Loading...
HomeMy WebLinkAbout11-21-1994 Minutes GENERAL EMPLOYEES' RETIREMENT TRUST FUND (PENSION MEETING) November 21, 1994 The meeting was called to order at 10:13 a.m. in the training room of the Community Center by Chairman Miller. The roll was called and a quorum declared present. PRESENT: Chairman Miller, Members Grafton, Oliver, Shiver, and Waldrop. Also present were Actuary Foster, Attorney Dehner, and Clerk/Stenographer Lewis. ABSENT: None APPROVAL OF THE MINUTES Secretary Grafton said there was a correction on page 2, which had already been made on the original, that said some motion was approved 4-0 and should read "Motion carried 3-0." Clerk/Stenographer Lewis said that the motion approving the minutes on page 1 should read "...the minutes of August 23, 1994, September 28, 1994 and September 30, 1994." Member Oliver arrived at the meeting at 10:25 a.m. Secretary Grafton, seconded by Member Oliver, moved to approve the minutes of October 27, 1994 as corrected. Motion carried 5-0. QUESTIONS/COMMENTS FROM AUDIENCE None TRAINING OF BOARD MEMBERS Chairman Miller explained that during the August 23, 1994 meeting a motion had been made to change the Operating Rules and Procedures to read "shall encourage to attend" (training conferences). Ms. Miller realized that it presented a hardship as Trustees had to take vacation time or personal leave but wanted it mandatory that each member attend at least two meetings or conferences. The Trustee had an important duty and responsibility to the employees. Attorney Dehner said there were five (schools/conferences) a year between the Division of Retirement and the FPPTA. Member Oliver, seconded by Secretary Grafton, moved that the General Employees' Pension Board change Rule 1.9 in the Operating Rules and Procedures to read "is expected to attend one training conference during their two year term in office." Motion denied 3-2. Members Grafton, Shiver, and Waldrop voted "nay." Member Shiver said that, based upon information that the advisors (attorney, actuary, and money manager) gave the Board, the Trustees made decisions. If that information turned out to be wrong, then the Board had the right to replace them. The Trustees needed a broad based knowledge on what was the purpose of the Board, what and why the Board was taking particular actions. Attorney Dehner cited six areas (legal, actuarial, money manager, the monitor (independent third party monitoring of money manager), the CPA that does the audit, and custodian that the Board received consultation on by professionals. The Trustees were judged on a prudent expert standard of those six areas of expertise and if, as Trustees, they were not expert in all those areas it was the Board's duty as Trustee to delegate responsibility to consultants and then get the input on the record from the consultant in a given area or element. General Employees' Retirement Trust Fund (Pension Meeting) November 21, 1994 The job as a Trustee was to exercise reasonable and prudent judgment in making a decision based upon what came before them. General employee Janet Resnik questioned the costs of trustees attending outside conferences as opposed to holding training conferences in the City for the entire Board. Ms. Resnik wanted a requirement that everyone in their first year attend at least in-house training with the Board deciding on additional training. Committing to being on a Board meant committing to certain things and two days was not too much to give for two years. New Board members should be made aware of training time prior to making the commitment to serve on the Board. Chairman Miller saw merit in the after hours training as it was difficult to take time away from work. A lengthy discussion ensued on the pros and cons of the costs/locations of the training sessions and a date of Wednesday, February 1, 1995, 6:00-10:00 p.m. in the Police Department training room was selected. Notice of the meeting must be posted to the General Employees' and the public. Attorney Dehner said that the Actuary and he will discuss investment advisory issues and basic responsibilities (of Trustees). Other topics will include Florida Laws, the Sunshine Law, the Public Records Act, etc. Reprints of materials will be provided in preparation for the conference and distributed as an outline. (1160, Chairman Miller inquired as to whether anyone was attending the school to be held in Tallahassee in February. Secretary Grafton, seconded by Member Oliver, moved to authorize any of the Pension members to attend the February Trustees school in Tallahassee, should they want to go. Motion carried 5-0. Members were to contact Secretary Grafton for the arrangements. DISCUSSION OF VETERANS' REEMPLOYMENT AND PENSION RIGHTS Member Miller reported reading a newsletter about a Federal law on changes in the Veterans Re-employment and Pension Rights that might affect the Plan. Attorney Dehner said the Fund was in compliance with the current Plan Provision. A Federal law states that someone who is already working for the City and separates from service in order to go into the military must be hired back with all the right of employment within a minimum of 90 days. Most Plans in Florida allow a year for that purpose as does the Plan of the Fund. The person then has an opportunity to buy their military time as credited in the Plan and the Fund offers that opportunity as well. If someone goes into the military and they are honorably discharged, within the next year they can come back and they have the right to be re-employed. Member Shiver did not agree with the Act and said he had a problem with someone who willfully resigns his job, goes to work with someone else and then returns and the City must re-employ him. 2 General Employees' Retirement Trust Fund (Pension Meeting) November 21, 1994 REPORTS ATTORNEY Attorney Dehner reported the following: 1) IRS - FORMULA BENEFIT PURPOSES - Re-iterated the reduction in the amount of compensation that a member could use for formula benefit purposes to $150,000 including the grandfather provision. While no one was making near that now, someone hired tomorrow may be embarking on a 30 year career, and with salary increases over a 30 year period, the Fund could run into that ceiling. The Board did not know what the indexing was going to be over time and Attorney Dehner recommended taking advantage of the grandfather opportunity. It was not a self executing grandfather provision and would require an amendment to the Plan. The issue could be revisited next August or September as there may still be amendments to that law which the Board could incorporate later. The grandfather opportunity would allow the Board to provide anyone who becomes a member of the Plan before the beginning of the 1996 Plan year to have as their limit the limit that was in effect July 1, 1993. (Clerk's Note: Also on the 8/23/94 agenda.) 2) DIVORCE PROCEEDINGS - Members getting a divorce should notify one of the Trustees of the Board of their attorney's name, address and phone number. The Trustee tikow would pass that information along to the Fund's attorney and a package of information would be mailed informing the attorney of the differences between a public and private plan. Discussion ensued on the differences of the two plans. 3) NOTICE - VERBATIM TRANSCRIPTION APPEAL/DISABLED PERSONS - The print at the bottom of the NOTICE of the Board agenda that refers to the responsibility to do a verbatim transcription appeal, some action of the Board, or with respect to disabled persons should be as conspicuous as anything else on the page. Police/Fire Board Chairman Reed asked for consideration in scheduling next year's meeting dates by going to quarterly meetings (February, May, August, and November) with Joint Board meetings to hear the actuary, attorney, and money manager reports. Chairman Reed suggested going to afternoon meetings as employees were unable to attend meetings until after 4:00 p.m. Other members supported quarterly meetings and a meeting date of 10:00 a.m., February 13, 1995 for the General Employees' Board, followed by a Joint Board, at which time the dates for the year would be decided. Mr. Reed left the meeting at 11:27 a.m. ACTUARY Actuary Foster reviewed the Actuarial Report for the Fund for performance as of October 1, Cor 3 General Employees' Retirement Trust Fund (Pension Meeting) November 21, 1994 1994. This was the first year that the Actuary had five years of salary information. A study that had been done in 1990 to determine alternative benefit provisions was the basis for the design of the program that went into effect on October 1, 1991 so the Certificates are very accurate now. They are based on the actual average salary definition in the Plan, which is the best five years of the last 10. The trustees may receive questions from members who, in the past, have gotten Certificates based on a one year salary information. Their projected benefit looked bigger because it is based upon the same number of years and a higher salary than the actual five year average. The actuary had foot noted the changes and in the back of the report was a description of how the numbers were developed. The contribution requirements compared with those developed in the October 1, 1993 actuarial valuation are as follows: 10/1/94 10/1/93 Total Required $ 380,816 $ 329,931 % of Total Annual Payroll 14.9% 14.6% Member Contributions 127,413 113,125 Balance From City 253,403 216,806 % of Total Annual Payroll 9.9% 9.6% r The required contribution had increased both in dollar amount and when expressed as a percentage of Total Annual Payroll. Approximately 80% of the dollar increase is attributable to the 12.6% increase in Total Annual Payroll. The balance of the dollar increase and the increase in the cost when expressed as a percentage of Total Annual Payroll is due to net unfavorable actuarial experience during the past 12 months. The principal component of unfavorable experience was a -1.1% investment return which was significantly less than the 8.0% assumption. The effects of these losses were partially offset by gains from the inclusion of 20 new entrants at comparatively younger ages. In connection with this year's valuation of the Plan, one methodology change was made. The use of market value in determining valuation assets had been changed to a method which is based upon a four (4) year moving weighted average of the ratio of market value to cost value. This technique had the effect of smoothing short term market fluctuations. The effects of the change are set forth in the Comparative Summary. A summary of the Plan Provisions was also given. Actuary Foster said that the Board must approve the methodology change in the Actuarial Valuation Report. An analysis of the investment performance of the Fund for the period from May 1, 1992 through Crir 4 General Employees' Retirement Trust Fund (Pension Meeting) November 21, 1994 September 30, 1994, had been completed and Actuary Foster presented the analysis to the Board. The report concludes the period of time when the Investment Council Company was acting as the investment manager. The average annual rate of return for the Fund during this period was 5.2%. This rate of return failed to outperform the composite index of market indicators (40% S&P 500 Composite Stock Index, 55% Lehman Brothers Government/Corporate Bond Index, and 5% U.S. Treasury Bills) which registered a return of 6.7%. During the one year period ending September 30, 1994, the Fund registered an 0.4% rate of return (compared with -0.7% for the composite index of market indicators) and ranked in the 32nd percentile of the Cadence Universe of investment managers. The equity portion of the Fund outperformed the S&P 500 (7.1% vs. 4.9%) and ranked in the 11th percentile for the one year period. Actuary Foster said that, probably beginning in March, the Fund will begin seeing how SunBank is doing. In their report, Foster & Foster, Inc. will isolate the time period that SunBank had been acting as manager so the Fund does not cloud the performance with a lot of history that SunBank did not have any control over. To get a long view of the performance the actuary will still go back to the date of inception and will also measure SunBank's performance. Attorney Dehner said that he had not written Key Trust in response to Secretary Grafton's inquiry on whether they had been notified of the change to SunBank. He would check with Attorney Christiansen. Attorney Dehner also responded to Secretary Grafton that authorization for payment of the bills for this meeting should go to Key Trust. Secret. Grafton seconded b Member Oliver moved to a. trove the chane in the asset valuation method as described on ease 2 of the Ci of Ocoee Munici I al General Em I to ees' Retirement Trust Fund Actuarial Valuation Report as of October 1, 1994 as presented. Motion carried 5-0. Actuary Foster will forward the report to the Division of Retirement. Actuary Foster commended City staff for an excellent job phasing in the new higher rate for the year ending September 30, 1994. Member Shiver seconded b Member Oliver moved to acce et the Actuarial Valuation Re s ort as of October 1, 1994 as presented. Motion carried 5-0. OTHER BUSINESS BILLS AUTHORIZED FOR PAYMENT Secretary Grafton explained the credit statement from Christiansen and Dehner. Ms. Grafton requested approval of the Board to present to Key Trust for payment the following bills: Low 5 General Employees' Retirement Trust Fund (Pension Meeting) November 21, 1994 1. City of Ocoee September: Copies 146 - $5.84 Postage $2.31 October: Copies 305 - $6.10 TOTAL $14.25 2. Foster & Foster, Inc. Actuarial Report for October 1, 1994 Actuarial Valuation & Report Preparation of Member Certificates - $3,670.00 The Analysis and report of Investment Performance of Trust Fund for the quarter ending September 30, 1994 - $500.00 Benefit calculation for Bruce Behrens - $50.00 TOTAL $4,220.00 Member Shiver, seconded by Member Oliver, moved to approve wment of the bills••resented for City of Ocoee and Foster and Foster, Inc. as presented. Motion carried 5-0. Secretary Grafton requested an original of the approved forms and Operating Rules and Procedures from the Board attorney. Ms. Grafton also asked if the Board secretary should notify Aetna that it is no longer using their service for Fiduciary coverage and Attorney Dehner said that the Board should send a letter. ADJOURNMENT The meeting was adjourned at 12:10 p.m. Respectfully submitted, Judi Lewis Clerk/Stenographer Low 6