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HomeMy WebLinkAboutRetirement Committee - Minutes - 02/03/2005COUNCIL LIAISON: COMMITTEE MEMBERS PRESENT: MEMBERS ABSENT: General Employees' Retirement Plan GENERAL EMPLOYEES' RETIREMENT COMMITTEE February 3, 2005, MEETING MINUTES Approved March 3, 2005 Mayor Ray Martinez A�MJ��' �� � Susan Lehman, r, 21-6813 Bill Switzer, 221-6713 Jim O'Neill, Vice Chair, 221-6779 Alan Krcmarik, 221-6788 Dottie Nazarenus, 204-4429 Michele Hays -Johnson, 416-2158 OTHERS Pat Kahle (Actuary, Milliman) PRESENT: Julie Depperman & Ann Wardle (Finance) Debbie Weedman (Human Resources) CALL TO ORDER: Susan Lehman called the meeting to order at 1:20 p.m. Michele Hays -Johnson and Greg Tempel did not attend. PUBLIC PARTICIPATION AND PLAN MEMBER COMMENTS: The Committee reserves this place on the agenda to receive comments from Members of the Plan or the public. There were no comments. APPROVAL OF MINUTES: Minutes of the January 6, 2005, meeting were distributed. The Committee discussed to whether to leave a Plan Member's last name out of the minutes that referenced a Domestic Relations Order. With regard to other Domestic Relation Orders, Greg had previously advised that it was important to refer to the Member by name for the official record in the minutes. Dottie Nazarenus moved to accept the minutes of the January 6, 2005, meeting as written, and Jim O'Neill seconded the motion. The Committee approved the minutes unanimously (5-0). DISCUSSION TOPICS: 1. Plan Philosophy: There were no comments on Plan Philosophy. 2. Review of Personal Retirement Planning Statements: Pat Kahle handed out copies of page two of the Personal Retirement Planning Statements for review. 215 North Mason Street • 2nd Floor • P.O. Box 580 • Fart Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 General Employees' Retirement Committee February 3, 2005, Meeting Minutes Page 2 of 4 Pat said that the information under the heading of G.E.R.P. Benefits (assuming no future salary increases) at the bottom of page two does not relate to the chart depicted on page one. The graph on page one assumes that salaries change and grow over time according to the salary assumptions (in this case, equal to the rate of inflation). The inflation assumption is 21/2%. Alan said the City Manager intends to include a labor market adjustment in the 2006 budget recommendation. Although discussion at the last meeting was to put off salary increases until 2008, we have since received information from the City Manager's Office that salary increases may begin in 2006 rather than 2008. Alan moved to accept the Personal Retirement Planning Statements as corrected, and Bill Switzer seconded the motion. The Committee approved the motion unanimously (5-0). 3. Valuation Assumptions: Pat distributed a three -page hand out of the Actuarial Procedures and Valuation Assumptions. These are long-term assumptions. The Plan uses the "actuarial cost" method which spreads the funding of the Plan over the lifetime of the population. This method is best when you have a plan membership that is frozen and shrinking. The method used to calculate the actuarial value of plan assets spreads asset gains and losses over a five-year period. This helps to smooth out the effects of market movements. Pat said smoothing is very standard for public plans. Investment earnings are assumed to be 71/2% per annum. Pat said she took the Plan's asset mix, applied a 21/2% inflation factor, and ran it through Milliman's internal models; she thinks the 7.5% investment return assumption falls within the acceptable range. She said that 71/2% may be a touch on the aggressive side, but she would not recommend lowering it and could defend that assumption. Pat reviewed the earnings progression table. Pat said the actuarial assumptions should not be confused with the personal benefit statements. Different assumptions are applied to the benefit statements and the valuation report. Pat said there is a trend toward more people retiring later. We changed our retirement assumption in 2003 to reflect the experience of the plan population and this trend. In 2004, the Plan began using the 1994 Group Annuity Mortality Table. The Committee discussed replacing this table in the next few years when another one comes out since people are living longer. Pat recommended keeping the assumptions where they are and continue to monitor the effect of gains/losses. Jim moved to accept the actuarial assumptions presented, and Dottie seconded the motion. The Committee approved the assumptions unanimously (5-0). The presentation of the Actuarial Valuation is scheduled for the April meeting. 4. 2004 Year -End and Quarterly Investment Report: Julie Depperman distributed a handout of the Investment Report for the year and quarter ended December 31, 2004. The Plan earned 9.14% or $2.2 million. The market value of Filename: 2005 GMIN 08 05 FINAL General Employees' Retirement Committee February 3, 2005, Meeting Minutes Page 3 of 4 the Plan was $36,267,812 at year end. Fixed income investments accounted for about 36% of the market value, and domestic and foreign mutual funds accounted for 48% and 16% respectively. All are within the investment policy targets. Fourth quarter activity was reviewed. The City contributed almost $200,000 to the Plan in the December quarter. Mutual funds and regular fixed income earnings totaled about $800,000 for the quarter. Expenses from the Plan for the quarter were $165,000 in lump -sum distributions, about $290,000 in retirement payments, and about $2,500 in administrative expense. There was a $2.1 million net gain on investments for the year, the majority of which was from mutual funds. The Committee reviewed the economic information and Plan performance data and charts. The gain from the 21.1% return in 1999 will fall off the five-year smoothing. This will be a hard hit to the market value of assets in the Actuarial Valuation. Julie provided the mutual fund compliance report for the quarter ended December 2004. Three of the funds had changes to their Morningstar ratings. Finance is closely monitoring and may liquidate the Dreyfus Emerging Leaders Fund. Alan said that Dreyfus yielded about 14.2% for the year, but that they may choose to liquidate the fund since it has changed its market focus from small cap to mid cap. 5. Other Business: Debbie asked about the Summary Plan Description handbooks. Alan said he is hoping to have the description available online when the personal retirement planning statements go out. Adjournment: The Committee adjourned at 2:45 p.m. TOPICS FOR NEXT REGULAR MEETING The next regular meeting of the Committee will be held on March 3, 2005, at 1:15 p.m. in meeting room 2A at 215 North Mason Street. The tentative agenda includes: Public Participation & Plan Member Comments Approval of Minutes Plan Philosophy Update on Personal Retirement Planning Statements Review and Update of Standing Rules Election of Officers Monthly Investment Report Other Business GENERAL EMPLOYEES' RETIREMENT PLAN WEB PAGE: The Plan's web page can be found at www.fcaov.com/cityclerk/retirement.phhp. The Committee's 2004 Annual Report, 2005 Work Plan, and monthly minutes are available at this site. Filename: 2005 GMIN 08 05 FINAL General Employees' Retirement Committee February 3, 2005, Meeting Minutes Page 4 of 4 2005 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 215 North Mason Street, meeting room 2A. For 2005, the Committee has scheduled the meetings as shown below: 3anwary 6 April 7 FebFuaFy May 5 March 3 June 2 July 7 October 6 August 4 November 3 September 1 December 1 Filename: 2005 GMIN 06 05 FINAL