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:
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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,
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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.
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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