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HomeMy WebLinkAboutMinutes Fire Pension 111504PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND MINUTES OF MEETING HELD November 15, 2004 A meeting of the Board of Trustees was called to order at 11:10 A.M. at Station 3, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Ed Morejon Margie Adcock, Pension Resource Center, Tom Murphy Administrative Manager Steve Rogers Joe Bodgahn, Bogdahn Consulting, Richard Beladino Investment Monitor Mike Dana, Investment Manager Robert Sugarman, Attorney (11:20 A.M.) TRUSTEE ATTENDANCE The Board noted that Dr. Buttaravoli was absent again. Ms. Adcock reported that he left a message that he would be unable to attend as he was working at the hospital. The Board thought it was necessary to find out his intentions on whether he wished to stay on the Board. The Board asked Tom Murphy to speak with Dr. Buttaravoli regarding the matter. MINUTES The Board reviewed the minutes of the meeting held August 16, 2004. The Board noted a correction under the "Minutes" portion concerning the 2% of pay. It was noted that it should read that it is 2% of pay for the cost of the additional benefits, not to pay the cost of a COLA. Robert Sugarman entered. The Board asked Mr. Sugarman about the guidelines on Trustee attendance at meetings. Mr. Sugarman noted that the firefighters serve a two year term, the 5th Trustee serves a two year term, and the City appointees serve at the pleasure of the City Council. AMSOUTH: DISCUSSION ON FEE INCREASE It was noted that the representative from AmSouth Bank was not available to attend the meeting today to discuss the proposed fee increase. Mr. Bogdahn stated that he was working with AmSouth on the matter to pull back the fee increase on some funds. However, he had received no information regarding that for this Fund. Mr. Sugarman noted that the original agreement with AmSouth was effective May 2002 and had a two year fee guarantee. Additionally there is a six month advance notice of any fee increase. Mr. Sugarman stated that the notice is dated September 20, 2004, so the soonest that the fee could be increased was March 20, 2005. Mr. Sugarman recommended that a letter be 2 sent advising that the fee increase is rejected and in violation of the agreement. The Board directed Mr. Sugarman to send a letter to AmSouth. The Board also asked Mr. Bogdahn and Ms. Adcock to see if they could obtain informal quotes from other custodians. INVESTMENT MANAGER REPORT Mike Dana appeared before the Board to discuss the investment performance. Mr. Dana reported that the asset allocation as of September 30, 2004 was 67% in equities; 30% in bonds; and the remainder in cash. He stated that the Fund was up .47% for the quarter and 10.66% for the fiscal year to date, while the benchmark was down .39% and up 9.86% respectively. Equities were down .48% for the quarter while the S& P 500 was down 1.87 %. Bonds were up 2.55% for the quarter while the benchmark was up 2.70 %. Mr. Dana noted that since September 30, 2004 there has been a favorable stock market. The Fund is up 3.53% through November 12, 2004. He stated that he thinks stocks will continue to outperform bonds and the asset allocation of the Fund is set up for that. The total market value of the Fund as of September 30, 2004 was $10,058,451.42. Mr. Dana then reviewed the sector distribution and the current holdings. The Board then asked Mr. Dana if the Fund can maintain the 8.5% actuarial assumption. He responded by saying he was not sure, but looking at history, over the long term stocks have outperformed bonds. Mr. Sugarman noted that Dana signed on to the Investment Guidelines of the Fund that states that performance is expected to equal or exceed 8.5 %. Mr. Dana stated that that is what they will try to do. Mr. Bogdahn noted that in the past couple of years the Fund has exceeded the 8.5% actuarial assumption, although the four year average does not meet the assumption. Over a ten year period the Fund should be able to meet the actuarial assumptions. Mr. Dana stated that the asset allocaitoOn of the Fund should get it to where it wants to be. The Board asked if it would be prudent to set aside money once the Fund reaches the 8.5% assumption. Mr. Bogdahn responded in the negative stated that the Fund needs to pick up additional returns for any negative years. The Board acknowledged that history indicates that the Fund can meet the 8.5% actuarial assumption, but the Board needs to know that it can do so in the future. Mr. Dana stated that he would not respond to the question. He stated that there is a positive outlook, but that he could not guarantee anything. He did note that there was a bigger risk in the bond market at this time. Mr. Bogdahn noted that the Fund just went over $10 million and that opportunities open up for adding additional asset class and stated that this might be a good time to review asset allocation. The Board stated that it wanted to know if the professionals are comfortable with the 8.5% actuarial assumption and noted that it can not get an answer from Mr. Dana. Mr. Bogdahn stated that he is comfortable with the 8.5% actuarial assumption. Mr. Sugarman stated that the professionals that can make the Board feel comfortable with the 8.5% actuarial assumption is the Manager who is not willing to do it; the Actuary based on historical information; and the Monitor based on asset allocation. The Board decided to have a special meeting on asset allocation on January 12, 2005 at 11:30 a.m. The Board asked Ms. Adcock to send letters to the Mayor, Finance Director, City Manager, Fire Chief and Union Representative to invite them to the special meeting. SECURITES LITIGATION Tom Murphy stated that he received a statement from the Vice Mayor regarding MetLife. Mr. Sugarman stated that he would call the attorney so that the Vice Mayor would be satisfied regarding the MetLife case. Mike Dana departed the meeting. INVESTMENT MONITOR REPORT Joe Bogdahn appeared before the Board to discuss investment performance for the quarter ending September 30, 2004. The Fund was up .39% for the quarter while the benchmark was down .39 %. The Fund was up 10.51% for the year while the benchmark was up 9.84 %. The total market value of the Fund as of September 30, 2004 was $10,055,000. The asset allocation at market was 66% in equities; 31% in fixed income; and 3% in cash. The fixed income was up 2.58% for the quarter while the benchmark was up 2.70 %. Equities for the quarter were down .60% versus the S &P 500 which was down 1.87 %. Mr. Bogdahn stated that Dana has a more defensive posture with respect to the fixed income. The two year trailing numbers are behind the benchmark. Mr. Bogdahn stated that he would look at the last two quarters of 2002 and why Dana has trailed. Mr. Bogdahn then briefly discussed additional asset classes such as REITs or commingled funds who own real estate. Mr. Sugarman noted that the Ordinance does not permit investments in real estate but REITs are permitted. Mr. Bogdahn recommended that the Ordinance be changed to allow real estate up to 10% or 15% of the portfolio. Mr. Sugarman stated that he would prepare an Ordinance to allow up to 15% in real estate. It was noted that real estate is not a liquid investment where one can buy right in or get their money right out. The Board asked Mr. Sugarman to review the Ordinance to see if anything else should be added at this point. ATTORNEY REPORT Mr. Sugarman provided an opinion letter to the Board regarding recovery from disability dated September 22, 2004. Mr. Sugarman reported on the status of the disabilities that are under review. He noted that two individuals postponed their examinations and one examination was just completed at the end of last month. Mr. Sugarman then discussed a new service that they are rendering to the members dealing with divorce. He stated that they are putting together a divorce kit which would include in the retainer one conference call with both attorneys. He stated that he wanted permission to charge if they go beyond the one conference call. Additionally, he stated that there can be an additional charge to cost the cover to set up the spouse for payment under an Income Deduction Order. A motion as made, seconded and carried 4 -0 to 4 charge $150 per occurrence to cover the cost to set up the spouse for payment under an Income Deduction Order. MINUTES CONTINUED A motion was made, seconded and carried 4 -0 to accept the minutes of the meeting held November 15, 2004 as corrected. ADMINISTRATIVE REPORT Margie Adcock presented the list of disbursements to be made. A motion was made, seconded and carried 4 -0 to approve the disbursements listed. Ms. Adcock reported that the Fiduciary Liability Insurance was up for renewal and provided the Board with the renewal quote. A motion was made, seconded and carried 4- 0 to renew the Fiduciary Liability Insurance. OTHER BUSINESS Ed Morejon then discussed additional benefit options. He stated that he went to the membership and asked for their input. He stated that the results were that the order of the additional benefits the membership wanted were as follows: an increased multiplier, medical benefits, and final average compensation. Mr. Sugarman stated that the benefits would need to be cost out. Mr. Sugarman stated the Pembroke Pines has made changes with the help of a gentleman named Richie Moss. Mr. Morejon stated that he would contact Mr. Moss and report back to the Board with a cost proposal. There being no further business, and the next meetings being scheduled for Wednesday, January 12, 2005 at 11:30 A.M. and Tuesday, February 22, 2005 at 11:00 A.M., the meeting adjourned at 2:00 P.M. Respectfully submitted, Ed Morejon, Secretary