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HomeMy WebLinkAboutMinutes Fire Pension 031510PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND MINUTES OF MEETING HELD March 15, 2010 A meeting of the Board of Trustees was called to order at 9:00 A.M. at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES Tom Murphy Rick Rhodes Ed Morej on Donna Wisneski Roy 011iff MINUTES OTHERS Margie Adcock, Administrator Bob Sugarman, Attorney Joe Bogdahn, Investment Monitor Mike Spencer, Investment Manager Brad Armstrong, Actuary The Board reviewed the minutes of the meetings held January 13, 2010 and January 25, 2010. A motion was made, seconded and carried 5 -0 to accept the minutes of the meetings held January 13, 2010 and January 25, 2010. ACTUARY REPORT Brad Armstrong appeared before the Board. He presented the September 30, 2009 Actuarial Valuation which determines contributions for the fiscal year beginning October 1, 2010. He stated that the Fund faired relatively well. Virtually every other fund he works with, locally and nationally, did not fair as well. He stated that it was a challenging year for the investment markets, especially the quarter ending December 31, 2008. He stated that the principal sources of experience gains and losses were: a gain of approximately $1.1 million due to a 2.8 average salary increase versus an expected salary increase of 5.2 %; a loss of approximately $1.4 million due to the rate of return on the value of assets of 2.3% versus the assumption of 8.25% gross; and a loss of approximately $.6 million due to 0 terminations versus the 4.6 expected. Mr. Armstrong discussed the contribution requirement. He stated that the City contribution requirement increased by 1.26% of payroll to 34.99% of payroll or $3,745,497. The Share Accounts totaled $4,664,308 as of September 30, 2009 with 118 members. The funded ratio increased from 56.8% to 59.7% excluding the Share Accounts. If the Share Accounts were included, the funded ratio increased from 61% to 63.5 %. Mr. Armstrong reviewed the derivation of funding value of assets and discussed the four -year smoothing. There was discussion on the effect of turnover and the possible decrease in the number of members in the Plan. A motion was made, seconded and carried 5 -0 to approve the September 30, 2009 Valuation. There was then discussion on the Share Accounts. Mr. Armstrong provided Share Account Statements for the terminated vested and DROP Participants. There was discussion on how long a Participant could leave their Share Account money in the Fund. 2 It was noted that DROP Participants are active firefighters so they would continue to get Share Account allocations. With respect to terminated vested Participants, they receive allocations through their date of termination of employment. However the Ordinance is not clear if they have to take their Share Account at termination of employment or if they can leave it in the Plan. Mr. Sugarman stated that he reviewed the Plan and the Ordinance provides that the Share Account is "payable ", not "paid ". Therefore, the Share Account does not have to be paid out when they terminate employment. There was discussion on the pros and cons of allowing Participants to leave their Share Account monies in the Plan once they terminate employment. There was a lengthy discussion. It was noted that there was no need to make a decision at this time. The Board decided that they wanted to discuss this matter further at a future meeting. There was further discussion regarding the concerns of the service providers in having a forced distribution upon separation of employment. Mr. Sugarman stated that he would rather have the Board get rid of the liability once a Participant separates from service. He would not want a Participant to be unhappy with the investment returns that they are receiving with the Board. However he could deal with his concern by having the Participants sign a waiver. It was noted that the current practice is that the Share Account monies are payable upon request of the Participants. There was more lengthy discussion. It was noted that the Actuary could do a final calculation of a Participant's Share Account balance. The Board would then approve the calculation prior to payment. If that were the case, it would take about 60 days past the end of the quarter or five months after termination from employment before payment could be made. Mr. Sugarman stated that he would work on an Ordinance to reflect this. Further discussion took place. The Board decided that they wanted to look at this issue more. A motion was made seconded an d carried 5 -0 to table this matter for further discussion at a future meeting. Mr. Armstrong provided the impact statement of closing the Plan to new hires and allowing existing members to transfer to FRS. He reviewed the impact statement dated February 19, 2010. The Board reviewed the current contract with the Actuary. It was noted that the contract had a term of October 1, 2005 to September 30, 2008 and is now a year -to -year contract. If the Actuary would like to adjust the contract, he should present a proposal to the Board. Mr. Armstrong stated that he would prepare a proposed fee schedule for upcoming years. Brad Armstrong departed the meeting. INVESTMENT MANAGER REPORT (RBC GLOBAL ASSET MANAGEMENT) Mike Spencer appeared before the Board. He stated that they used to be Voyageur Asset Management. He discussed the name change. He stated that there was no ownership change. They have always been owned by RBC Global Asset Management. They extended branding to all of the subsidiary companies. There have been no investment management changes. Mr. Spencer discussed the international equity product. He 3 discussed their objective, which is to indemnify the best values in the world. They look for cash flow. He reviewed performance as of February 28, 2010. For the year to date the portfolio was down 2.93% while the EAFE was down 5.05 %. For the quarter ending December 31, 2009, the portfolio was up 1.53% while the EAFE was up 2.23 %. For the calendar year 2009, the portfolio was up 53.48% while the EAFE was up 32.45 %. Since inception of January 1, 2006, the portfolio was up .34% while he EAFE was up the same. Mr. Spencer reviewed calendar year 2008. He stated that hit was a very bad year. They owned a lot of Japanese companies that were not involved in global trade. They had a huge weighting in Japan at the end of 2008. They were good companies and did well, but the overall market was dropping. They sold almost one -half of Japanese holdings and reinvested the cash slowly over a two -month period. They deployed cash back into companies they already had. He reviewed their buys and sells in 2009. He discussed their 2009 strategy. He discussed their outlook. He thinks they will have more turnover than usual. They will do some selling at the end of the first quarter so they will have more cash in the account. They believe that Asia is the most attractive place o put the money right now. Mike Spencer departed the meeting. INVESTMENT MONITOR REPORT Joe Bogdahn appeared before the Board. He stated that he reviewed performance for the quarter ending December 31, 2009 at the last meeting. There was discussion at the last meeting on the American Core Realty Fund. He provided information on the quarter ending December 31, 2009 and the calendar year 2009 for American Realty. He reviewed the fund diversification. He reviewed property type, geographic region and property size. He stated that he was not displeased with American Realty at all. Over the three -year period they are in the top quartile of their peer group. He thinks the market is in the bottom end of the trough of real estate. For those plans that do not have real estate, now is the time to add exposure to that. He thinks it might be a good time to add to real estate and would take the money from fixed income. He thinks it might be the end of the year before they were to see a rebound. He stated that for the next meeting he would bring an action plan and would discuss with American Realty their call procedure. He also discussed the possibility of possibly adding a different real estate manager, such as Intercontinental. He thinks the two mangers would blend well together. Mr. Bogdahn discussed the Revised Investment Policy Statement (IPS). He provided a revised IPS based on discussion at the last meeting and reviewed the Statement. There was a lengthy discussion on the various changes. The Board stated that they wanted to see the changes in legislative style so they can see what language was stricken and what language was added. Mr. Bogdahn stated that he would provide the requested information for the next meeting. Mr. Bogdahn stated that at the next meeting he would discuss the peer group rankings for the three and five -year time periods for total equities and Dana. He stated that total equity is fine, but the Dana Core for the three and five year time periods is below the 4 median and the Dana Growth is below the median for the five year period. He will provide a report for the next meeting. ATTORNEY REPORT Mr. Sugarman discussed the status of the revised Ordinance. He stated that he sent it to the City Attorney and has not received a response as of yet. Mr. Morej on stated that he wanted to get the exact dates that the proposed Ordinance was sent to the City Attorney, as the Board is getting no response form the City. Mr. Sugarman stated that it was sent to the City Attorney by email on March 4. Mr. Morej on noted that the Police changes went through about a month ago. The Board discussed holding off on the IPS to wait for the Ordinance to pass because the IPS will just need to be changed once the Ordinance passes. A motion was made, seconded and carried 5 -0 to table the IPS until the proposed Ordinance passes. Mr. Sugarman stated that he revised the Agreement with the Investment Monitor. He stated that the Agreement is in proper legal form and is ready for execution. A motion was made, seconded and carried 5 -0 to accept the Agreement with the Investment Monitor. Mr. Sugarman departed the meeting. ADMINISTRATIVE REPORT Ms. Adcock provided the final Audit, Governance Letter and Representation Letter she received from Steve Gordon. Ms. Wisneski stated that she reviewed her concerns and had discussions with Mr. Gordon. She stated that he would do an investment breakout and the Management Discussion and Analysis next year. As far as the Audit there were only minor wording changes and the numbers remained the same. She recommended accepting the Audit, Governance Letter and Representation Letter. A motion was made seconded and carried 5 -0 to accept the Audit, Governance Letter and Representation Letter Ms. Adcock presented the list of disbursements to be made. The Board discussed their concerns about the legal bills and how high they are getting and whether some of the work was asked for by the Board to be done. It was noted that the entry for the last meeting was for $2,400, which looked like it included travel time. Bob Sugarman reentered the meeting. The Board discussed their concerns with Mr. Sugarman. Mr. Sugarman stated that he would take off 2.5 hours from his bill for travel for the last meeting. A motion was made, seconded and carried 5 -0 to approve the disbursements with the deduction of 2.5 hours from the legal bill. OTHER BUSINESS The Board reviewed the status of the disability recipients. Ms. Adcock provided a chart of those receiving disability benefits. It was noted that anyone that feels there is an issue with any disability recipient could call the Attorney directly to investigate. Mr. Sugarman discussed the process of reviewing the disability recipients. He noted that in this City a person must be reemployed in order to lose their pension benefits. The Board reviewed the disability recipients. There was a lengthy discussion. A motion was made, seconded and carried 5 -0 to table this matter until the next meeting. There being no further business, the meeting adjourned. Respectfully submitted, Tom Murphy, Secretary