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HomeMy WebLinkAboutDocumentation_Pension General_Tab 03_02/01/20101 SYNOPSIS OF GENERAL EMPLOYEES PENSION BOARD QUARTERLY MEETING HELD 11/02/09 1. New member John Terzakis was sworn in by Pension Coordinator McWilliams. 2. Minutes of August 3, 2008 quarterly meeting were approved. 3. Duane Howison of Gabriel Roeder Smith and Company, reviewed the October 1, 2008 Actuarial Valuation Report, which was accepted by the Board. 4. Mr. Howison was requested when his firm next attended a meeting that they tell the Board how close the RP 2000 mortality table was to the most recent actuarial tables-whether it had kept up or was behind, or perhaps ahead. 5. Dan Johnson, Bogdahn Consulting LLC, provided the quarterly presentation by the monitor. 6. Mr. Johnson was requested to make formatting changes on page 16 of his report, instead of showing fixed income twice to replace Total Fixed with Total Equity. 7. Mr. Johnson reviewed the final changes made to the Investment Policy and advised he would distribute the signed copy to all necessary parties. 8. The Board approved the quarterly report from Dana Investment Advisors, LLC. 9. The Board approved the quarterly report from Bogdahn Consulting, LLC. 10. Attorney Jensen provided an update on the status of the IRS Determination Letter. 11. The following items were approved on the Consent Agenda: Ratification Of Invoices Paid Since Last Quarterly Meeting: • Business Services Connection, Inc. - OfFice work-weeks ended 7/10/09 through 10/10/09 $1,656.53 • Business Services Connection, Inc. - Attendance, recording and preparation of minutes and synopsis for 8/3/09 Regular SYNOPSIS OF GENERAL EMPLOYEES PENSION BOARD QUARTERLY MEETING HELD 11/02/09 2 Quarterly meeting $ 288.83 • Perry ~ Jensen, LLC. Legal Fees through 8/15/09 $1,607.78 • Scripps Treasure Coast Newspapers Ad for new board member $ 168.00 Payments To Be Reviewed And Approved: • Business Services Connection, Inc. - Prepare minutes and synopsis of 10/7/09 Special Meeting $ 35.68 • Perry 8~ Jensen, LLC Legal Fees through 9/15/09 $ 525.32 • Bogdahn Consulting, LLC $2,625.00 Services through 9/30/09 • Dana Investment Advisors $1,730.09 Services through 9/30/09 Approval of new applicants for participation in Pension Plan: Russell White, Public Services Manager -hired 8/10/2009 Derek Watson, Water Plant Operator I -hired 10/1/09 Approval of withdrawal of contributions: None Terminated Employees who have not taken their contributions Maureen McGuinniss (Went from full time to part time) 9/30/09: Revenue and Expenditure Report END OF CONSENT AGENDA 10. The Budget Report was received and filed. 11. Attorney Jensen reviewed changes in the Administrative Rules. SYNOPSIS OF GENERAL EMPLOYEES PENSION BOARD QUARTERLY MEETING HELD 11/02/09 3 12. Attorney Jensen reviewed changes in State law affecting the collection and use of social security numbers and this plan's exemption from reporting requirements. 13. Attorney Jensen reviewed the plan updates regarding the HEART amendment, and allowing authorized Board fiduciaries to sign checks in the absence of the Board of Trustees. 14. Attorney Jensen was to provide draft language of a further change to the plan document for the next meeting regarding requiring the Village to fully fund pensions if they terminated the plan. 15. Attorney Jensen explained a new special tax notice would be required by the IRS to be given to members receiving lump sum distributions after December 31, 2009. She would provide a current copy to the Pension Coordinator, and any further changes after the IRS had responded to her questions. 16. Request to ratify the payment to The Gehring Group for the annual fiduciary liability insurance premium was delayed to the next meeting. 17. Board Member Gload requested copies of pages from the Public Safety Officers pension plan be given to the Board for information regarding the DROP program, and this item placed on the next agenda for discussion on whether to add this benefit to the General Employees' plan. END OF SYNOPSIS TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING November 2, 2009 I. Call To Order And Roll Call The Tequesta General Employees Pension Trust Fund Board of Trustees held a regular quarterly meeting at the Tequesta Village Hall, 345 Tequesta Drive, Tequesta, Florida, on Monday, November 2, 2009. The meeting was called to order at 8:03 a.m. A roll call was taken by Recording Secretary Betty Laur. Board Members in attendance at the meeting were: Secretary Carl Hansen, Board Member John Terzakis., Board Member Deanna Mayo, and Board Member Michelle Gload. Chair Michael Rhodes was absent from the meeting.. Also in attendance were Attorney Bonni Jensen, Daniel Johnson with Bogdahn Consulting LLC - Monitor, Duane Howison with Gabriel Roeder Smith and Company -Actuary, Pension Coordinator Lori McWilliams, and Betty Laur, Recording Secretary. II. SWEARING IN OF MEMBER JOHN T. TERZAKIS Pension Coordinator McWilliams swore in new member John Terzakis. III. APPROVAL OF AGENDA Pension Coordinator McWilliams advised she had received an email from Chair Rhodes with comments and questions, which had been distributed as a handout. Acting Chair Hansen requested that Agenda Item 13, approval of the investment manager's report, be moved to follow Mr. Johnson's presentation and that he answer any questions regarding the investment manager's report. MOTION: Motion was made by Board Member Gload, seconded by Board Member Mayo to approve the agendas discussed. Motion carried by unanimous 4-0 vote. IV. APPROVAL OF MINUTES 1. Tequesta General Employees' Pension Trust Fund Board of Trustees Regular Quarterly Meeting Minutes -August 3, 2009 MOTION: Motion was made by Board Member Gload, seconded by Board Member Terzakis to approve the agenda as discussed. Motion carried by unanimous 4- 0vote. Minutes of General Employees' Pension Trust Fund Board Meeting November 2, 2009 2 V. PRESENTATIONS 2. Presentation of October 1, 2008 Actuarial Valuation Report Duane Howison, Gabriel, Roeder, Smith and Company, reviewed the October 1, 2008 Actuarial Valuation Report. Mr. Howison explained the assets had not performed up to the assumption rate. Last spring Gabriel Roeder Smith and Company had been requested to prepare a report and subsequently changes had been made in the actuarial assumptions and mortality rate tables. Smoothing over five years was currently being used, which spread losses over time, and the losses occurring in year ending September 30, 2009 were still not recognized. This was to make the funding requirement of the Village less volatile. Return for the past year was estimated between 1 and 2%, versus the goal of 7-1/2%, plus further losses. This was estimated to result in another 1-1/2% percent of payroll increase in funding requirements over the next few years. Board Member Gload asked if the average of the investment returns on page 5 was still low enough; Mr. Johnson explained he believed it was. Mr. Howison commented as things turned around, gains would be incorporated to offset the losses. Employee turnover during the year ending in 2008 had been more than expected, which had offset some of the losses on the asset side. In response to questions provided by Chairman Rhodes, Mr. Howison explained if performance going forward were better than the actuarial assumption, that would provide a positive base which would be recognized over a 5-year period; and confirmed that his company planned to come back annually. Pension Coordinator McWilliams advised this actuarial report had been given to the Village Council when it had been received in August. Secretary Hansen questioned why the report was as of October 1, 200$, to which Mr. Howison responded that was the latest one completed; the data for the October 1, 2009 had only been received during the last week or two and that report was currently in process. Board Member Gload commented the average salary increase was 5% in 2009 instead of the 6% expected; Mr. Howison explained that was an assumption, and the liabilities for this period were lower than if salaries had gone up 6% or more, and did not recommend lowering the 6% for now. Mr. Howison advised the increase in covered payroll of 4% was an assumption of overall growth in payroll, which had been brought forward as the requirement for the year ending in 2009, and reflected number of employees rather than salaries. Board Member Terzakis expressed his opinion that having an actuarial valuation annually was a good idea, and was worried about using a 10-year old actuarial table when the insurance industry was using a 2003 table. Mr. Howison responded the Society of Actuaries had put together the year 2000 Minutes of General Employees' Pension Trust Fund Board Meeting November 2, 2009 3 table, which was the latest really thorough study that had been done on mortality, and it allowed for mortality improvements each year after the year 2000. The insurance industry tended to be more conservative. Board Member Terzakis questioned the expected termination figure of one per year since over the past three years the actual terminations had been 5, 8, and 5. Board Member Terzakis also commented that investment earnings were expected at 7-1/2% per year, but that was net after investment expenses, so it was actually 8+%, which he believed was far too high going forward. He wanted to be sure the data and numbers were the latest and best available. Mr. Howison commented that although more conservative assumptions would result in higher funding requirements now, over the long run it would not really matter because the Village would have to contribute according to what really happened. These things needed to be looked at closely. Attorney Jensen commented when the Board had adopted the RP 2000 mortality table last year, there had been discussion that improvements were built in for years after 2000, and requested when Mr. Howison's firm came back that he tell the Board how close the RP 2000 mortality table was to the most recent actuarial tables--whether it had kept up or was behind, or perhaps ahead. Mr. Howison explained that page 13 of his report showed the history for the last 10 years of the funded ratio of the plan; taking the actuarial value of assets used to determine the funding requirement divided by the actuarial accrued liability, the funding target. This plan was well-funded compared to most others, partially due to funding more than required in past years. MOTION: Board Member Mayo made a motion to accept the October 1, 2008 Actuarial Report. Board Member Gload seconded the motion, which carried by unanimous 4-0 vote. 3. Quarterly Presentation By Monitor Dan Johnson, Bogdahn Consulting, LLC, explained they had submitted a preliminary report, since comparison information with peers was not available by the date the report was requested, and he was providing a final report at the meeting. He would continue this practice in the future since it was important for the Board to have some preliminary information in their packets distributed before the meetings. Mr. Johnson reported good returns for the quarter. The returns up until March had been dismal, in March the government stimulus began to bring investors back into the market, and there had been a "rubber band" effect thereafter. During the past quarter, anything with more risk had done better-having Minutes of General Employees' Pension Trust Fund Board Meeting November 2, 2009 4 more international than domestic stocks had helped the returns. Value had outperformed growth for the quarter, and the best sector had been finance. GDP had been declining over the past four quarters but last Thursday there had been a positive GDP reported, a good indication the economy was growing--although there was the question of how much of this was artificially created by the government stimulus. The fund was now in tine with the 60/40 target weights. Secretary Hansen indicated Chair Rhodes had pointed out inconsistency between the market value of international equity shown on page 12 and the market value shown for Dana International Equity on page 34 of the Dana report. Mr. Johnson explained Dana invested in ADR's, foreign companies which trade domestically, and the EFT used to replicate international exposure had been separated out. Secretary Hansen reported Chair Rhodes felt Bogdahn had done a good job, but that there had been sloppy reporting. Mr. Johnson indicated he would call Mr. Rhodes regarding the reporting. Mr. Johnson reviewed the financial reconciliation for the quarter and fiscal year to date, and the returns as of September 30, 2009. There had been significant out-performance to the index of about 1.2% premium for the fiscal year. The fund had trailed index for the quarter because riskier investments had done better during that time period. Mr. Johnson explained there were now three parts to the Dana investments, the core equity, the international portfolio, and the fixed income, and reviewed each part. Dana had not done as well during the past quarter because they did not own financials, but had done well in international investments. Mr. Johnson commented low quality stocks had out-performed, which he believed to be due to the "rubber band" effect, and Dana did not invest in low-quality stocks. Attorney Jensen advised fixed income was shown twice on page 16 and requested Total Fixed be replaced with Total Equity. Mr. Johnson agreed to that change, and advised the Board to let him know any time they wanted formatting changes or additional information included in the report. Other items reviewed included comparative performance, and the risk versus reward charts. Secretary Hansen indicated he liked the compliance appraisal part and the proxy voting information in the back of the Dana report. Mr. Johnson referred to page 19 which showed historical information and discussed opportunities for recovery, and commented coming up in future quarters he would bring up hedging against inflation. Attorney Jensen commented Chair Rhodes' had submitted further questions, some of which had already been answered. Follow-up questions were discussed. Mr. Johnson commented there had been a little re-balancing; Dana had the ability to move money among the accounts and they had moved some from their bond portfolio to their growth portfolio. The only major Minutes of General Employees' Pension Trust Fund Board Meeting November 2, 2009 change was that now there was a separate international component. Also, Chair Rhodes was looking for a sector analysis of the portfolio, which Mr. Johnson would discuss with Chair Rhodes. Attorney Jensen noted she believed Chair Rhodes wanted an attribution report. Mr. Johnson advised he would forward the attribution report to Pension Coordinator McWilliams who could email it to Chair Rhodes. Chair Rhodes had also asked what the last page in the preliminary report was saying compared to current levels. Mr. Johnson explained that showed the fund's benchmark history, the total investment policy, and the changes the plan had gone through. Mr. Johnson commented on the investment policy changes discussed at the last meeting and items pointed out by Board Member Gload, and advised the investment policy had been finalized. Board Member Terzakis asked the position on re-balancing the portfolio. Mr. Johnson explained the chart on page two of the investment policy showed ranges, and if at any point the plan fell below 30% bonds they re-balanced to the target, and the investment manager did the re-balancing. Board Member Terzakis questioned the 10% international position going forward and the wisdom going into international at this time. Attorney Jensen explained the fund had previously been in international equities but there had been no separate measurable piece. Mr. Johnson indicated he would probably bring up TIPS at the next meeting when Dana would be present. Mr. Johnson also expressed his opinion that the process met the objectives pretty well, and he thought it was good the Village had been over-contributing, because that controlled volatility. Changing the assumption from 8% to 7-1/2% just lowered the amount the Village was supposed to contribute-the Village could always over-contribute if they desired. Board Member Gload expressed concern with the assumptions because the Village looked at that actuarial report to help them budget, and to see what they needed during the next year to keep the plan funded, and she was concerned because there wouldn't have been enough money if the Village had not been over-contributing-2% more would have been needed. Mr. Johnson indicated it was hard to predict, but there had been good years before and he felt 8% would be good for the next ten years. MOTION: Board Member Gload made a motion to approve the quarterly report from Dana Investment Advisors, LLC. Board Member Mayo seconded the motion, which carried by unanimous 4-0 vote. MOTION: Board Member Gload made a motion to approve the quarterly report from Bogdahn Consulting, LLC. Board Member Mayo seconded the motion, which carried by unanimous 4-0 vote. Minutes of General Employees' Pension Trust Fund Board Meeting November 2, 2009 6 Mr. Howison left the meeting at this point, at 9:55 a.m. VI. UNFINISHED BUSINESS 4. Update on Approval of Final Investment Policy Statement - Attomey Jensen reported that since the last meeting the Village had approved the changes to the pension plan document, which changed the investment policy statement. It was now ready to be put into effect. Chair Rhodes had questioned the roll-out of that policy-how the coordination of Dana and Bogdahn would work. Mr. Johnson advised that he, Chair Rhodes, and a representative of Dana Investment Advisors had all signed the investment policy statement and it would be effective mid-December. He would make sure it was filed with all necessary parties, including the State of Florida. 5. Update on IRS Determination Letter -Attomey Bonni Jensen Attorney Jensen reported her firm was still in the process of review with the IRS representative, who had shared with her that the IRS was woefully unprepared for the number of governmental plans who would be filing and for document review and understanding what was happening in the governmental sector. Several of her other clients who had filed a straight IRS determination letter at the same time this plan filed had heard nothing back yet except for the initial acknowledgement this plan had chosen the voluntary compliance option. Pension Coordinator McWilliams complimented Attorney Jensen and her firm for their work on this matter, as there had been numerous requests for documents and their work had been wonderful. VII. CONSENT AGENDA Board Member Gload noted the Board had previously approved paying the fiduciary liability policy premium for two years at a time because the premium would stay the same; however, the amount was $56 higher than the last payment. Recording Secretary Laur confirmed this was the second year; the premium should have been the same. Pension Coordinator McWilliams indicated she would ask HR Director Merlene Reid to come in to explain. Consensus was to pull this item from the Consent Agenda for discussion later in the meeting. MOTION: Board Member Gload made a motion to approve the Consent Agenda with the ratification of an invoice to The Gehring Group pulled for discussion. Board Member Mayo seconded the motion, which carried by unanimous 4-0 vote. Therefore, the following items were approved on the Consent Agenda: Minutes of General Employees' Pension Trust Fund Board Meeting November 2, 2009 6. Ratification Of Invoices Paid Since Last Quarterly Meeting: • Business Services Connection, Inc. - Office work-weeks ended 7/10/09 through 10/10/09 $1,656.53 • Business Services Connection, Inc. - Attendance, recording and preparation of minutes and synopsis for 8/3/09 Regular Quarterly meeting $ 288.83 Perry & Jensen, LLC. Legal Fees through 8/15/09 $1,607.78 • Scripps Treasure Coast Newspapers Ad for new board member $ 168.00 7. Payments To Be Reviewed And Approved: • Business Services Connection, Inc. - Prepare minutes and synopsis of 10/7/09 Special Meeting $ 35.68 • Perry & Jensen, LLC Legal Fees through 9/15/09 $ 525.32 • Bogdahn Consulting, LLC $2,625.00 Services through 9/30/09 • Dana Investment Advisors $1,730.09 Services through 9/30/09 8. Approval of new applicants for participation in Pension Plan: Russell White, Public Services Manager -hired 8/10/2009 Derek Watson, Water Plant Operator I -hired 10/1/09 9. Approval of withdrawal of contributions: None 7 10. Terminated Employees who have not taken their contributions Minutes of General Employees' Pension Trust Fund Board Meeting November 2, 2009 8 Maureen McGuinniss (Went from full time to part time) 9/30/09: 11. Revenue and Expenditure Report END OF CONSENT AGENDA VIII. BUDGET REPORT 12. Quarterly Budget Report Expenditures Attorney Jensen noted no motion was needed; the report was received and filed. IX. NEW BUSINESS 13. Approval of Investment Manager's Report (Dana Investment Advisors) Secretary Hansen noted this had been done earlier in the meeting. 14. Updated Administrative Rules Attorney Bonni Jensen reported the administrative rules had been updated to incorporate the new meeting dates and times, and the process for the payment of contributions, and read aloud the changed sections. MOTION: Board Member Mayo made a motion to approve the updated Administrative Rules. Board Member Gload seconded the motion, which carried by unanimous 4-0 vote. 15. State Law Updates Attorney Jensen explained that Florida Statutes had been changed a couple of years ago to recognize that social security numbers were confidential and private information. This legislation had included reporting requirements to let the State know if any commercial entities had requested social security numbers. Last year, the State had been inundated with reports from governmental entities; this year the Legislature changed the law so that we are now exempt from reporting. We are allowed to collect social security numbers and to use those numbers with our service providers. If, for example, Gabriel Roeder Smith & Company needed social security numbers in order to process or calculate benefits, or Salem Trust needed social