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HomeMy WebLinkAboutDocumentation_Pension Public Safety_Tab 04A_02/04/2004.- - BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August 12, 2003 PAGE 7 MOTION: Vice Chair Genco made a motion to take the language of the proposed change in pension benefit regarding tiering as outlined in the August 6, 2003 letter from Steve Palmquist to Chairman Weinand, and incorporate that information into the plan document and have it come back to the Board at the next meeting for approval. Boardmember Youngblood seconded the motion, which carried by unanimous 5-0 vote. d) Proposed Language on 13"' Check Chair Weinand commented the only other change to the plan document would be if language regarding a 13'h check was to be included. Attorney Jensen submitted draft language for the 13''' check from another plan, indicating changes could be made. Attorney Jensen explained that supplemental pension distribution which was a 13"' check, was paid upon returns on the pension fund in years when they were good and exceeded the actuarial assumption and the experience from the pension plan had been positive from all sources. Highlighted items and the format of paying in one lump sum check could all be changed. It could be paid as a cost of living adjustment such as a 4°Io permanent increase for everybody going forward, or a 3°Io or a 1 °Io, but it was not guaranteed. Chair Weinand commented this was a fund paying a COLA versus building a COLA into the fund, which the Village Council did not want since it was very expensive. Vice Chair Genco asked what happened in years when the portfolio under performed, to which Attorney Jensen responded that there would be no check because neither of the criteria would have been met. This benefit was designed not to make the Village contributions increase-they would not pay it in years when the actuarial assumption had not been met. What would happen was in years when the returns on the pension fund were good, the Village's contributions would not decrease as fast as they would have otherwise. It would not increase the contributions. Vice Chair Genco expressed concern, commenting looking at the experience already if there was an 8% actuarial expectation, over a 6-year period there would need to be a return of 48% and if there was only a 40°lo return they would be in the hole 8°~o and that 8°Io had been achieved in one year; however, the next year there would need to be 56°Io return and it would not be there, so what would happen. Attorney Jensen responded that a 13'h check would not be paid. Vice Chair Genco commented this would get rid of the smoothing. Attorney Jensen explained it would not get rid of the smoothing-that in a year when a 13'h check was going to be paid it would only be based on the retiree portion of the portfolio so if there were a $2 million portfolio with one retiree and $500,000 set aside to pay that retiree, it BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August 12, 2003 PAGE 8 --------------------------------------------------------------------------------- would only be the returns on that $500,000. The Village would still get the $1.5 million return and the 13"' check would only be paid when the actuarial assumption was met. Boardmember Lucia asked what would happen the next year. Attorney Jensen responded the retiree would pay out a certain portion of his benefit-he wouldn't have the whole thing-you would only pay out a certain percentage of that benefit. Discussion ensued. Boardmember Lucia clarified that his question was if you had a 10 or 20-year assumption on 8% his question to the investment advisor or the actuary was to tell him the boundaries they were assuming. Mr. Lucia commented he agreed with Attorney Jensen if they said they would always be within 6°Jo to 12% to average 8°~0; then above 12% would be acceptable, but otherwise they were probably assuming the highs and lows blended into 8%. Attorney Jensen commented Mr. Palmquist might need to come into talk about this, but she believed what he actually did was each year when you made 8°Io that was all you were expected to make and the overage offset the Village's contribution over whatever the smoothing period was and reduced the amount of gain. You would only be missing one quarter in any given year of whatever you had distributed. Boardmember Lucia responded he believed he understood, but would like to have the investment advisor or actuary say when they assumed 8% if they assume a net payout on the 13`'' check to still achieve 8% or what was the net effect over the long run. After further discussion, Chair Weinand noted this would not be a concern for years so it might be better to have Mr. Palmquist explain it with the next actuarial study. It was requested that a tickler be set up to discuss this in the first quarter next year. Attorney Jensen explained that someone retiring with less than 25 years of service would receive a pro rata share, and reviewed how it could be calculated. It was noted that the supplemental distribution information had been received and filed at this point. MOTION: Vice Chair Genco made a motion to table discussion of the 13"' check until next year, noting the information had been received and filed. Boardmember Youngblood seconded the motion, which carried by unanimous 5-0 vote. c) Return to Item C, Approval of Proposed Plan Revisions Boardmember Lucia referred to page 5 where it talked about participation and the language indicated participation by the Fire Chief and Police Chief were optional, and asked for the background on that. Attorney Jensen explained that the State law had changed in 1999 that allowed plans to let Police and Fire Chiefs opt out. This gave the management of the Village more flexibility to negotiate to get employees. MnTi(lN~