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HomeMy WebLinkAboutMinutes Police Pension 111606Ar City of Palm Beach Gardens Police officers' Pension Fund Minutes of the Meeting meld November 16, 2006 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers' Pension Fund was called to order at 9:05 AM by Chairman Jay Spencer in the Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail, Palm Beach Gardens, Florida. TRUSTEES PRESENT OTHERS PRESENT Jay Spencer, Chairman Peter Alfele, Cherry, Bekaert & Holland, L.L.P. David Pierson, Secretary Steve Palmquist, Gabriel, Roeder, Smith & Company Jules Barone Wayne Owen, RhumbLine Advisers Brad Seidensticker John McCann, GRS Asset Consulting Wayne Sidey Bonni Jensen, Hanson, Perry, & Jensen, P.A. Scott Baur, Pension Resource Center, LLC Bonnie Lindberg, Pension Resource Center, LLC MINUTES MOTION: Brad Seidensticker made a motion to approve the minutes of the meeting held on August 11th, 2006. SECOND: David Pierson seconded. CARRIED: The motion carried unanimously. ELECTION OF FIFTH TRUSTEE Chairman Spencer asked Wayne Sidey if he would like to continue to serve as fifth trustee on the Board. Mr. Sidey has interest to continue to serve. Wayne becomes the third Police Officer on the Board and Chairman Spencer does not want the balance to appear unfair and wants to make sure that everyone is comfortable with this nomination. MOTION: Brad Seidensticker made a motion to nominate Wayne Sidey to serve as Fifth Trustee. SECOND: David Pierson seconded. CARRIED: The motion carried unarniously. Chairman Spencer thanked David Pierson and Brad Seidensticker for agreeing to serve another term as Trustees. The reappointments will go before council on December 7, 2006 INVESTMENT MANAGER REPO RhumbLine Advisers — Wayne Owen Mr. Owen reviewed the three index strategies for the plan: S&P 500 Pooled Index Fund (Large -Cap Core), S &P 400 Pooled Index Fund (Mid -Cap Core) and S &P 600 Pooled Index Fund (Small -Cap Core). RhumbLine total assets were. $11,902,737.67 as of October 31, 2006. 'i ' $ 3C 11 L 6-36 Palm F«^_ q Gardens ' li b? The S &P 500 Large -Cap matched the index return of 5.6710 (best Q3 return for S &P since 1997) and the October return is up at 3.26 %. RhumbLine has successfully managed changes to index. The S &P 500 Portfolio has a total of 30 participants. Mr. Owen reviewed the top holdings performance, as well as the best and worst performances in index. Fund trades very efficiently at an average rate of 1.76 per share. The S &P 400 Mid -Cap Portfolio had returns for October of 4.15% versus the index at 4.16% and return is at 17.49% since inception (November 20, 2002). The fund has a total of 20 participants. Mr. Owen again reviewed the top holdings performance, as well as the best and worst performances In index. This fund traded at an average rate of 2.13 per share. The S &P 600 Small -Cap Portfolio had returns for October of 4.96% versus the index at 4.95% and return is at 15.961D/o since inception (October 14, 2003). The fund has a total of 7 participants. Mr. Owen again reviewed the top holdings performance, as well as the best and worst performances in index. This fund traded at an average rate of 2.4� per share. Mr. Owen noted that he likes the S &P market since they have a committee that meets frequently to determine and adjust holdings. Mr. Owen then reviewed the article in The Wall Street Journal November 2, 2006 which reports on the Merrill Lynch & Co. report released last month - titled 'Time to Index ?" Mr. Owen then reviewed the Company update and reported that RhumbLine is an employee owned company with $14.5 Billion assets under management. AUDITOR REPQR Cherry, Sekaert >& Holland, L.L.P. - Peter Alfele, CPA Mr. Alfele presented the Financial Statement for September 30, 2005 to the Board. The auditor gives opinion on the financial statement numbers and presentation to conform to GAAP (generally accepted accounting principles) set by GASB (governmental accounting standards board) statement no. 25. The report includes management's discussion and analysis. Mr. Alfele issued an unqualified opinion. He discussed internal controls and the new industry standards to increase awareness of possible fraud in process. Process example given was payments to a new retiree. Plan had total assets of $19,539,635 as of September 30, 2005 up from $16,014,364. The increases were attributed to higher contributions and gains on investments. Mr. Alfele reported that expenses had an increase of 26.5% from 2004. The increase was primarily due to an increase in benefits paid to new retirees in 2005, which was up $154,533 from 2004. Chairman Spencer talked about the timing and release of reports. Mr. Alfele believes he can complete the process next year in January. He noted that Cherry, Bekaert & Holland have addressed staffing and scheduling issues. aae2 o i 7 6 ACTUARIAL VALUATION 'REPORT Gabriel, Roeder, Smith & Company — Steve Palmquist Mr. Palmquist began with review of current assumptions. Siginificant changes would include, possible revisions to earnings assumption and change to entry age normal cost method using 15 -year amortization of bases not frozen entry age cost method using 30 -year amortization of bases. He also considered changes to smoothing of returns, changes to mortality table, retirement rate, salary increase assumption and the inflation assumption. The Hoard discussed salary increase, retirement rates and amortization periods in greater detail. Chairman Spencer would like to be conservative and keep the salary increase at 9 % for one additional year before lowering the assumption. The net impact of changes lowers the required employer contribution from 36.42% of payroll to 34.42% of payroll using 7.5% investment earnings assumption, a reduction of 2% and using 8% investment earnings assumption would lower the required employer contribution of payroll to 30.65 %, a reduction of 5.77 %. Mr. Palmquist prefers the more conservative approach. MOTION: Brad Seidensticker made a motion with exception of delay for one year on salary increase assumption, to change the earnings assumption to 7:S% SECOND: Wayne Sidey seconded. CARRIED: The motion carried unanimously. Ms. Jensen asked for clarification of supplemental benefit. She interprets that beneficiaries should continue to receive (surviving spouse) same benefit without reduction for optional form of benefit payment. Chairman Spencer confirmed that ,was the interpretation. INVESTMENT CQNSULTANT REPORT GRS Asset Consulting Sohn McCann Mr. McCann presented the return of market indices and compliance with investment policy report. He commented that this is a nicely diversified fund. The plan had $21,277 total assets as of September 30, 2006; 55% equities, 45% fixed income and cash. Plan had return of 3.41 % compared to 3.62% benchmark for the quarter and a return of 6.76% compared to 7.08% benchmark for fiscal year. The plan out performed the benchmark 11.26% to 9.36 %u for three years and out performed the benchmark 7.71 % to 6.98 % for five years. There was discussion on possible brokerage account to handle exchange - traded funds (EfFs) and dialogue on active versus passive management. Mr. Pierson also discussed allocation to hedge funds and would like hedge fund information. Mr. McCann will report back to the Board if they find a manager that is currently speaking to a hedge fund manager. Mr. McCann reported that the Mid -Cap index did not perform well. He then reviewed the performance of the International Funds which have done very well for the short term. The Board will consider increasing position to international down the road. Ms. Jensen asked if the Board should be concerned that this represents 11% of the portfolio. Mr. McCann replied that he is not concerned about it. Minutes 11-t")-06 Palm Beach Ga,dens r flice Pa.QC. ?')J, 6 Ms. Jensen then inquired about the fixed income performance checklist that was not in compliance. Mr. McCann replied that he has faith in ICC Capital and thinks they are a great manager. Mr. Pierson asked about the Board taking control of fixed income by purchasing treasury securities. The Board requested that ICC Capital attend the next meeting. ATTORNEY REPORT Hanson, Perry & Jensen, P.A. — Bonni Jensen Ms. Jensen reviewed the proposed Buyback Policy. Chairman Spencer asked about removing the limit on number of years member could purchase once pension becomes vested. He suggested that the member be 100% vested prior to buyback of service. Ms. Jensen will change the policy to reflect that the credit purchased will count for all purposes, except vesting (pending passage of ordinance). Chairman Spencer wants members to have Palm Beach Gardens Police as a career opportunity and not a pension opportunity. Mr. Sidey agrees with the Chairman. The Board would also like to eliminate the chart showing examples of buyback costs. Ms. Jensen will bring back proposed changes to the next meeting. MOTION: David Pierson made a motion to approve the Buyback policy with the proposed changes. SECOND: Wayne Sidey seconded. CARRIED: The motion carried unanimously. The Board had some discussion on pre -tax and post -tax contribution totals in line with payment of benefits and safe harbor. Letter to the Trustees and Ms. Jensen from Samuel Nasca dated November 1, 2006 requesting the Board to consider the monthly health stipend for the retirees receiving disability benefits was received and filed. Ms. Jensen reported that the Summary Description Plan is complete. Chairman Spencer wants to distribute the new guides to members during training. Ms. Jensen then reported on the changes to the Statement of Policy for Trustee Expenses which mirrors the City policy. The food expense is now $40 per day and the miles traveled is $0.445 per mile or the IRS standard mileage rate, whichever is greater. MOTION: David Pierson made a motion to accept the revised Statement of Policy for Trustee Expenses. SECOND: Wayne Sidey seconded. CARRIED: The motion carried unanimously. Ms. Jensen had discussion on the Pension Protection Act of 2006 (PPA). She reviewed the provisions for the $3,000 tax free benefit for deductions from pension remitted to the City for health insurance premiums. Ms. Jensen commented that the Plan can only make deductions back to the City according to the Florida statute. She recommends that members complete a Health Insurance Premium Election Form. Ms. Jensen will contact the HR director to discuss the City age requirement that does not conform to the statute. r DISBURSEMENTS AND BENEFIT APPROVALS There was some discussion on the total amount paid to ICC Capital Management. Mr. Baur explained that this invoice included the current quarter along with last quarter's fee, which had not been reimbursed. Chairman Spencer requested the administrator make one document to include both the disbursements and benefit approvals. MOTION: Brad Seidensticker made a motion to approve the disbursements and the Benefit approvals. SECOND: 3ules Barone seconded. CARRIED: The motion carried unanimously. BANKING LETTER OF RECOMMENDATION Mr. Baur reviewed the Bank Checking Account Comparison spreadsheet that he prepared for the Board. His recommendation is to move the checking account from Bank of America to either BankAtlantic or SunTrust Bank. Mr. Baur commented that SunTrust was not as competitive as BankAtiantic. Mr.. Seidensticker asked what the bank balance runs and Mr. Baur replied that the balance runs between $275K - $300K. MOTION: David Pierson made a motion to move the checking account from Bank of America to BankAtlantic. SECOND: Brad Seidensticker seconded. CARRIED: The motion carried unanimously. ADMINISTRATOR REPORT The Pension Resource Center, 'LLC - Scott Baur Mr. Baur reported that there have been a lot of improvements made to the Resource Centers website www.resourcecenters.com and that content can be made available immediately, if passed electronically. He also discussed the online pension calculator that will be available in the near future. Mr. Baur then gave a status on the transition update. He reported that he is not comfortable using the data that ASI has provided and that he has a meeting with the City next week to discuss obtaining this data directly from them. Mr. Baur is concerned that when ASI received the data that it was not recorded very carefully. He will be talking to the City about the format in which the data is being sent. Chairman Spencer would like for Scott to give an update at the next meeting on how the meeting with the City went. OTHER BUSINESS Chairman Spencer talked about the 4 - 8 hour training for members on pension that he would like to have in the March /April timeframe. He encourages the Board to attend this training. Mr. Baur commented that another fund had a Lifestyle Consultant after retirement at their training that was a success. Mr. Pierson wants to have his address updated to reflect his home address with the State of Florida. Mr. Baur commented that when the next annual report is submitted on 3/15/07 the change would be made. Chairman Spencer inquired on whether or not the Chapter 185 money in the amount of $428K was deposited and asked the administrator to verify with the custodian that the money has been received. Chairman Spencer asked for permission to have Steve Palmquist complete a benefit study reducing the final average compensation from five years to three years. MOTION: Wayne Sidey made a motion to complete a benefit study reducing the final average compensation from five years to three years. SECOND: David Pierson seconded. CARRIED: The motion carried unanimously. SCHEDULE NEXT MEETING The next Meeting was not scheduled. Respectfully submitted, DAVID PIERSON, Secretary