approve the budget for the 2019 fiscal year. Jonathan Currier seconded the motion, approved by the Trustees 4-0. OLD BUSINESS The Board discussed the 2017 Annual Report, pending approval for September 30. Ed Morejon stated that he authorized Foster, plan actuary, to assist with the response to questions received from the Division to facilitate approval of the Annual Report by September 30. NEW BUSINESS Mr. Sugarman reminded the Trustees of the fall FPPTA Trustee School and the annual Division of Retirement Conference in November. The FPPTA will recognize the local representing employees of the Town of Palm Beach, which froze and closed their plans for employees resulting in substantial employee turnover with personnel costs that far exceeded the cost of the pension. The Board considered the updated Summary Plan Description, using a sample COLA calculation from a prior version of the SPD- The Trustees noted that the plan still has a money market investment alternative available to members in the DROP. Since the Board no longer has a money market account for DROP members, the Board directed to eliminate the corresponding description. The Trustees also discussed the 75% cap on accrued pension benefits potentially shorting members of the value of previously purchased prior qualifying service credit. Rick Rhodes made a motion to approve the Summary Plan Description with changes to remove the description of the money market option for members in the DROP, replacing the COLA example, and changing the word "No" on page S item 10 of the draft copy distributed to the Board. Jonathan Currier seconded the motion, approved by the Trustees 40. Mr. Sugarman advised that the Board of options to distribute the updated Summary Plar Description to members. The Board chose to email an electronic copy to all members with a printed copy available at each station. Tom Murphy departed the meeting, as he was still recovering from a recent shoulder surgery. Doug Lozan of Foster & Foster and Denise McNeill and Scott Baur of the Resource Centers departed the meeting at 11:03 out of courtesy to the candidates for administrator that will be making presentations. After a brief discussion on the fees paid to PRC and the trustees' dissatisfaction with their services, the trustees interviewed two candidates who presented proposals. Foster & Foster. Ferrell Jenne and Doug Lozan presented their proposal and stressed the experience of their firm, their administering only governmental plans, the included dedicated website, and their cooperation with and the availability of the Fund's actuaries. Their presentation is presented in more detail in their written proposal which was distributed to the trustees and is part of these minutes. Their base fee is $3,000 per month for 6 Board meetings plus out of pocket travel expenses and $3000 for preparation of state annual report. The details of a possible transition were discussed in coordination with PRC. Strategic Benefit Advisors. Mary Shah, based in Atlanta, introduced herself as a former actuary, said her firm was new to the Florida public plan market, and now administers the Palm Tran plan in Palm Beach County. She said her firm is in process of learning about Florida pension plans and the applicable laws unique to Florida, although there are many similarities to servicing their corporate and healthcare clients. Fee of $54,000 per year including up to $5K out of pocket expenses. The bundle of services offered as well as how a transition would take place. Pension Studio. Did not appear but the trustees reviewed their proposal. Discussion. Based upon the continued disappointment with PRC, experience of Foster & Foster with governmental plans and particularly our plan and F&F's lower fees, the trustees voted 3-0 to replace PRC with F&F with the transition to begin in October and be completed by the end of the year. F&F and PRC will be requested to jointly develop a transition schedule and splitting of fees during the transition process with Salem to make all expense and benefit payments starting 01/01/19. State report. PRC was delayed in preparing the state report and the September 30 deadline was looming, so the chairman asked F&F to finish the state report at an hourly fee of $100 with a cap of $3500. The trustees by a vote of 3-0 ratified the chairman's decision. Share account statements. The trustees voted 3-0 to delay sending out the 2018 share account statements until the issues identified by F&F with the share accounts are resolved so the statement will be accurate. There being no further business, the meeting adjourned at 12:42 PM. Res Ily submitted, n Currier, Sec ry