HomeMy WebLinkAboutMinutes Fire Pension 032811PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND
MINUTES OF MEETING HELD
March 28, 2011
A meeting of the Board of Trustees was called to order at 9:10 A.M. at Council
Chambers, Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES
Tom Murphy
Rick Rhodes (9:17 A.M.)
Ed Morej on
Mark Joyce
Donna Wisneski
MINUTES
OTHERS
Margie Adcock, Administrator
Pedro Herrera, Attorney
Troy Brown, Investment Monitor
Brad Armstrong, Actuary
The Board reviewed the minutes of the meeting held January 24, 2011. A motion was
made, seconded and carried 4 -0 to accept the minutes of the meeting held January 24,
2011.
Ms. Wisneski inquired as to whether the Board received any response to the letter it sent
to the City regarding the City's request for information. Mr. Morejon stated that he
received no official response to the letter.
Ms. Wisneski inquired as to whether the organizational chart set out in the response to
RFP from the Administrator was current. Ms. Adcock advised that she would provide the
Board with a current organizational chart.
The Board reviewed the minutes of the meeting held February 11, 2011. A motion was
made, seconded and carried 4 -0 to accept the minutes of the meeting held February 11,
2011.
Rick Rhodes entered the meeting.
ACTUARY REPORT
Brad Armstrong appeared before the Board. He presented the September 30, 2010
Actuarial Valuation. He stated that the principal sources of experience gains and losses
during the fiscal year from October 1, 2009 to September 30, 2010 were: a gain of
approximately $1.7 million due to a .7 average salary increase versus an expected salary
increase of 5.1 %; a loss of approximately $1.5 million due to the rate of return on the
value of assets of 3.0% versus the assumption of 8.25% gross; and a loss of
approximately $.6 million due to 0 terminations versus the 4.1 expected. Mr. Armstrong
reported that the Share Accounts totaled $5,456,393 as of September 30, 2010 with 117
members. He stated that the assets and methods should be reviewed again prior to the
September 30, 2011 Valuation. He stated that the funding value of assets is $2.2 million
greater than the market value of assets as of September 30, 2010 because of the
investment losses not yet recognized, noting that the smoothing is 4 years. The funded
ratio increased from 59.7% to 63.2% excluding the Share Accounts. If the Share
Accounts were included, the funded ratio increased from 63.5 to 74.3 %.
Mr. Armstrong discussed the contribution requirement. He stated that the City
contribution requirement for the fiscal year beginning October 1, 2011 is $3,974,487.
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There was further discussion on the funded ratio. Mr. Armstrong stated that the funded
ratio for the Fund is probably below the median compared to other pension plans.
However, because the cash flow obligations for the Fund are quite small, the trend has
been moving favorably toward 100% in the last few years. He stated that one could not
ignore cash flows when looking at the funded ratio. He stated that the Fund's trend is in
the right direction and everything is moving favorably in his opinion. There was
discussion on the Fund's assumed rate of return of 8.25 %. Mr. Armstrong noted that the
assumed rate of return for this Plan is a little misleading, as at first blush it appears that
the Fund's assumed rate of return is 8.25% gross. However, this Fund has at least 50
basis points of conservatism compared to those plans with a 7.5% and 8% net investment
return assumption. As such, this Fund is in line where most of those net assumptions are.
A motion was made, seconded and carried 5 -0 to approve the September 30, 2010
Valuation. A motion was made, seconded and carried 5 -0 to provide the City with a final
copy of the Actuarial Valuation.
There was discussion on the actuarial assumptions. Mr. Armstrong stated that with
respect to mortality, there is not enough data to be credible. He would look at doing an
experience review versus an experience study. If the Board would like to review the
assumptions, he would do nothing more elaborate that what he did 3 -4 years ago. It
would also depend on when the Board would want to adopt the new assumptions. The
Board could adopt them to take effect with this Valuation, the 2011 Valuation, or some
but not all of the assumptions at the point of the Board's choosing. If the Board would
like to review the assumptions, he will draft a letter for consideration at the next meeting.
There was a lengthy discussion. A motion was made, seconded and carried 5 -0 to
authorize the Actuary to perform an experience review of the actuarial assumptions and
methods related to the Valuation not to exceed the cost of the last experience review.
It was noted that Kevin Mitchell had contacted the Board advising that he was told that
his disability payment would be increased after ten years due to an offset for a workers'
compensation settlement. The Board reviewed the background of the matter. It was
noted that there were two letters from the Actuary at the time dated January 28, 2000 and
May 12, 2000. It is unclear whether the Board at the time of the second letter considered
that letter or not, as there was no reference in any minutes from Board meetings during
that time that referenced the matter. Mr. Herrera stated that it is the Board's role to pay
benefits under the Plan. He stated that he thinks the Board's current Actuary should
calculate what the benefit should be. A motion was made, seconded and carried 5 -0 to
have the current Actuary recalculate the disability benefit due Mr. Mitchell. A motion
was made, seconded and carried 5 -0 to have the Chair call a special meeting if the
recalculation is done before the next regular meeting.
Brad Armstrong departed the meeting.
INVESTMENT MONITOR REPORT
Troy Brown appeared before the Board. He discussed the international exposure. He
stated that the current Investment Policy Statement provides for a maximum on
international exposure of 10% at cost and 15% at market. He stated that the Fund is
currently out of compliance with the Investment Policy Statement as the Fund has 16% at
market and the maximum in the Statement is 15 %. Mr. Herrera stated that the Ordinance
provides a maximum of 25% at market. Mr. Brown recommended that the Board revise
the Investment Policy Statement to change the maximum to 25% at market. He stated that
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he would remove the cost basis language all together. Mr. Herrera stated that it appears
to have just been an oversight.
There was discussion on the use of a transition manager. Mr. Brown stated that the Fund
does have commission recapture with ConvergEx. However, their contract for transition
management is quite lengthy. As such, Mr. Bogdahn provided the Chair with a transition
management agreement with GTS. The Chair did not feel comfortable signing that
agreement, as he did not feel it was within the scope of what the Board authorized him to
do from the prior meeting.
There was discussion on the representatives from the Bogdahn Group that are handing
the Fund's account. It was noted that currently Mr. Bogdahn has been the contact for the
Board. It was noted that Mr. Brown attended the last meeting and discussed his way of
relating to the Board. The Board consensus was to have Mr. Brown as the representative
from the Bogdahn Group handle this account going forward.
There was further discussion on the Investment Policy Statement. Mr. Herrera stated that
legally he does not like to see the Fund out of compliance. However, he thinks it was just
an oversight. The Board changed the Ordinance with that intention. He is comfortable
holding off for 31 days for the Policy to be effective. Mr. Rhodes pointed out that Mr.
Bogdahn did advise the Board that they would need to revise the Statement after the
Ordinance was revised. The Ordinance was recently revised and at that time the Fund
was not over the 10% maximum. A motion was made, seconded and carried 5 -0 to revise
the Investment Policy Statement to allow for up to 25% in international at market. Mr.
Brown stated that he would provide the revised Statement prior to the next meeting for
Board review. Mr. Herrera stated that the change would become effective 31 days from
today.
There was further discussion on transition management. Mr. Herrera stated that he has
worked with GTS before and does have some additional language he would want to
include in the agreement. He has worked with ConvergEx as well. There was a lengthy
discussion. A motion was made, seconded and carried 5 -0 to negotiate an agreement with
ConvergEx and forward that agreement to the Chair to execute.
Mr. Brown stated that he would recommend engaging a secondary recapture manager, as
Dana has not traded with ConvergEx at all in the past year. Rather, Dana uses CAPIS. A
motion was made, seconded and carried 5 -0 to authorize the Monitor to bring back to the
next meeting information for engaging CAPIS as a recapture manager.
Ms. Wisneski stated that she had previously requested that Mr. Bogdahn provide a
monthly cash balance on all accounts. Mr. Brown stated that he would provide
information on the cash in the accounts at every meeting.
Mr. Brown discussed Manning and Napier and noted that they have broadened their
policy guidelines to increase the limit of 25% in emerging markets to 35 %. Mr. Brown
stated that he was fine with that.
Mr. Brown provided an update on the performance of the Fund. The total market value
of the Fund as of February 28, 2011 was $39,074,028.
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ATTORNEY REPORT
Mr. Herrera discussed the status of the proposed IRS Ordinance. He stated that he did not
have any new information. Mr. Morej on stated that the City has not moved forward on it
yet. Ms. Wisneski stated that she would inquire as to where it is in the process.
Mr. Herrera discussed the status of the IRS Determination Letter. He stated that the IRS
has approved all of the changes as timely, so there will be no penalties or fees incurred by
the Fund. The Letter has now been forwarded to the Determination Letter Department
within the IRS.
Mr. Herrera provided a Legislative update. He discussed SB 1128 and noted that it has
been amended from the language that was first introduced.
ADMINISTRATIVE REPORT
Ms. Adcock presented the Board with the benefit calculation and election for Mark Sean
Olsen. A motion was made, seconded and carried 5 -0 to approve the benefit election.
Ms. Adcock presented the list of disbursements to be made. A motion was made,
seconded and carried 5 -0 to approve the disbursements listed.
OTHER BUSINESS
There was discussion on the payment of the Share Accounts to Participants that separate
service and the timing of such payments. Mr. Herrera stated that the Ordinance provided
that the Share Accounts "shall" be paid out which would mean that the Participant could
not leave the money with the Fund. Ms. Adcock stated that this had been discussed
before with Mr. Sugarman and she would review the minutes from prior meetings for that
information. The matter would be discussed at the next meeting.
There was discussion on the Summary Plan Description. A motion was made, seconded
and carried 5 -0 to authorize the Actuary to update the Summary Plan Description.
There being no further business, the meeting adjourned.
Respectfully submitted,
Tom Murphy, Secretary