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HomeMy WebLinkAboutMinutes Police Pension 042313 Minutes 4-23-13.doc Page 1 of 5 City of Palm Beach Gardens Police Officers’ Pension Fund Minutes of the Meeting Held April 23, 2013 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 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 Audrey Ross (Resource Centers) David Pierson, Secretary Bonni Jensen (Law Offices of Perry & Jensen) Brad Seidensticker, Trustee Donna Kramer (PBG Clerk’s Office) Greg Mull, Trustee Max Cann (SSGA) Marc Glass, Trustee Steve Stack (ICC Capital) John McCann (Thistle Asset Consulting) Pete Strong (GRS) PRESENTATION OF THE 9/30/2012 ACTUARIAL VALUATION REPORT GRS – Presented by Pete Strong Mr. Strong reintroduced himself and stated that the first time he met the board was late last year when Mr. Palmquist was retiring. He reviewed the valuation for the fiscal year ending September 30, 2012 and stated that the City’s required contributions for the fiscal year ending September 30, 2014 is $2,712,635 or 52.62% of payroll. He noted that this is a slight increase from this year’s contributions of $2,700,762 or 44.93% of payroll. Mr. Strong explained that the increase in the City’s contributions is mainly due to the salary increases being less than expected by 15%. He reviewed the benefit changes and the assumption changes that were made during the year and how they impacted the plan this year. The plan lowered their investment assumed rate of return from 7.4% to 7.3% this year and will continue to lower it by 0.1% each year until their goal of 6.5% is met. Mr. Strong reported that the plan had a net actuarial gain of $751,599 this year due to a mix of lower than expected salary increases and also a great investment year. The plans funded ratio also increased this year to 69.1% from 66.4% last year. He reviewed the Chapter 185 monies and commented that the plan received in $455,534 from the State, which gives them a new amount of $538,552 that is being held in the reserve account for future benefit improvements (after the base amount of $412,644 is accounted for). The plans total unfunded liability this year is $22M which is an annual payment of $1.9M. Mr. Strong noted that 2008 will now fall off the 5 year smoothing chart. This will be very beneficial to the plan because 2008 was a bad investment year and we will now be replacing it with the 2012 numbers which were much better. Mr. Strong reviewed the participant data and stated that the active members decreased from 84 to 74 during the year and the DROP members and retirees increased from 46 to 54. He also reported that this plan has had an actuarial gain the last 4 years out of the last 6 years, in which Mr. Strong noted he has not seen this with any of his other clients. Lastly Mr. Strong reviewed the new reporting that is required under the SB 1128. The State now requires the plan to report its present value of benefits compared to the FRS benefits. He noted that this is not an accurate comparison because the FRS does not put in their Minutes 4-23-13.doc Page 2 of 5 required contribution amount each year and defined benefit plans are required to fund fully each year. MOTION: Mr. Seidensticker made a motion to approve the September 30, 2012 Actuarial Valuation Report as presented by the Plan’s Actuary. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5-0. Mr. Strong reviewed his memo regarding the new GASB 67 changes that were passed last summer and will be effective for the fiscal year ending September 30, 2014. The new GASB 68 changes are not in effect for City’s until the fiscal year ending September 30, 2015. He stated that the new GASB 67 requirements basically require additional footnotes and disclosures for the investment managers, but they will not be incorporated in the regular valuation and will more than likely require a separate valuation to be completed. This new valuation will be for reporting purposes only and not for pension use. Mr. Strong noted that GRS will more than likely come back in the near future with a proposed fee increase due to the new reporting requirements. Mr. Strong stated that his office prepared a response and a study in regards to the letter that the Plan received from the Division of Retirement regarding the use of their Chapter 185 revenue (know as the “Naples Letter”). He explained that based on GRS’s findings, the plan should continue to receive the Chapter 185 monies. Mr. Strong stated that this letter and study should be sent to the Division of Retirement and if approved then the Chapter 185 money (base amount) will be sent to the City to offset their contributions. Ms. Ross noted that she will send the letter to the State and await a response. PRESENTATION ON EMERGING MARKETS SSGA – Presented by Max Cann Mr. Cann introduced himself and stated that his firm is specializes in spider ETF’s. SSGA works with many institutional clients and his job is to educate clients on ETF’s and to make sure that they are using them properly. SSGA has a total of $2T in assets with 27 offices and 10 investment centers country wide. SSGA is the second largest ETF provider. Mr. Cann explained in great detail what an ETF is and how they work. All ETF’s are managed by the same managers that mange the active funds as well. Currently their ETF has 67 products within their fund and their returns can or cannot be inline with the index. Mr. Cann explained how ETF’s are invested and how they produce returns. ETF’s provide more diversification within a portfolio and they are completely transparent. Mr. Cann reported that the 1 year return for ETF’s is .8%, 3 years is 2.57%, and 5 years is 1.19%. Also the fee for ETF’s is 59 basis points. The Trustees had a lengthy discussion on ETF’s and when it is a good time to fund them. Mr. Cann noted that ETF’s are placed in a portfolio with long term intentions and they are like mutual funds, but they can be traded on a daily basis if needed. The Trustees thanked Mr. Cann for his time and presentation and stated that they will discuss ETF’s with their Consultant. Board Discussion: The Trustees had a lengthy conversation regarding ETF’s and if they would be a fit for their portfolio. Mr. McCann passed out information on other firms that offer ETF’s as well (such as Vanguard) and compared it to SSGA’s product and noted that over long term SSGA has outperformed. Mr. McCann noted that ETF’s are volatile no Minutes 4-23-13.doc Page 3 of 5 matter what company you go with, although it is a great industry to be in. The Trustees concurred that they would like to revisit ETF’s at a later time because right now they do not think it would be a good fit for their portfolio. INVESTMENT MANAGER REPORT ICC Capital – Presented by Steve Stack Mr. Stack stated that during the quarter equities out performed bonds and the amount of money that came from bonds into equities was tremendous. As of March 31, 2013 the total fund (fixed income) was negative but ahead of the benchmark at -0.10% versus -0.17%, but for the fiscal year to date they are negative and also behind the benchmark at -0.13% versus 0.21%. He noted that they are being very conservative on the fixed income side. The growth fund had a better quarter and outperformed the benchmark for the quarter at 12.38% versus 9.54%, and for the fiscal year to date they are also ahead at 14.96% versus 8.10%. Their largest weighting is in IBM and not apple. They are underweighted to the technology sector and they are also keeping their duration low. INVESTMENT CONSULTANT REPORT Thistle Asset Consulting – Presented by John McCann Mr. McCann noted that they currently have a lot of cash sitting on the side lines because American Realty did not take the full amount during their recent capital call. Therefore Mr. McCann is recommending that the board move the cash over to the ICC Capital fixed income portfolio. The Trustees discussed and noted that they will keep the money in cash until the next capital call from American Realty. Mr. McCann reviewed the funds performance for the quarter ending March 31, 2013 and stated that the total fund net of fees outperformed the benchmark at 6.98% versus 6.51%, and for the fiscal year to date they are also ahead at 8.31% versus the benchmark at 7.61%. He reviewed the managers performance during the quarter and noted that all managers either outperformed the benchmark or where inline. ATTORNEY REPORT Law Offices of Perry & Jensen - Presented by Bonni Jensen Ms. Jensen passed out the memo regarding a retiree that recently passed away, Charles K. Sharon. Mr. Sharon retired on May 1, 2004 with a 50% joint and survivor option, naming his wife, Catherine Sharon as the joint annuitant. In June 2005, Mr. Sharon was divorced from Catherine and in the final judgment she was not awarded to her 50% if Mr. Sharon’s pension. Then in 2007 Mr. Sharon completed a designation of beneficiary form listing his son as the beneficiary, but there was no indication at that time to change his joint annuitant. Therefore his benefit was never recalculated to take into account the younger age of the son. Ms. Jensen wanted the Trustees to confirm that based upon the facts and provisions of the plan, no benefits are payable to anyone as a result of Mr. Sharon’s death. The Trustees concurred. Ms. Ross noted that she would explain this to Mr. Sharon’s son who was listed as the beneficiary at the time of his death. Ms. Jensen provided the board with the revised DROP distribution policy. The policy now allows retirees to take DROP distributions on a monthly basis instead of a quarterly basis. The policy does state that any distribution over $35K would need to be approved by the board of Trustees before it is paid out. All other distributions under $35K can be paid out in between meetings, but must be ratified by the board of trustees at the next meeting. MOTION: Mr. Seidensticker made a motion to approve the revised DROP distribution policy as presented. Minutes 4-23-13.doc Page 4 of 5 SECOND: Mr. Mull seconded the motion. CARRIED: The motion carried unanimously 5-0. Ms. Jensen reviewed the memo regarding Senate Bill 458 and House Bill 1399. Both bills have been stalled in the house and has not been approved as of yet. Ms. Jensen noted that she will keep the board updated as more information is available. ADMINISTRATOR REPORT Resource Centers – Presented by Audrey Ross N/A MINUTES MOTION: Mr. Mull made a motion to approve the minutes from the January 31, 2013 regular meeting. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 5-0. DISBURSEMENTS APPROVALS MOTION: Mr. Seidensticker made a motion to approve the disbursements. SECOND: Mr. Mull seconded the motion. CARRIED: The motion carried unanimously 4-0. FINANCIAL STATEMENTS The board reviewed and discussed the financial statements that were provided through March 2013. The board received and filed the financial statements through March 2013. OTHER BUSINESS Mr. Glass stated that Union and the City are currently in negotiations and he would like the board to approve for GRS to complete a study reflecting what the costs would be to change the normal retirement age to 55, or 25 years of service regardless of age, and to also increase the multiplier from 2.75% to 3%. MOTION: Mr. Glass made a motion to allow GRS to perform a study on the cost of changing the normal retirement age to 55, or 25 years of service regardless of age and to also increase the multiplier from 2.75% to 3% per the Union and the City’s request. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5-0. Ms. Ross noted that the VEBA fund closed and all members have been refunded their contributions. Minutes 4-23-13.doc Page 5 of 5 Ms. Ross explained that the board uses the carrier Ullico Insurance Group for their fiduciary liability insurance. The plan just received communication that the parent company of Ullico Insurance Group, Ullico Casualty Company went into a rehabilitation order. Ms. Jensen commented that this order does not have any effect on this plan because it is the parent company that received the order, it was just for informational purposes. PUBLIC COMMENTS N/A AJOURN There being no further business, the Trustees officially adjourned the meeting at 12:08 PM. The next meeting is scheduled for Friday August 2, 2013 at 9AM. Respectfully submitted, _____________________________ DAVID PIERSON, Secretary