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HomeMy WebLinkAbout01-17-1994 Minutes GENERAL EMPLOYEES' RETIREMENT TRUST FUND (PENSION MEETING) January 17, 1994 The meeting was called to order at 10:05 a.m. in the Community Center by Chairman Lewis. PRESENT: Chairman Lewis, Members Grafton, and Waldrop. Also present were Attorney Lee Dehner, Actuary Ward Foster and Scott Haynsworth, M.A.S. of Foster and Foster Actuarial Consulting, Terry McDougal and Reese Lospinoso of The Investment Counsel Company, Clerk/Stenographer Lewis, and employees Ellen King and Janet Resnik. ABSENT: Members Miller and Oliver. APPROVAL OF MINUTES Member Waldrop, seconded by Secretary Grafton, moved to approve the minutes of November 12, 1993 meeting as presented. Motion carried 3-0. QUESTIONS AND COMMENTS FROM THE AUDIENCE There were no questions or comments from the audience at this time. Ly Consideration/Adoption Of Amendments To OPERATING RULES AND PROCEDURES And Selected Provisions • Attorney Delmer distributed copies of proposed amendments to the Operation Rules and Procedures for Board study, pointing out that one of the primary changes in the document relates to election procedures. He also pointed out the following changes: 1) Rule 2 par. 2.2: A new legend is now required on the agenda in addition to the notice, "Any person who desires to appeal any decision made at the meeting will need a record of the proceedings and for this purpose, may need to ensure that a verbatim record of the proceedings is made which includes testimony and evidence upon which the appeal is based." The new ADA legend is "Persons with disabilities needing assistance to participate in any of these proceedings should contact the (contact name's office) 24 hours in advance of the meeting."; 2) Rule 6 par. 6.1: re: Fiduciary Insurance, add "..., but the fund shall not pay to waive recourse against Trustees. ..."; 3) Rule 10 par. 10.8: This paragraph was expanded to include more specific details to cover solicitations from consultants. When the final draft is presented and adopted then the off-print of the selected provisions will be authorized. In order to complete the adoption of the amendments in a timely manner there was consensus to schedule a meeting for early February. Later in the day, during the Fire/Police Pension Board Meeting, the time was set for 9:00 a.m. on Wednesday, February 9, 1994. 1 General Employees' Retirement Trust Fund (Pension Meeting) January 17, 1994 Proposed Revision To PERMIT EMPLOYEE TRANSFERRING TO FIRE/POLICE FUND FROM GENERAL FUND TO RETAIN VESTING CREDITS EARNED IN GENERAL FUND Attorney Delmer reported that he had discussed several issues with City Manager Shapiro and Personnel Director Psaledakis regarding possible ordinance amendments to the policy which the Board may wish to consider recommending to Commission: 1. Should a provision be incorporated which provides that an employee's credit of time toward vesting for retirement count from the time of employment with the City rather than from the time of transfer from the General Fund Plan to the Fire/Police Plan? The present policy provides that an employee who transfers from the General Fund to the Fire/Police Fund must start all over earning vesting credits toward retirement, and lose those credits toward vesting that had been earned in the General Fund. During discussion Board determined that, if this is done, language should be clear whether or not this time so credited is to be counted toward actual retirement date. Language should also be clear on the accrual rate calculation to be used on the General Fund contribution if the employee so transferred opts to leave his contribution in the General Fund Plan, becomes fully vested in the Fire/Police Plan, and then retires. 2. Should employees who have used time under the Family Medical Leave Act have the option to buy that time as credited service time in the plan? The current ordinance does not cover this area. Mr. Dehner said that Mr. Shapiro and Ms. Psaledakis have no objection to including this in the plan should the Board desire to incorporate this policy, and he had included it in the draft for Board consideration. Actuary Foster responded to the November 12, 1993 Board questions as presented in the minutes. He explained the current plans provide for full vesting after five years of service yet he had seen many situations where a member might start out as a General Employee and, after working four years, become a Police Officer/Fire Fighter, accrue benefits in that plan four years, terminate employment and never get benefits from either plan other than a refund of contributions. Actuary Foster said that some plans define service for vesting purposes as "service with the City in any capacity for entitlement to vesting." When this is done the employee gets two checks, one from each plan, computed based upon the average monthly earnings in effect at the time of retirement and the benefit provisions in effect in each plan at the time of retirement. In this way a transferred employee would share in any benefit improvements that the plan they transferred from had developed. A terminated employee would not get the benefits of increased plan provisions. Mr. Foster said that the financial impact on either plan would be minimal. In response to Chairman Lewis's questions as to why we are just now addressing this and what other cities are doing, Mr. Foster said that other cities are beginning to use this method and it was not incorporated into their plans until the issue came up 2 General Employees' Retirement Trust Fund (Pension Meeting) January 17, 1994 as employees transferred. Mr. Foster's recommendation was as follows: 1. Use the average of the best five years of all service to apply to the formula benefit from each plan as opposed to the best average they had as a general employee. 2. Apply the accrual rates in effect in each plan on the date of retirement as opposed to the full rate in effect at the time of the transfer. Attorney Dehner agreed with Mr. Foster's comments on the distinction to be made between the terminated vested employee receiving the benefit of any improvements in the General Plan the employee left when terminated from City service versus continuing to work for the City, and said that he would have a legal problem with applying benefit improvements to a terminated vested employee with respect to under compensation, which is a Statutory Prohibition. Secretary Grafton asked if a provision should be included for those employees who have already transferred to the Fire/Police Plan who have withdrawn their money from the General Fund to buy back in for vesting purposes. She said it might create a financial hardship for some employees but the option could be made available to them. Attorney Dehner said there was no legal requirement to do so, but the Board could provide an opportunity for this to be done. Actuary Foster pointed out employees could be given a one year buy back period then close the window on the opportunity. Chairman Lewis directed, on the Board's behalf, that Attorney Dehner prepare a workable DRAFT of the Ordinance and asked Mr. Foster to prepare a cost estimate presentation for the next scheduled meeting. Mr. Lewis suggested a delay in making a decision based on the outcome of the estimate and to table it for the next meeting. REPORTS ATTORNEY Attorney Dehner explained the Family Medical Leave portion of the draft was for discussion purposes only, and that the minimum federal standards do not require that this provision be made available to the employee. He suggested, if Board elects to provide this option, a buy- back date for an employee who had taken leave during the past fiscal year to occur annually between March 1 - April 30, and for the employee to provide a check for costs of Mr. Foster's calculation for employee buy back amount. Mr. Dehner pointed out the importance of tracking personnel records and possibly placing a cap on the total amount that can be purchased. Another issue of concern was whether the amount of time should count for vesting purposes and if the employee should be given 12, 24 months, or an open ended time to buy back. Mr. Dehner also pointed out that the language required for the Internal Revenue Service before the end of this calendar year is included in the plan on direct trustee to trustee transfer for roll over distributions. ACTUARY Actuary Foster said a new program had been created to produce the member certificates and L 3 General Employees' Retirement Trust Fund (Pension Meeting) January 17, 1994 the new format offered a more detailed formulation. He said that the new system will enable them to produce the certificates in November this year as the City is very good about providing employee data in a timely manner. Scott Haynsworth explained each aspect of the Actuarial Valuation Report, noting that there was a change in the methodology used in this year's valuation of the Plan which assumes that those active members who are eligible to retire on the valuation date retire one year following the valuation date instead. This change was required by the Department of Management Services, formerly the Department of Administration. Chairman Lewis asked when this fund would be fully funded to cover 100% of the accrued benefits to date and whether the City's contribution would decrease at that time or the fund would continue to build to an over-funded status. Mr. Haynsworth said it would probably be fully funded next year and typically at that time it would be appropriate for the Board to consider increasing employee benefits. Member Waldrop asked if the City could move the multiplier up and Attorney Dehner said that to change a benefit the Board would have to request a study and then make a recommendation to the City for a benefit change which occurs only through amending an Ordinance to amend the Plan. Mr. Dehner also recommended discussion with membership to determine where they would like to see the improvements made in 1.) increasing monthly retirement benefit which can be done by increasing the accrual rate and/or decreasing the number of years that is provided for the average final compensation, and 2.) retirement age. The Board should then request that Actuary Foster do a cost estimate on those improvements, then review the results to determine a recommendation on how it will be funded. Mr. Foster said that he can provide some information regarding medical benefit supplements and post retirement medical benefit premiums Board could consider to help the retirees. This will be considered at the next meeting. Actuary Foster gave his quarterly report on the analysis of the investment performance of the Trust Fund for the period ending September 1993. The report showed poor performance for the quarter. Mr. Foster pointed out, however, that the yearly average was acceptable and The Investment Counsel Company had a good track record for a number of years or they would not have been considered by this Board in the beginning. MONEY MANAGER Terry McDougal, of The Investment Counsel Company, introduced Reese Lospinoso to the Board and then presented the Investment Review for the period ending December 31, 1993. She reminded the Board that they are a value manager as opposed to a growth manager and explained their strategy. She then distributed "The Investment Counsel Company - Description of Fixed-Income Strategy" report describing different investment strategies. Attorney Denner asked Ms. McDougal about the transaction rate and said he does not understand why Investment Counsel does not go through a broker that will give the Board 6 to 10 cents a share to accomplish the "best execution" required by the Board as opposed to the approximately 30 cents being charged now. Ms. McDougal said that she was sure they were doing their very best to 4 General Employees' Retirement Trust Fund (Pension Meeting) January 17, 1994 do best execution now and she described the method used. Mr. Definer asked Actuary Foster to provide a list of rebate brokers he would recommend to the Board to contact for written materials. OTHER BUSINESS GENERAL EMPLOYEES' RETIREMENT TRUST FUND SIGNATURE CHANGES Secretary Grafton submitted for Board consideration a Resolution providing a new list of authorized signatures to the custodians, removing Judy Henry's name and adding new member Ricky Waldrop. After pointing out that this was a legally noticed meeting at which a quorum was present, Secretary Grafton, seconded by Member Waldrop. moved to adopt the Resolution resolving that any two _(2) of the following named trustees' signatures may authorize disbursement from the account maintained by Key Trust Company of Florida, as custodian, for the City of Ocoee Municipal General Employees' Retirement Trust Fund: Paul Lewis, Chairman; Jean Grafton. Secretary; Tanya Miller: Joyce Oliver: and Ricky Waldrop. Motion carried 3-0. BILLS AUTHORIZED FOR PAYMENT Secretary Grafton requested approval of the Board to present to Key Trust for payment the following bills: 1. Christiansen and Denner $ 1,118.35 2. Investment Counsel Company $ 964.23 3. Foster & Foster, Inc. $ 4,085.00 Secretary Grafton, seconded by Member Waldrop moved to pay the bills as presented. Motion carried 3-0. Attorney Definer advised the Board that his service fees would increase from $150 to $180 an hour, effective February 1, 1994. RECESS 12:15 - To Reconvene in Joint Pension Board Meeting at 3:30 P.M. 3:30 p.m. JOINT BOARD/GENERAL EMPLOYEES PENSION BOARD In the absence of Chairman Lewis, Secretary Grafton opened the meeting at 3:30 p.m., and introduced Actuary Foster. Mr. Foster then explained the new format for the employee certificates while they were being distributed to those employees present. There followed a general session of questions from the employees which Mr. Foster and Attorney Denner answered. 5 General Employees' Retirement Trust Fund (Pension Meeting) January 17, 1994 ADJOURNMENT The meeting adjourned at 4:05 p.m. Respectfully submitted, Judie F. Lewis Clerk/Stenographer a:\wp60\pension6Uewis L 6