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
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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.
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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.
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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