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.
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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
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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.
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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.
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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
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