HomeMy WebLinkAboutAgenda Fire Pension 082007THE PENSION RESOURCE CENTER, INC.
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, August 20, 2007
Location: Palm Beach Gardens Fire Rescue — Station 3
5161 Northlake Blvd.
Palm Beach Gardens, Florida 33410
(561) 776 -1071
Time: 10:00 A.M.
AGENDA
1. Call Meeting to Order
2. Minutes of Meeting Held July 30, 2007
3. Investment Monitor Report: Joe Bogdahn
4. Attorney Report: Bob Sugarman
5. Administrative Report: Margie Adcock
6. Disbursements
7. Other Business
8. Schedule Next Meeting: Monday, September 24, 2007 at 2:00 P.M.
9. 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
Pension Resource Center, Inc. no later than four days prior to the meeting.
THE PENSION RESOURCE CENTER, LLC
4360 hlorthlake Boulevard, Suite 206 44 Palm Beach Gardens, FL 33410
Phone (561) 624 -3277 44 Fax (561) 624.3278 •:# WWW.RESOURCECENTEPS.COM
VIA, E&C$11V>I,ILE 79941
August 24, 2007
City Clerk
City of Palm Beach Gardens
10500 North Military Trail
Palm Beach Gardens. FL 33410
RE: Palm Beach Gardens Firefighters' Pension Trust Fund
Investment Policy Statement
Dear City Clerk:
As you Haight know, we serve as the Administrator for the Palm Beach Gardens
Firefighters' Pension Trust Fund. At the Board of Trustees meeting on August 20, 2007.
the Board adopted the enclosed Investment Policy Statement. We are providing you with
the Investment Policy Statement as the Plan Sponsor as required by Section 112.661,
Florida Statutes. By copy of this letter, I am also providing a copy of the Investment
Policy Statement to the Department of Management Services and the Fund's Actuary as
required by Section 112.661, Florida Statutes.
Thank you for your attention to this matter. Should you have any questions regarding
this, please do not hesitate to contact our office.
incerely,
P et . Adcock
Administrator
Enclosure
cc: Charles Slavin, Department of Management Services (with enclosure)
Brad Armstrong, Actuary (with enclosure) (via facsimile 248 799 -9020)
Bob Sugarman, Board Attorney (via facsimile 305- 447 -8115)
.Toe Bogdahn, Investment Monitor (via facsimile 863 -292 -8717)
City of Palm Beach Gardens
Man Sponsor
Firefighters' Pension Trust Fund
Investment Policy Statement
I. PURPOSE OF INVESTMENT POLICY STATEMENT
The Pension Board of Trustees, as named fiduciaries maintains that an. important
determinant of future investment returns is the expression and periodic review of the Fund's
investment objectives. To that end, the Trustees have adopted this statement of Investment
Policy and direct that it apply to all assets under their control. .
In fulfilling their fiduciary responsibility, the Trustees recognize that the Pension Plan is
an essential vehicle for providing income benefits to retired participants or their beneficiaries.
The Board also recognizes that the obligations of the Fund are long -term and that investment
policy should be .made with a view toward performance and return over a number of years. The
general investment objective, then, is to obtain a reasonable total rate of return - defined as
interest and dividend income plus realized and unrealized capital gains or losses - commensurate
with the Prudent Investor Rule and any other applicable statute.
Reasonable consistency of return and protection of assets against the inmads of inflation
are paramount. however, the volatility of interest rates and securities markets make it necessary
to judge results within the context of several years rather than over short periods of two years or
less.
The Pension Board of Trustees will employ professional Investment Management firms
to invest the assets of the fund. Within the parameters allowed in this IPS, the ) nvestment
Managers have full discretion, including security selection, sector weightings and investment
style.
The .Trustees, in performing their investment duties shall comply with the fiduciary
standards set forth in Employee Retirement Income Security Act of 1974 (ERISA) at 29 U.S.C.
s. 1104(a) (1) (A) — (C). In case of conflict wit other provisions of law authorizing investments,
the investment and fiduciary standards set forth in this section shall prevail.
ADOPTED: 8-20-2007 - 1 -
1I. TARGET ALLOCATIONS
In order to provide for a diversified portfolio, the Board has engaged Investment Management
firms with target investment allocations as provided for on Schedule A, attached. hereto. The
managers are responsible for the assets and allocation of their mandate only, subject to the
restrictions as outlined in this policy.
On a regular bias (at least quarterly) the Investment Consultant will review the investment
portfolio for the purpose of rebalancing assets within the target investment allocations prescribed
on Schedule A, and shall coordinate the overall assct allocation and affect rebalancing of the
portfolio when necessary. The consultant shall also periodically review the investment portfolio
and report to the Board the style and capitalization of the individual and total portfolios.
III. INVESTMENT PERFORMANCE OBJ)ECTI'M
The following performance measures will be used as objective criteria for evaluating
effectiveness of the investment managers.
A. Total Fund Performance
1. The performance of the total Fund will be measured for tolling three and five year
periods. These periods are considered sufficient to accommodate the market cycles
experienced with investments. The performance of this portfolio will be compared to the
return of a portfolio comprised of 55% Russell 3000, 10" /o MSCI SAFE, and 30%
Lehman Brothers Intermediate Governmentt / Credit Bond Index., and 5% of the 90
day U.S. Treasury Bill Index.
2. On a relative basis, it is expected that the total fund performance will be in the top 40%
of the Appropriate peer Universe over three to five -year periods.
3. On an absolute basis, it is expected that total return of the combined equity, fixed
income, and cash portfolio, will equal or exceed the actuarial earnings assumption (8.25
%), and equal or exceed the Consumer Price Indcx plus 3% over three to five year
periods.
B. equity Performance
The combined equity portion of the portfolio, defined as common stocks and convertible
bonds, is expected to perform at a rate at least equal to the S &P 500 Index. Individual
components of the equity portfolio will be compared as outlined in Schedule A. All
portfolios are expected to perform in the top 40"/0 of an appropriate peer universe.
C. Fixed lncomc Performance
The overall objective of the fixed income portion of the portfolio is to add stability,
consistency and safety to the total fund. The fixed income portion of the portfolio,
defined as fixed income and preferred stocks, is expected to perform at a rate at least
equal to the Lehman Brothers Intermediate Aggregate Bond Index, and in the top 40% of
the appropriate peer universe.
D. Alt matives (Real Estate/Timber
ADOPTED., 8 -20 -2007 - 2 -
The overall objective of the alternative portion of the portfolio is to provide an attractive
level of income with minimal volatility to the fund. This portion of the fund is expected
to provide an absolute rate of return as ben.chmarked in Schedule A attached hereto.
IV. INVESTMENT GUIDELINES
A. /Aid2rized Investmots
Other than with commingled funds as may be approved by the board, all investments
made or held in the fund shall be limited to:
1. Time or savings accounts of a national bank, a state bank insured by the Bank Insurance
Fund, or a savings and loan association insured by the Savings Association. Insurance
Fund which is administered by the Federal Deposit Insurance Corporation or a state or
federal chartered credit union whose share accounts are insured by the National Credit
Union Share Insurance Fund.
2. Bonds issued by the Sate of Israel.
3. Obligations issued by the United States Government or obligations guaranteed as to
principal and interest by the United States Government or by an agency of the United
States Government.
4. Stocks, commingled funds administered by national or state banks, mutual funds and
bonds or other evidences of indebtedness, issued or guaranteed by a corporation
organized under the laws of the United States, any state or organized territory of the
United States or the District of Columbia.
5. Commingled fixed income vehicles which may include Asset- backed securities, caps,
tloars, options, collective funds, corporate notes, bonds, debentures, and bank credit or
loan participation agreements, federal agency securities/or other debts or loans backed by
U.S. Govt. Agencies, federal funds, forward agreements /dollar rolls, financial futures,
swaps, money market instruments, mortgage- backedsecurities, nmrtage pass- throughs,
mutual funds (which incorporate investments listed above), municipal securities, private
placements /144A, tepurchase agreements, treasury notes, bonds and bills/or other debts
or loans guaranteed by the U.S. Treasury, fixed & variable preferreds/hybrids, other
illiquid securities with exposure not to exceed 2% of the Fund assets: provided that:
a. The securities when purchased meet the following .ranking criteria:
i. Fixed income: lnvestm"t Grade as measured by Standard & Poor's or Moody's.
ii. Equities: Traded on a national exchange.
iii. Money Market: Standard & Poor's A l or Moody's P 1.
iv. Real Estate: Commingled private placements and direct investments trust be
independently appraised annually.
b. Not more than 3% of the Fund's assets shall be invested in the common stock or capital
stock of any one issuing company, nor shall the aggregate investment in any one
issuing company exceed 3% of the outstanding capital stock of the company.
ADOPTED.- 8 -20 -2007 - 3 -
c. The value of bonds issued by any single corporation shall not exceed 3% of the total
fund.
6. Real Estate
7. Foreign Securities, to include fixed income and equity securities.
B. Limitatioas
1. Investments in corporate common stock and convertible bonds shall not exceed 65% of
the Fund assets at cost or 75% of the fund assets at market value.
2. Foreign securities shall not exceed 10% of the value at cost of the fund.
3. Real estate investments shall not exceed 1.0% of the value at cost of the fund.
4. No investment may be made unless provided for as part of this policy
A. Trading Parameters
When feasible and appropriate, all securities shall be competitively bid. Except as
otherwise required by law, the most economically advantageous bid shall be selected.
Commissions paid for purchase of securities must meet the prevailing best- execution
rates. The responsibility of monitoring best price and execution of trades placed by each
manager on behalf of the Plan will be governed by the Portfolio Management Agreement
between the Plan and the Investment Managers.
V. COMMUNICATIONS
A. On a monthly basis, the custodian shall supply an. accounting statement that will include a
summary of all receipts and disbursements and the cost and the market value of all assets.
On a quarterly basis, the managers shall provide a written report affirming compliance
with the security restrictions of Section IV above and a summary of common stock
diversification and attendant schedules. In addition, the manager shall deliver each
quarter a report detailing the Fund's performance, adherence to the investment policy,
forecast of the market and economy, portfolio analysis and current assets of the Trust.
Written reports shall be delivered to the Trustees within 60 days of the end of the quarter.
A copy of the written report shall be submitted to the persona designated by the City, and
shall be available for public inspection. The Investment Managers will provide
immediate written and telephone notice to the Trustees of any significant market related
or non - market related event, specifically including, but not limited to, any deviation from
the standards set forth in Section IV above.
B. The Investment Managers will disclose any securities that do not comply with section TV
in each quarterly report.
C. If the Fund owns investments, that complied with section TV at the time of purchase,
which subsequently exceed the applicable limit or do not satisfy the applicable
investment standard, such excess shall result in rebalancing within 30 days; noncompliant
investments shall be disposed of at the earliest economically feasible opportunity in
accordance with the prudent man standard of care, but shall not exceed two (2) fiscal
quarters and no additional investment may be made.
ADOPTED: 8 -20 -2007 -4,
D. The Trustees shall retain a monitoring service to evaluate and report on a quarterly basis
the rate of return and relative performance of the Fund. The Trustees will meet quarterly
to review the monitoring service's Performance Report. The Trustees will meet with the
investment manager and appropriate outside consultants to discuss performance results,
economic outlook, investment strategy and tactics and other pertinent matters affecting
the Fund on a periodic basis.
E. At least annually, the Trustees shall provide the Investment Managers with projected
disbursement needs of the plan. so that the investment portfolio can be structured in such
manner as to provide sufficient liquidity to pay obligations as they come due. To this
end, the Investment Managers should, to the extent possible, attempt to match investment
maturities with known cash steeds and anticipated cash -flow requirements.
VI. COMPLIANCE
A. It is the direction of the Trustees that the plan assets are held by a third party custodian,
and that all securities purchased by, and all collateral obtained by, the plan shall be
properly designated as plan assets. No withdrawal of assets, in whole or in part, skull be
made from safekeeping except by an authorized member of the board of Trustees or their
designee. Securities transactions between a broker - dealer and the custodian involving
purchase or sale of securities by transfer of money or securities must be made on a
"delivery vs. payment" basis to insure that the custodian will have the security or money
in hand at conclusion of the transaction. Provided that all approved vendors transacting
repurchase agreements perform as stated in any Master Repurchase Agreement
B. At the direction of the Trustees, operations of the fiend shall be reviewed by independent
certified public accountants, as part of any financial audit periodically required.
Compliance with the Trustees' internal controls shall be verified. These controls have
been designed to prevent losses of funds that might arise from fraud, error, or
misrepresentation by third parties or imprudent actions by the Board or employees of the
plan sponsor, to the extent possible.
C. Each member of the Board of Trustees shall participate in a continuing education
program relating to investments and the Trustee's responsibilities to the fund. It is highly
suggested that this education process begin during the Trustees' first term.
D. With each actuarial valuation, the Board of Trustees shall determine the total expected
annual rate of return for the current year, for each of the next several years and for the
long term thereafter. This detemination shall be filed promptly with the Department of
Management Services, the plan's sponsor and the consulting actuary.
E The proxy votes must be exercised for the exclusive benefit of the participants of the
Fund. Each manager shall provide the Board with a copy of their proxy voting policy for
approval. On a regular basis, at least annually, each manager shall report a record of their
proxy vote.
VII. CRITERIA FOR INVESTMENT MANAGER REVIEW
A D O P T E D : 8 -20 -2007 - s .
The Board wishes to adopt standards by which judgments of the ongoing performance of
a portfolio manager may be made. If, at any time, any one of the following is breached,
the portfolio manager will be warned of the Board's serious concem:
A. Four consecutive quarters of total Fund performance below the 50th percentile in
manager performance rankings.
B. Standard deviation for a fund component in excess of 150% of the assigned benchmark.
C. Loss by the manager of any senior investment personnel.
D. Any change in basic investment philosophy by the manager.
E. Failure to attain a 60% vote of confidence by the Board of Trustees.
F. Failure to observe the security quality restrictions of section IV.
Nothing in this section shall limit or diminish the Trustees' right to terminate the manager
at any time for any reason.
VIII. FLORIDA STATUTES 1129 175 AND APPLICABLE CITY ORDINANCES
If, at any time, this document is found to be in conflict with Chapter 112 or 175 Florida
%Ltutes, or the applicable City Ordinances, the Statutes and Ordinances shall prevail.
IX. REVIEW AND AMENDMENTS
It is the Trustees intention to review this document at least annually subsequent to the
actuarial report and to amend this statement to reflect any changes in philosophy,
objectives, or guidelines. Any investment not specifically allowed as part of this policy is
prohibited. It at any time, the Investment Manager feels that the specific objectives
defined herein cannot be met, or the guidelines constrict performance, the Trustees
should be notified in writing. By initial and continuing acceptance of this Investment
Policy Statement, the Investment Managers concur with the provisions of this document.
CITY OF PALM BEACH GARDENS FIREFIGHTERS' PENSION PLAN
By:
Chain -Tian, Boar rustees
Date: d-1010
ADOPTED: 8 -20 -2007 - 6 -
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