HomeMy WebLinkAboutRetirement Committee - Minutes - 09/11/2003City of Fort Collins
Retirement Plan
GENERAL EMPLOYEES' RETIREMENT COMMITTEE
September 11, 2003, MEETING MINUTES
Approved, as amended, October 9, 2003
COUNCIL LIAISON: Mayor Ray Martinez
COMMITTEE
Susan Lehman, Chair, 221-6813 Alan Krcmarik, 221-6788
MEMBERS
Michele Hays -Johnson, 416-2158
PRESENT:
Bill Switzer, Vice Chair, 221-6713
MEMBERS
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Dottie Nazarenus, 204-4429
ABSENT:
Jim O'Neill, 221-6779 ��vG
OTHERS Pat Kahle (Actuary, Milliman USA)
PRESENT: Greg Tempel (City Attorney)
Debbie Weedman (Human Resources)
Julie Depperman & Ann Wardle (Finance)
CALL TO ORDER: Susan Lehman called the meeting to order at 1:38 p.m. Four
members of the Committee were present, constituting a quorum.
PLAN MEMBER COMMENTS: The Committee reserves this place on the agenda to
receive comments from Members of the Plan or the public. A Plan Member and her
husband attended the meeting to discuss her concerns about the Full-Time/Part-Time
Plan change (see Discussion Topic #2 below).
APPROVAL OF MINUTES: Alan Krcmarik distributed the minutes of the July 10,
2003, meeting. Michele Hays -Johnson moved the minutes be adopted and Bill Switzer
seconded the motion. The Committee approved the minutes unanimously (4-0).
DISCUSSION TOPICS
1. Plan Philosophy: Alan asked Pat Kahle, Milliman USA, if she had additional
information regarding the Plan's liabilities. Pat said Milliman USA could create an
asset/liability model for the Plan or she could use the investment reports prepared as
of August 31, 2003 and move the liabilities forward to see how they have changed
with the improvement in the equity market. Julie Depperman said she does not see a
lot of value in spending $400-$500 to run the portfolio through this model right now.
The Plan assets are up almost 10% year to date. Alan agreed that the Plan should not
spend money on a quick snapshot of assets and liabilities at the present time. Alan
215 North Mason Street • 2nd Floor • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
• General Emcees' Retirement Committee
Septem r 11, 2003, Meeting Minutes
Page 2 of 4
said that even though the market value of assets is above the expected 7.5%
investment return so far this year, there is still a large liability that needs to be funded
over the next 20 years. The Committee agreed to keep the option of modeling open
and will add asset liability modeling to future agendas.
2. Part -Time Plan Change Comments: As stated under Plan Member Comments
above, a Plan Member and her husband attended the meeting to discuss their
concerns with the full-time/part-time Plan change that was approved by City Council
in June 2003. The Plan Member's husband gave a copy of the overhead material he
planned to use for the meeting; Ann Wardle will distribute copies to Board Members.
He said they had met with Alan and Julie but would like to present their situation to
the entire Committee. He reviewed his wife's case and stated that she has worked for
the City for over 14 years, which works out to a little more than 8 years credited
service based on the Plan change. Under the old Plan, her retirement benefit would
have been about $567 per month but is $492 under the new calculation method. He
recognizes that the actual benefit can never be lower than $567 based on her accrued
benefit as of June 30, 2003. He said, however, that her benefit would be $237.53 per
month less under the new Plan if she continues working until she is age 65. He also
suggested an alternative method of calculation. The Plan Member and her husband
left the meeting at about 2:21 p.m.
Alan indicated that this Plan change was not a result of recent market losses and was,
in fact, being looked for several years when the Committee recognized there was a
fundamental difference with the benefit accruals between full-time and part-time
Members. In his opinion, the right action was taken in trying to address equity and
having proportionate benefits with what has been contributed on the Member's behalf.
Alan also reported that the Committee reviewed an alternate calculation method
similar to the one suggested by the Member and found it created additional inequities
within the Plan.
Susan stated that she fully understood the method of calculation and that she thought
the Committee had adopted the best choice. She then asked for the opinions of other
Committee Members. Bill said the Committee will have to defend that the Plan did not
take away the Member's vested benefits if the Member brings in an attorney. Even
though is was not required, the Plan obtained another legal opinion from a qualified
pension attorney who opined that you could not take accrued benefits away but that
you can change the benefit formula going forward. This was also confirmed by the
Plan's actuarial firm. Pat added that it is future benefits that are affected and what
was earned previously is not being taken away and that the change is valid. Greg
stated the Plan change and how it was handled are legally defensible. Michele said
Plan changes had both negative and positive impacts on Members' benefits but the
Committee can not possibly address each and every situation individually. Michele
stated that all Members were given ample notice and that this Member failed to
contact the Committee until after City Council approved the change. Alan said this
particular Plan Member will still receive a benefit that is higher than the amounts that
the City has contributed into the Plan. Alan will prepare an answer to the Member and
have Greg and the rest of the Committee review it.
Filename: 2003 GMIN 091103 Final
• General Emmees' Retirement Committee
Septem r 11, 2003, Meeting Minutes
Page 3 of 4
Greg distributed copies of the Resolution adopting the third amendment to the Plan;
the Full-time/Part-time Plan change. Greg routed everyone a working copy of the Plan
via email that incorporated the three amendments to the Plan.
3. Monthly Investment Update: Julie distributed the Plan Investment Report as of
August 31, 2003. She reported that the year-to-date portfolio return was close to
10%. Mutual funds were up 18.9% for the year. Julie also reported that they have
completely liquidated out of the Nicholas Fund. The Nicholas Fund had been on the
"watch list" due to poor performance. Alan indicated that they are reviewing whether
to move out of Janus Funds, given recent news stories regarding their business
practices. Alan said he would like to give Janus an opportunity to express what they
plan to change now that their management has changed. The former director of
I.C.M.A. Retirement Corporation has taken a position with Janus, and based on his
past performance at Fidelity and the Retirement Corporation, Alan has confidence in
his abilities.
Julie also distributed the Mutual Fund Quarterly Compliance Analysis. She reviewed
the report and discussed the star ratings of the Plan's funds. She said that most of
the Plan's funds gained in asset size and that the overall portfolio has a strong rating
of three and one-half stars.
4. Other Business: Bill asked if anything has been determined as far as additional
funds for the Plan. Alan said the Plan got $250,000 for the year 2002 and that the
request for a similar amount was renewed for 2003. Alan said the budget information
did not reflect additional funds for the Plan; he and Darin Atteberry will be visiting
with City Manager Office staff about the funding request, but this meeting has not be
completed yet.
Adjournment: There being no further business, the Committee adjourned at 3:15
p. M.
TOPICS FOR NEXT REGULAR MEETING
The next regular meeting of the Committee will be on October 9, 2003, at 1:30 p.m.
in the Council Information Center of City Hall. There will be a 15-minute variance
from the usual meeting time of 1:15. The tentative agenda includes:
Plan Member Comments
Approval of Minutes
Plan Philosophy
Status on Proposed Part -Time Plan Change
Monthly Investment Update
Other Business
GENERAL EMPLOYEES' RETIREMENT PLAN WEB PAGE: The General Employees'
web page can be found at www.fcgov.com/city clerk. The Committee's 2002 Annual
Report, 2003 Work Plan, and monthly minutes are available at this site.
Filename: 2003 GMIN 091103 Final
General Emcees' Retirement Committee
Septem r 11, 2003, Meeting Minutes
Page 4 of 4
2003 Meeting Schedule:
The regular meeting time for the Committee is at 1:15 p.m. on the first Thursday of
each month. The regular location is the Council Information Center at City Hall. For
2003, the Committee has scheduled the meetings as shown below:
Apr+l3 guly 10 October 9
Fey 6(eaneele6qNovember 6
Mafeh 6 3une 5 December 4
frem September- 4"
Filename: 2003 GMIN 091103 Final