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Home My WebLink AboutAgenda Fire Pension 091012THE RESOURCE CENTERS, LLC 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 Phone (561) 624-3277 Fax (561) 624-3278 WWW.RESOURCECENTERS.COM PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND Meeting of Monday, September 10, 2012 Location: Unified Services Conference Room, Building Department Palm Beach Gardens City Hall 10500 North Military Trail Palm Beach Gardens, FL 33410 Time: 9:00 A.M. AGENDA 1. Call Meeting to Order 2. RFP Presentations: • Actuary – Foster & Foster (Doug Lozen) • Auditors – o Cherry, Bekaert & Holland – CBH (Jim Burdick) o Goldstein Schechter Koch - GSK (Clement Johns) 3. Investment Monitor Report: The Bogdahn Group (Troy Brown) • 8/31/2012 Portfolio Update • Recommendation for Allocation of 2011 State Money Received 4. Minutes: • Regular Meeting Held on July 16, 2012 5. Attorney Report: Sugarman & Susskind, P.A. (Pedro Herrera) • City’s Request for Actuarial Impact Statement Regarding Pending Ordinance • House Bill 401 Update 6. Administrative Report: Resource Centers (Audrey Ross) • Disbursements 7. Old Business 8. Memo from Division of Retirement Regarding Local Retirement Plans Minimum Funding Basis: Percentage of Payroll versus Fixed Dollar Contributions 9. New Business 10. Other Business 11. Schedule Next Meeting: Monday, November 5, 2012 at 9:00 A.M. 12. Adjourn PLEASE NOTE: Should any interested party seek to appeal any decision made by the Board with respect to any matter considered at such meeting or hearing, he will need a record of the proceedings, and for such purpose he may need to insure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based. In accordance with the Americans With Disabilities Act of 1990, persons needing a special accommodation to participate in this meeting should contact The Resource Centers, LLC no later than four days prior to the meeting. Please direct all correspondence to: Division of Retirement Bureau of Local Retirement Systems PO Box 9000 Tallahassee, Florida 32315-9000 Toll Free: 877.738.5622 ⁄ Tel: 850.488.2784 ⁄ Fax: 850.921.2161 www.frs.MyFlorida.com May 29, 2012 M E M O R A N D U M TO: Florida Local Government Retirement Systems or Plans FROM: Division of Retirement Bureau of Local Retirement Systems SUBJECT: Local Retirement Plans Minimum Funding Basis: Percentage of Payroll Versus Fixed-Dollar Contributions The Division of Retirement performs actuarial reviews of Florida’s local government retirement plans to ensure that they are being funded in an actuarially sound manner in accordance with Part VII of Chapter 112, Florida Statutes. The provisions of section 112.61, Florida Statutes, require in part that, “such retirement systems or plans be managed, administered, operated, and funded in such a manner as to maximize the protection of public employee retirement benefits” and “it is the intent of this act to prohibit the use of any procedure, methodology, or assumptions the effect of which is to transfer to future taxpayers any portion of the costs which may reasonably have been expected to be paid by the current taxpayers.” In 2009, in an effort to ensure compliance with these provisions, the division began requiring that local retirement plan contributions must minimally equal the amount of contributions determined using the percentage-of-payroll method. This was intended to eliminate recurring actuarial losses due to payroll growth underestimation. However, economic conditions since then have led to substantial changes in the allocation of local government resources and the causes of the prior actuarial losses attributable to this issue have largely abated. With several years of experience accumulated to evaluate the effectiveness of the percentage-of-payroll contribution requirement, the division has determined that use of this method is not required for compliance with Part VII of Chapter 112, Florida Statutes. Accordingly, effective immediately, local governments should confer with the retirement board actuary to select and maintain a contribution method (percentage of payroll or fixed dollar contributions) that best fits the funding requirements of the plan and satisfies the legislative intent found in section 112.61, Florida Statutes. The division will continue to monitor all plans for compliance with these provisions. If you have any questions or wish to discuss further, please contact our office and speak to Doug Beckendorf, Joe Edmonds, or Keith Brinkman at (877) 738-5622 or (850) 488-2784. SS:kb The Firm of Choice. www.cbh.com 1 Proposal to Provide Audit Services to City of Palm Beach Gardens Firefighters’ Pension Fund Cherry, Bekaert & Holland, L.L.P. September 10, 2012 The Firm of Choice. www.cbh.com 2 Agenda •Introduction •CB&H Overview •CB&H Florida Practice •Employee Benefit Plan Experience •Service Team •Approach for the Audit •Proposed Fees •Why CB&H? The Firm of Choice. www.cbh.com 3 Introduction Cherry, Bekaert & Holland is pleased to provide our qualifications for audit services to the Fund. We offer: •Strong credentials in serving government pension plans, including Palm Beach Gardens Police Pension Fund •Significant resources •An excellent reputation •Commitment to excellent service and focus on your needs The Firm of Choice. www.cbh.com 4 CB&H Overview •History •Founded in 1947 •25 offices from Miami to Northern Virginia •One of the nation’s largest accounting and consulting firms •Depth of Resources •Significant Florida presence •Network of professionals with specialized expertise •Concentration of government audit experience The Firm of Choice. www.cbh.com 5 CB&H in Florida •Orlando •Tampa •Fort Lauderdale •Miami The Firm of Choice. www.cbh.com 6 CB&H Florida Practice •Strong government and benefit plans practice •Strong specialization in benefit plans •Governmental auditing is the largest segment of our practice •Significant government audit expertise •Professionals with considerable concentration in government auditing •Focused on high quality services provided by experienced professionals The Firm of Choice. www.cbh.com 7 CB&H Florida Government Clients •Orange County •Charlotte County •Hillsborough County •Lee County •Monroe County •City of Haines City •City of North Port •City of Pinellas Park •City of Stuart •Town of Eatonville •Village of Islamorada •Village of Palmetto Bay •School Board of Collier County •School Board of Duval County •School Board of Osceola County •School Board of Polk County •School Board of Sarasota County •School Board of Seminole County •School Board of St Lucie County •Enterprise Florida •LYNX •State of Florida The Firm of Choice. www.cbh.com 8 CB&H Employee Benefit Plan Experience •CB&H has audited employee benefit plans for most of its 65 years of existence •CB&H currently audits over 300 benefit pension plans •Comprehensive services to sponsors of employee benefit plans in the areas of audit, ERISA and IRS compliance •CB&H offers a wide range of plan types: •401K Plans •403B Plans •ESOPs (Employee Stock Ownership Plans) •Defined Benefit Pension Plans •Defined Contribution Plans •Traditional Profit Sharing Plans •Health and Welfare Plans, including VEBAs The Firm of Choice. www.cbh.com 9 CB&H Orlando Office Government Pension Plan Audit Experience •Palm Beach Gardens Police Officers’ Pension Fund •Town of Jupiter Police Officers Retirement Fund •ATU Local 1596 Pension Plan •ATU Local 1577 Pension Plan •Boynton Beach General Employees’ Retirement System •Retirement System for the General Employees of the Utility Board of the City of Key West The Firm of Choice. www.cbh.com 10 Service Team for the Audit of Fund The Firm of Choice. www.cbh.com 11 Service Team Overview •Jim Burdick – Government practice audit partner with over 30 years of government and pension plan experience. •Peter Alfele – Partner with 13 years of diversified experience providing audit and accounting services to a variety of commercial enterprises and public sector entities. He has provided concurring reviews for each of the Florida government pension plans. •Alisa Train – Has over 28 years of audit and accounting experience. •Brandon Redler – Has approximately two years of experience auditing public sector pension plans. The Firm of Choice. www.cbh.com 12 Service Team Overview •Significant specialized team approach providing fresh perspective •Extensive public retirement systems audit experience •Knowledge of “best practices” for benefit plans •Focused on high quality services and matters relevant to Fund’s participants The Firm of Choice. www.cbh.com 13 Approach for the Audit of Fund The Firm of Choice. www.cbh.com 14 The CB&H Approach Benefit Pension Plan Audit •CB&H professionals included in the proposal have extensive Benefit Pension Plan experience •Proactive planning and communication •CBH’s Benefit Plans Audit expertise offers a thorough review of: Plan’s investment accounts Plan’s Census data and actuarial assumptions Participants data and contributions Participant benefits paid •Excellent working relationship with The Pension Resource Center, Inc., the Fund Administrator The Firm of Choice. www.cbh.com 15 Proposed Fees Audit engagement fees •Fair and reasonable offering high quality benefit plans audits and attestation services •2012 proposed fee $13,750 The Firm of Choice. www.cbh.com 16 Conclusion – Why CB&H? CB&H brings: •Proven local expertise and capabilities •Government Pension Plans experience •Streamlined efficient audit •High quality and timely service •Focus on your needs year around; close proximity •Fresh perspective The Firm of Choice. www.cbh.com 17 Actuarial Services for the Palm Beach Gardens Fire Pension Fund Fort Myers, FL | Lincolnshire, IL | Oakbrook Terrace, IL Douglas H. Lozen, EA, MAAA Founded in 1979 by Ward & Eileen Foster One of the largest actuarial firms that consults exclusively to the public sector Over 250 public retirement programs Florida (140 Police & Fire plans!) Texas Georgia Alabama Arkansas Illinois Louisiana Ou r F i r m 2 10 credentialed actuaries with nearly 200 years of public sector actuarial experience Assigned Staff Has over 40 years of public sector experience 3 consultants have experience working on plans with 25 to 200,000 or more participants 3 credentialed actuaries including 2 Fellows of the Society of Actuaries (FSAs) to provide consulting expertise We have 19 additional staff members Trust Accounting Department Actuarial Department (students/analysts) Health & Welfare Department General Administration Ou r S t a f f 3 Ways Actuaries Are Typically Evaluated Value-Added Materials Client Retention Accuracy Responsiveness/Timeliness of Work Cost Communication Ability 4 Ov e r v i e w We are Innovative and Passionate! Trustees Minimize paper, maximize functionality Cutting-edge actuarial software Funding projections Deterministic/Stochastic modeling Customized tools DROP Analyzer Large public sector database Well-equipped to set assumptions as to future demographic behavior Ranking schedules Passion for education Sponsor and speak at as many conferences as possible FPPTA, Division of Retirement, NCPERS, etc. Va l u e -Ad d e d 5 We are Innovative and Passionate! Members Online capabilities Benefit calculation software DROP calculations Prior service purchases Educational workshops for Members or Sponsor We acknowledge that we are a fiduciary to the Plan Media Publish press releases Helps control the message Reduces negative press We are advocates for defined benefit pension plans! Foster & Foster has a pension plan Va l u e -Ad d e d 6 Since 2005, we have not been fired for cause by a client Cl i e n t R e t e n t i o n 7 Enrolled Actuary (EA) credentials are necessary to do the work We use ProVal, a state-of-the-art valuation software Same software utilized to perform valuations on the largest plans in the country Peer review performed by at least two actuaries prior to any work being delivered to the client Submit over 190 valuation reports to State Review Boards for review, and we have never had a valuation report not approved Ac c u r a c y 8 Organizational Goals  Provide unparalleled customer service  Generate meaningful results  Exceed client expectations  Making each client feel like they are our only client Re s p o n s i v e n e s s 9 How do we attain these goals? Economies of Scale We have stream-lined public pension processes Do our own asset reconciliation Actuarial valuations performed and delivered within 60 days of getting the data and the final trust statement Benefit calculations in ten business days We have consultants who are evaluated and paid based upon accuracy/timeliness of these calculations We are committed to being over-staffed At least 2 and often times 3 actuaries assigned to each account Accessibility to an actuary who is up-to-speed with your account will be easy Re s p o n s i v e n e s s 10 Less overhead than most other firms No other lines of business to support Low billing rates, and many items are a fixed cost FSAs at no extra cost Experts in plan design Not experts in fashion Co s t 11 We want you to be fully educated on your plan Where are we now relative to last year? How well funded are we? What is the outlook for next year? Board education is a top priority Frequent speakers at state and national conferences Brad Heinrichs, FSA, EA, MAAA, is a key consultant to lawmakers and unions in evaluating proposed legislation Low turnover among employees Co m m u n i c a t i o n A b i l i t y 12 13 QUESTIONS? Thank you PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD July 16, 2012 A meeting of the Board of Trustees was called to order at 9:04.M. at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Rick Rhodes, Chair Audrey Ross, Administrator Tom Murphy, Secretary Bob Sugarman, Attorney Donna Wisneski Troy Brown, Investment Consultant Ed Morejon Richard Hitchens, AXA Equitable Mark Joyce Ray Eissa, AXA Equitable Ms. Wisneski stated that at the last meeting the Board created a “committee” to review the Actuarial and Audit RFP responses. She explained that she was part of that committee and that she never attended a meeting to review the responses. Mr. Rhodes commented that due to the few number of responses that they received, he did not think it was necessary to hold a meeting as the board can review all the responses together today at the meeting. He apologized that he did not notify Ms. Wisneski of this in advance. MINUTES The Board reviewed the minutes of the regular meeting held on May 21, 2012. A motion was made by Ed Morejon to approve the minutes of the May 21, 2012 regular meeting. The motion was seconded by Tom Murphy and carried 5-0. INVESTMENT MANAGER PRESENTATION: AXA EQUITABLE (RICHARD HITCHENS & RAY EISSA) Mr. Hitchens introduced himself and Mr. Eissa to the Board. He explained that he was here today to review a self directed DROP account product that AXA Equitable has to offer. AXA Equitable is the second largest insurance company world wide and they came out with this self directed DROP product in October 2010. This product allows the ability to invest in indexes such as the S&P 500, the Russell 2000, etc. Mr. Hitchens explained that as an investor, you would choose one or more indexes to invest in. This product helps protect on the downside tremendously and also captures the upside. Mr. Hitchens reviewed the investing process and commented that they would also work closely with the Plan’s Consultant. This fund has daily liquidity and is a fee basis account. INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (TROY BROWN) Mr. Brown commented that he does not recommend the product that was presented by AXA Equitable. He stated that the board can do something similar to this affect if they are interested, but it would also have an insurance wrapper with it. Mr. Brown reviewed the preliminary June 30, 2012 report. He stated that securities lead the quarter, as information technology was the worst performing sector and was down -7.1%. For the quarter ending June 30, 2012 the total fund net of fees was down -2.89%, but for the fiscal year to date they are still up 12.54% net of fees. Mr. Brown explained 2 that international equity did not perform well during the quarter as well as real estate. He briefly reviewed each Managers performance during the quarter and commented that they will be taking a look at ICC’s long term performance later on. Lastly, he reviewed the Plan’s asset allocation and stated that Dana’s equity account is underweighted compared to the Plan’s policy. Therefore Mr. Brown made a recommendation to transfer $800K from the cash account to the Dana Equity account, so that the will be back in line with their current investment policy. A motion was made by Ed Morejon to approve and authorize the transfer of $800K from the Plan’s receipt and disbursement account to the Dana Investment Advisors Large Cap Core fund as recommended by the Plan’s Investment Consultant to be back inline with the Plan’s asset allocation. The motion was seconded by Donna Wisneski and carried 5-0. Mr. Brown handed out a report that reflected ICC Capital’s long term performance. He explained that they have been in this strategy with ICC for a very long time and that the strategy is high aggression. During the last quarter their biggest holding and number one holding was down -22%, which really hurt them. Mr. Brown stated that the Bogdahn Group is still recommending this strategy with ICC until they meet again later this month. Also he explained that if you make a change now then the board will be locking in the loss they occurred instead of letting them try to make it up. Mr. Brown also discussed with the board about managing their cash and reallocations in between the meetings. He explained that sometimes in between meetings we will need to raise funds for benefit payments or reallocate assets to be inline with the Plans Investment Policy Guidelines, and it is hard to do this without the proper authorization. Therefore Mr. Brown is asking the boards permission for him to be able to contact the Chair in between meetings if necessary to reallocate assets. Then at the next pension board meeting we will put the transaction on the agenda for ratification by the board. A motion was made by Donna Wisneski to approve and authorize the Bogdahn Group to have direct investment of available cash in accordance with the Plan’s Investment Policy Guidelines with the goal towards keeping the allocations in accordance with the Plan’s Investment Policy Guidelines . The motion was seconded by Tom Murphy and carried 5-0. Lastly Mr. Brown asked that when preparing the 2013 meeting dates, to schedule the quarterly meeting dates later in the month so that he will have a full report available. ATTORNEY REPORT: SUGERMAN & SUSSKIND (BOB SUGARMAN) Mr. Sugarman explained that he attended the City Council meeting last Thursday where the proposed Ordinance was on the agenda for the first reading. He stated that the Council did pass the Ordinance on the first reading, although there are still some outstanding questions/issues that need to be resolved before they can pass the second reading. In addition they will also need the Actuarial Impact Statement from GRS. Mr. Sugarman and the Trustees’ reviewed the proposed changes and stated that they will need to hold a special meeting once the Ordinance is passed to explain the benefit changes to the members in a more detailed way. Also it was noted that the City has the other drafted changes to the Plan, but they did not include them in the first reading of the Ordinance. 3 Mr. Sugarman reviewed the memo from the Division of Retirement which now allows City’s/Boards to choose whether they want to contribute based off the percentage of payroll or on a fixed dollar amount. He explained the history behind the changes in the first place and stated that now the Division of Retirement doesn’t really care how contributions are made and will now leave that up to the City. The board directed Ms. Ross to check with the Plan’s Actuary for a recommendation and to also send this memo to the City asking for their opinion as well. Mr. Sugarman updated the board on House Bill 401 which became effective July 1, 2012. This bill states that when a member gets divorced they are considered pre-deceased for pension purposes on a joint and survivor annuity unless there is a court order. He stated that the main thing members need to do is update their beneficiary forms. Mr. Sugarman stated that their plan of action is to have the Administrator look up all the retirees and the ones with the joint and survivor annuities will need to be sent a letter asking them to update their beneficiary forms. He noted that he will have more information pertaining to this at the next meeting. Mr. Sugarman reviewed the election policy procedure for the Board Officers’. A motion was made by Tom Murphy to approve and adopt the Board Officers’ Election Procedure as prepared by the Plans Attorney. The motion was seconded by Mark Joyce and carried 5-0. Lastly Mr. Sugarman reviewed the May and June 2012 securities litigation reports from SFMS. He noted that there were no new security filings or settlements. ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS) DISBURSEMENTS The Board reviewed the disbursements presented for approval by the Administrator. A motion was made by Ed Morejon to approve the disbursements that were presented by the Administrator with exception to the GRS invoice #1180756 in the amount of $14,670. The motion was seconded by Tom Murphy and carried 5-0. OTHER BUSINESS The Trustees’ reviewed the Auditor and Actuary RFP responses. Ms. Ross noted that 4 Auditors responded to the RFP and 1 Actuary besides the current. The board reviewed and discussed the Auditor responses and asked Ms. Ross to invite Cherry, Bekeart & Holland (CBH) and Goldstein Schector & Koch (GSK) to the next meeting for an interview. The board also concluded that they would like to here from Foster & Foster, the only other Actuary that responded. Mr. Rhodes stated that we can also send the invite out to GRS to see if they would like to attend the next meeting, although they know what services they provide as that is their current Actuary. There being no further business, the meeting adjourned at 11:44AM. Respectfully submitted, Tom Murphy, Secretary Palm Beach Gardens Firefighters Preliminary Performance Update As of August 31, 2012 (1) Value as of June 30, 2012 and not available for most recent time period. Value is carried forward. Investment Structure 6/30/2012 Market Value QTD Cash Flow 8/31/12 Market Value QTD Gain / (Loss) July Return August Return QTD Return FYTD Return FYTD Return Dana Core $12,344,120 $800,000 $13,610,241 $466,121 1.1%2.5%3.7%$2,691,231 29.7% ICC $8,647,718 $8,839,993 $192,276 -2.4%4.7%2.2%$1,046,952 13.0% Dana Small Cap $2,500,988 $2,604,613 $103,626 2.4%1.7%4.1%$684,117 35.6% Total Domestic Equity $23,492,825 $800,000 $25,054,847 $762,022 0.0%3.2%3.2%$4,422,300 23.4% RBC International $2,083,769 $2,194,900 $111,131 1.7%3.6%5.3%$335,013 18.0% Manning & Napier $1,936,086 $2,030,485 $94,398 0.9%3.9%4.9%$218,935 13.8% Total International Equity $4,019,856 $0 $4,225,385 $205,529 1.3%3.8%5.1%$553,948 15.8% Agincourt Capital $5,545,396 $5,644,186 $98,790 1.5%0.3%1.8%$345,142 6.5% Garcia, Hamilton $5,921,582 $6,060,879 $139,297 1.6%0.8%2.4%$485,479 8.7% Templeton Global Bond $1,479,669 $1,523,130 $43,461 2.6%0.3%2.9%$145,992 10.6% Total Fixed Income $12,946,647 $0 $13,228,195 $281,548 1.7%0.5%2.2%$976,613 8.0% American Core Realty(1)$1,809,859 $1,809,859 N/A N/A N/A N/A $146,429 N/A Intercontinental(1)$1,789,408 $1,789,408 N/A N/A N/A N/A $169,252 N/A Total Real Estate $3,599,267 $0 $3,599,267 N/A N/A N/A N/A $315,681 N/A Cash & Equivalents $108,739 $89,689 $198,466 $38 N/A N/A N/A $380 N/A Total Investment Structure $44,167,334 $889,689 $46,306,160 $1,249,137 0.6%2.2%2.8%$6,268,922 16.4% Palm Beach Gardens Firefighters Policy Allocation Worksheet As of August 31, 2012 (1) Value as of June 30, 2012 and not available for most recent time period. Value is carried forward. Investment Structure 8/31/12 Market Value Current Allocation Target Allocation Allowable Range Potential Adjustment Adjusted Market Value Adjusted Allocation Dana Core $13,610,241 29.4%$585,000 $14,195,241 30.3% ICC $8,839,993 19.1%$8,839,993 18.8% Dana Small Cap $2,604,613 5.6%$2,604,613 5.6% Total Domestic Equity $25,054,847 54.1%55.0%45% -65%$585,000 $25,639,847 54.6% RBC International $2,194,900 4.7%$2,194,900 4.7% Manning & Napier $2,030,485 4.4%$2,030,485 4.3% Total International Equity $4,225,385 9.1%10.0%5% -15%$0 $4,225,385 9.0% Agincourt Capital $5,644,186 12.2%$5,644,186 12.0% Garcia, Hamilton $6,060,879 13.1%$6,060,879 12.9% Templeton Global Bond $1,523,130 3.3%$1,523,130 3.2% Total Fixed Income $13,228,195 28.6%25.0%15% -35%$0 $13,228,195 28.2% American Core Realty(1)$1,809,859 3.9%$1,809,859 3.9% Intercontinental(1)$1,789,408 3.9%$1,789,408 3.8% Total Real Estate $3,599,267 7.8%10.0%5% -15%$0 $3,599,267 7.7% Cash & Equivalents $198,466 0.4%0.0%0% -5%$27,314 $225,780 0.5% Total Investment Structure $46,306,160 100.0%100.0%$612,314 $46,918,474 100.0% State Money $612,314