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HomeMy WebLinkAboutMinutes Police Pension 102909City of Palm Beach Gardens Po /ice Officers' Pension Fund Minutes of the Meeting Held OCTOBER 29, 2009 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers' Pension Fund was called to order at 9:17 AM by Jay Spencer in the Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail, Palm Beach Gardens, Florida. TRUSTEES PRESENT Jay Spencer, Chairman David Pierson, Secretary Brad Seidensticker, Trustee (departed 3:51) Jules Barone, Trustee Wayne Sidey, Trustee OTHERS PRESENT Audrey Ross (Resource Centers) Bonni Jensen (Law Offices of Perry & Jensen) Steve Stack (ICC Capital Management) Donna Cannon (PBG Clerk's Office) Brendon Vavrica (Thistle Asset Consulting) INVESTMENT MANAGER REPORT ICC Capital — Presented by Steve Stack Mr. Stack commented that it has been the same theme for the past three quarters. The fixed income has done great, and he stated that the changes in management that occurred on the fixed income side had a positive effect on the portfolio. Mr. Stack reviewed the sector attributions on the growth side and stated that they hold a neutral weighting in all the sectors; although they are a little underweighted in consumer staples because there has not been much growth there. Also, the lower quality bonds do better coming out of a recession in which there is a hard and fast recovery taking place in the markets. Mr. Stack reviewed the fixed income portfolio and reported that they started the quarter with $11,785,265 and they ended with $12,695,048, which was a total gain of $374,184 for the quarter. There is 86.9% in fixed income and $13.1% in cash, which gives the total fund a return of 3.14% versus the index at 3.74 %. The total bonds for the quarter were slightly ahead at 3.75% versus 3.74 %. Mr. Stack stated that they have gone longer in the Government debt and shorted on the correlated debit. Also there is more deflation then inflation so that makes them go light on duration because they are a yield manager. As far as the growth portfolio, they begun the quarter with $4,165,952 and ended with $4,954,316, which was a gain of $788,877. They currently hold 94.2% in equities and $5.8% in cash. The total fund outperformed for the quarter at 18.94% versus 13.98 %, and the total equities also outperformed at 19.81% versus 13.98 %. Mr. Stack explained that they will probably not take a lot of risk on the fixed income side because we will probably be seeing inflation start happening within the next 2 to 3 years. Also, the dollar has started to rally which will hurt the equity side. Mr. Stack commented that the portfolios in both funds are in a good position. The Board discussed the oil prices and shares. Mr. Seidensticker shared his thoughts on oil and the global economics as well. Minutes 10 -29 -09 - Palm Beach Gardens Police.doc Page 1 of 5 Mr. Seidensticker had some comments in regards to what he sees as "upcoming risks ". The first risk he is worried about is when inflation gets heated up. Also the defecate spending by the Government, China, and India are growing and he thinks we should put more money into International to maintain more value. The Board discussed different options of how to preserve and protect the fund for any other upcoming "bust" that may happen again. Mr. Pierson explained that there is really nothing that you can do except to move your money into cash, and if you did that then you would be missing out on the returns. Mr. Spencer commented that they are adding a VEBA fund within the City and they had GRS do a study. He explained that the stipulation of having an investment assumption of 2 -4% is more reasonable now days because of the markets and the environment. He wanted the Boards thoughts on reducing the assumption rate for this pension plan. Ms. Jensen explained that if you lower your assumption rate it will help in the long run, but you do not want to lower it during a low year because it will tremendously increase the City's contribution rates. The Board had a lengthy discussion on the different rates and options. Mr. Vavrica agreed that the Board could increase their International exposure. He stated that currently there is 7% in International and the max they can go to right now is 10% until the pending Ordinance change takes place, then they will be able to invest up to 25 %. MOTION: Mr. Sidey made a motion to increase the International exposure to 9.5% (with the funds to be taken from the fixed income account and to split equally between all 3 International accounts held with Vanguard). SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5 -0. Lastly, Mr. Pierson asked if ICC was able to buy ETF's. Mr. Stack explained that he can expand the large cap growth side to be able to. He reviewed the process in doing that and also explained specifically what they can buy into. He commented that if they did buy into ETF's then it would be considered unclassified by ICC. Mr. Pierson commented that he thinks this is something that they should look into and have it added into their IPG. Ms. Jensen commented that commodity ETF's would not fall under a manager, it would be up to the Board. INVESTMENT CONSULTANT REPORT Thistle Asset Consulting — Presented by Brendon Vavrica Mr. Vavrica reviewed the revisions that were made to the IPG. He increased the International allocation to 25% and added the necessary language in regarding the scrutinized companies. He commented that this fund does not have any investments with any of the companies on the scrutinized list, but this language is required by law to be added in. Mr. Vavrica explained that these changes will not become effective until the amended Ordinance is adopted. MOTION: Mr. Barone made a motion accept the amended Investment Policy Guidelines as presented by the Consultant. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5 -0. Mr. Vavrica reviewed the funds performance for the quarter ending September 30, 2009. He commented that this fund had a wonderful quarter seeing that all trailing indices are still negative. He reviewed the compliance checklist and stated that they are inline with their policy, except they are trailing their 3 year return for the total Minutes 10 -29 -09 - Palm Beach Gardens Police.doc Page 2of5 fund. At the end of the quarter they had 60% in equities, 34% in fixed income and 6% in cash. The total fund was behind the index for the quarter at 11.76% versus 12.31 %, the total equities were ahead at 18.26% versus 17.10% and the total fixed income was also slightly ahead at 3.75% versus 3.74 %. Mr. Vavrica briefly reviewed each manager's return for the quarter and commented that the fixed income side is doing very well and that most of Rhumblines portfolios were beating the indexes. Overall Mr. Vavrica stated that this fund is doing very well and they will be able to do a lot more in regards to investing in International once they expand the IPG. Mr. Spencer wanted to also recognize the strategies that they have done in the past that has brought them to the point, even when going through such down markets. Mr. Vavrica concluded by stating he has no other recommendations at this time. ADMINISTRATOR REPORT Resource Centers — Presented by Audrey Ross Ms. Ross explained that she wanted the Board to consider expanding their DROP distribution open enrollment periods. Currently members are allowed to take distributions from their DROP account twice a year; April and October. Ms. Ross would like the Board to also consider allowing members to take a distribution from their account 30 days from when they exit the DROP as well. The Board discussed the different open enrollment periods and thought about expanding them. MOTION: Mr. Sidey made a motion to approve DROP distributions to occur quarterly on the 15th of the month (April 15, July 15, October 15 and January 15), and also 30 days from when a member exits the DROP. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4 -0. Ms. Ross presented the Board with the Audit Engagement Letter from the plans auditor, Cherry, Bekaert & Holland for the preparation of the 9/30/09 financial statements. Ms. Jensen stated that she reviewed the document and has approved. MOTION: Mr. Sidey made a motion to accept and approve the audit engagement letter from Cherry, Bekaert & Holland in regards to the 9/30/09 audited financial statements. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4 -0. Ms. Ross stated that it was that time of year again to renew the funds Fiduciary Liability Insurance. She commented that we have stayed with the same company and that the renewal rate for this year is $6,384.97, which is $42.23 higher then the previous year. MOTION: Mr. Sidey made a motion to accept and approve the Fiduciary Liability Insurance for the 2009 -2010 plan year at $6,384.97. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4 -0. Minutes 10 -29 -09 - Palm Beach Gardens Police.doc Page 3of5 ATTORNEY REPORT Law Offices of Perry & Jensen - Presented by Bonni Jensen Ms. Jensen briefly reviewed the State Law Update Memo. The changes to this law will include the repeal of the requirement to report annually to the Governor, the President of the Senate and the Speaker of the White House whether a pension board has provided social security numbers to any commercial entity during the year. She commented that all the forms will be updated to exclude social security numbers. Ms. Jensen went through and reviewed all the revisions that are taking place to the Ordinance: • added the language in regarding members who leave for service will be credited with time for up to 5 years • updated the definition of a firefighter and salary • increased the Trustees terms to 4 years • added the language in to be able to invest in anything written in the IPG • removed the language that was specific about investments • added language in about the scrutinized companies • added language in regarding the termination of the plan (incorporation from the Town of Lake Park) • added language to allow a member to change their beneficiary up to two times after retirement • added the new HEART provisions • added the new clause in that will allow a member to elect contingent beneficiaries up to two times • added language in regarding cases were benefits can be paid to anyone else but the retiree • added language regarding buybacks and that they do no count towards vesting • cleaned up the language regarding the DROP plan. MOTION: Mr. Barone made a motion to approve the Ordinance amendments as presented and to authorize Ms. Bonni Jensen to present the amendments to the City Council. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4 -0. Ms. Jensen wanted to notify the Board that she received a call from Mitch Bears who is the attorney for George Mamick. He notified her that Mr. Mamick has not been paying him the money that was agreed upon. Ms. Jensen briefly reviewed the case and explained that Mr. Mamick is on a disability and he agreed to pay Mr. Bears a portion of his pension to him on a monthly basis as Mr. Bears was the attorney who represented him in his disability case. Mr. Mamick will be going to a hearing regarding this situation and Ms. Jensen just wanted the Board to be aware of what was going on even though they can not take any action. Ms. Jensen explained that the IRS has issued a new tax notice. This notice will apply to members who take distributions from their DROP account or a refund if contributions. This notice is required to use by the end of 2009. Minutes 10 -29 -09 - Palm Beach Gardens Police.doc Page 4of5 MINUTES MOTION: Mr. Sidey made a motion to approve the minutes from the September 3, 2009 regular meeting. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4 -0. DISBURSEMENTS APPROVALS MOTION: Mr. Barone made a motion to approve the disbursements. SECOND: Mr. Sidey seconded the motion. CARRIED: The motion carried unanimously 4 -0 BENEFIT APPROVALS MOTION: Mr. Sidey made a motion to approve the benefit approvals for Shirley Feltz who is the widow of Sam Nasca. SECOND: Mr. Barone seconded the motion. CARRIED: The motion carried unanimously 4 -0 OLD BUSINESS NA OTHER BUSINESS Ms. Spencer commented that he received a letter from GRS regarding the calculations of any changed beneficiaries. Ms. Jensen explained that once the amended Ordinance is passed, then members will be allowed to change their beneficiaries and the member will have to pay for the recalculation of their benefit. Lastly the Board reviewed the 2010 meeting dates. Ms. Ross commented that the Commissions Chambers would not be available on Thursday January 28. 2010 at 9AM, so the Board moved the January meeting date up one to Wednesday January 27, 2010 at 9AM. AJOURN There being no further business, and the future meetings are scheduled for the last Thursday of the first month of the quarter. The next regular meeting was rescheduled for Wednesday January 27, 2010 at 9AM; the Trustees officially adjourned the meeting at 11:28AM. Respectfully submitted, DAVID PIERSON, Secretary Minutes 10 -29 -09 - Palm Beach Gardens Police.doc Page 5of5