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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. 2 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 3 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. 4 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