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HomeMy WebLinkAboutMinutes Fire Pension 082106PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND MINUTES OF MEETING HELD August 21, 2006 A meeting of the Board of Trustees was called to order at 11:00 A.M. at Station 3, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Richard Beladino Margie Adcock, Scott Baur & Bonnie Lindberg, Administrator Ed Morejon Robert Sugarman, Attorney Tom Murphy (9:45 A.M.) Joe Bogdahn, Investment Monitor Steve Rogers Cindy Farrow, Custodian Philip Buttaravoli (12:25 A.M.) MINUTES The Board reviewed the minutes of the meetings held May 18, 2006 and June 8, 2006. Steve Rogers stated that he thought the last paragraph of the June 8th minutes did not occur during the meeting, but rather after the meeting concluded. A motion was made, seconded and carried 4 -0 to delete the last paragraph of the June 8, 2006 minutes. A motion was made, seconded and carried 4 -0 to accept the minutes of the meetings held May 18, 2006 and June 8, 2006 as amended. PRESENTATIONS ON ADMINISTRATIVE RECORDKEEPING PROPOSAL Scott Baur appeared before the Board. He stated that they have worked for the Board since 2000. He noted that they were recently hired by the Palm Beach Gardens Police Pension Plan. He discussed the additional services that they do for other pension plans but that are not done for this Plan right now. He stated that he understood that the circumstances might have changed for the Plan and that the Board might desire to have some of those additional services. He reviewed the basic plan administration that is done for the Board at this time. He stated that they are not doing the recordkeeping for the Board now. He stated that for the Police Pension Plan they will be processing the pension payments to retirees, noting that AmSouth currently does the pension payments for this Plan. He discussed on -line access and the background of the staff. He provided the Board with a monthly fee proposal of $1,625 plus the cost of set up for the system which he estimated would be about $3,200. There was a lengthy discussion. Mr. Sugarman stated that the proposal was for a different level of service to the members of the Plan. He noted that some plans want to be able to give more information to their members. The Board asked if there would be an increase in the fee if the Board did not want the additional services but wanted to keep the basis administration. Mr. Baur stated that he would propose to increase the monthly fee for the basic administration to $800. Mr. Rogers stated that although he did think the services were a great idea, he did not think it was the right time to add them as they were not really needed now. Mr. Morej on disagreed noting that he thought it would be a benefit to the members and the Police Pension Plan was doing it. A motion was made to provide the members with the 2 additional services. There was no second to the motion so the motion died. The Board asked that this be put on the agenda for the next meeting. CUSTODIAN REPORT Cynthia Farrow appeared before the Board. She stated that she was the client service representative and wanted to introduce herself to the Board. She stated that AmSouth and Regions Bank would be merging. She noted that there would be a name change when the merger occurs. She stated that the shareholders still have to vote and she anticipated that would be done in the fourth quarter. Mr. Sugarman presented an Amendment to the Custodial Agreement to add a new duty of filing proofs of claim. A motion was made, seconded and carried 4 -0 to approve the Amendment to the Custodial Agreement. Scott Baur departed the meeting. INVESTMENT MONITOR REPORT Joe Bogdahn appeared before the Board. He discussed the investment performance for the quarter ending June 30, 2006. He noted that the Fund transferred the first capital call to American Realty on July 5. The Fund was down .17% for the quarter while the benchmark was down .86 %. For the one year, the Fund was up 10.06% while the benchmark was up 7.97 %. The total market value of the Fund as of June 30, 2006 was $15,787,000. The asset allocation at market was 62% in equities; 34% in fixed income; and 4% in cash. Philip Buttaravoli entered the meeting. Mr. Bogdahn reported that the fixed income portion of the portfolio was up .04% for the quarter while the benchmark was up .21 %. He stated that David West went to Milwaukee to visit Dana. The overall response is that they have confidence in the bond portfolio. Dana does have some ADRs in the portfolio. He stated that when they modified these adjustments they made historic adjustments versus just for that time period. He also discussed the bond universe comparison and noted that they are working on creating a more tailored peer universe to compare them to. The net result is that it will improve their performance slightly. Mr. Bogdahn reported that the total market value of the total equity portfolio was $9,808,000. Equities for the quarter were down .32% versus the benchmark which was down 1.54 %. The equity portfolio managed by Dana was down .21% for the quarter while the benchmark was down 1.98 %. The total market value of the equity portfolio managed by Dana was $8,456,000. The international equities managed by Freedom were down .98% for the quarter while the benchmark was up .94 %. The total market value of the international equity portfolio managed by Freedom was $1,351,000. 3 Mr. Bogdahn stated that with respect to the bond portfolio managed by Dana, without a doubt Dana has done exactly what they have said they would do. The question is whether that is what the Board wants them to do going forward. Mr. Bogdahn stated that given where the market is at in the interest rate cycle, to make a change now would not be wise. He will continue to review this on a quarterly basis. ANALYSIS OF ACTUARIAL ASSUMPTIONS & FUNDING OF PBG DB PLANS The Board was provided with a memorandum from Bolton Partners on their analysis of actuarial assumptions and funding of the Palm Beach Gardens Defined Benefit Plans. Mr. Bogdahn provided a response to their memorandum noting that making the changes suggested by the City's Actuary would increase the City's cost. He noted that 8% was the typical interest rate assumption and noted that of their 117 other clients, 8% was the average. He stated that if they were just using index returns, then they would need to reduce the assumption. However, looking at Dana and Freedom and their long term track records, they have outperformed the index about 4% per year for the last 15 years. If the Fund can add some value through active management with managers the Fund has, he is a little more comfortable with an assumption rate above 7.5 %. He noted that the Board has positioned the portfolio to create a portfolio that will do better than the indices. He stated that he did to disagree that the consensus forecast is for continuing economic headwinds. If the Board can reduce the assumption rate from 8.5% to 8% and make it palatable to the City then it makes it easier for the Board to manage the Fund. Mr. Bogdahn noted that this is more of an actuarial issue. From the investment side he stated that there is no reason to think that the Fund would not continue to perform the way it has. He does not think the Fund will see three negative years again back to back to back. There was a lengthy discussion. Mr. Sugarman stated that the law is clear that the setting of the actuarial assumption for the Plan is within the Board's solid discretion based on advice from the Actuary and Monitor. He noted that Bolton Partners is a well respected firm. He stated that the Board should invite the City to attend the next meeting and make a presentation on what they are asking the Board to do. The Board should also have Brad Armstrong attend the meeting, as well as Mr. Bogdahn. Mr. Rogers stated that a lot of the members are asking to increase the multiplier to match that of the police. He asked for permission to have Brad Armstrong do a study on the cost of increasing the multiplier. A motion was made, seconded and carried 5 -0 to give permission to Steve Rogers to contact Brad Armstrong to do a study on the cost of increasing the multiplier. ATTORNEY REPORT Mr. Sugarman reported on the status of the disability application of Shawn Thurman. He provided a report from the cardiologist. He suggested that the Board schedule this for hearing at the next meeting and invite Mr. Thurman and his attorney, Mr. Sicking, to attend. Mr. Sugarman stated that his office is performing a final review of the Summary Plan Description and will have a final document for approval at the next meeting. 4 Mr. Sugarman stated that he reviewed and worked out agreements with the three securities monitoring firms. Ms. Adcock advised that she received one agreement from Lerach Coughlin that the Board needed to sign. It was noted that the other two agreements were executed with Mr. Sugarman. Mr. Sugarman reported that the President signed the Pension Protection Act last week. The Act reduces the age for early withdrawal penalties from 55 to 50. The Act also permits current and future retirees to designate up to $3,000 to pay for health insurance or long term care which amount would be pre -tax. Mr. Morejon discussed a matter which could possibly save the City money and help the members. It would involve cashing in some unused time. He noted that he discussed it with the Finance Director and the City is interested. He requested permission to set up a meeting with the Finance Director and Mr. Sugarman to discuss the matter. A motion was made, seconded and carried 5 -0 to grant authorization to move forward with this matter. Mr. Morejon stated that he would like to pursue obtaining a certification from the FPPTA. Mr. Murphy stated that he would like to do so as well. It was noted that it would be a benefit to them as Board Members as well as to the Plan. A motion was made, seconded and carried 5 -0 to allow Mr. Morejon and Mr. Murphy to obtain their certification from the FPPTA. ADMINISTRATIVE REPORT Margie 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 being no further business, the meeting adjourned at 1:50 p.m. Respectfully submitted, Ed Morejon, Secretary