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HomeMy WebLinkAboutRetirement Committee - Minutes - 07/12/2001City of Fort Collins Retirement Plan GENERAL EMPLOYEES' RETIREMENT COMMITTEE JULY 12, 2001, MEETING MINUTES COUNCIL LIAISON: Mayor Ray Martinez (!&1dr. Approved August 2, 2001 COMMITTEE Terry Van Cleave, 221-6321 Susan Lehman, 221-6813 MEMBERS Michele Hays -Johnson, 416-2158 Dottie Nazarenus, 204-4429 PRESENT: Bill Switzer, 221-6713 Alan Krcmarik, 221-6788 OTHERS Julie Depperman & Sue Wilcox (Finance) Greg Tempel (City Attorney's Office) PRESENT: Deb Weedman (Human Resources) Gary Heaston, Milliman USA (actuary) CALL TO ORDER: Chair Susan Lehman called the July 12 regular meeting to order at 1:37 PM. ITEMS OF NOTE: Susan moved the discussion item regarding actuarial performance to the end of the agenda. PLAN MEMBER COMMENTS: A Plan member asked Michele Hays -Johnson the Committee would consider a "rule of 80" type of benefit. The Committee agreed the Plan Restatement and the revision to the method of calculating the retirement benefit would remain to be the focus. The Committee may discuss the "rule of 80" after these two topics are resolved. APPROVAL OF MINUTES: Alan Krcmarik distributed the June 7, 2001, draft meeting minutes. Terry Van Cleave moved approval of the minutes. Dottie Nazarenus seconded the motion. The Committee approved the minutes unanimously (6-0). DISCUSSION TOPICS 1. DISCUSSION OF RETIREMENT PHILOSOPHY MAIN POINTS: The Committee did not have any items to discuss related to this topic. CONCLUSION AND NEXT STEPS: The Committee agreed to retain this item on the agenda. 2. PLAN RESTATEMENT TASKS AND SCHEDULE MAIN POINTS: Greg Tempel reported a subgroup of staff members and Susan and Alan met on July 9, 2001, review the Steve Weinstein's (Pension attorney) first draft of the Plan restatement. In the Plan restatement, the Committee intends to incorporate all amendments since 1992, the last restatement and to insure that the Plan complies with all state and federal laws. The purpose of the small group review is to reduce the number of questions. Greg said that other Committee members are welcome to attend these sessions, but that if three or more Committee members attend, formal public notice of the meeting is required. Filename: GminJuly200117 215 North Mason Street • 2nd Floor • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221 6782 General Employees' Retirement Committee ry 12, 2001, Meeting Minutes Page 2 of 4 CONCLUSION AND NEXT STEPS: The subgroup will meet again on Wednesday, July 18. The schedule calls for Mr. Weinstein to provide the second draft to the Committee and staff a week before the August 2 Committee meeting, a very ambitious schedule. Gary Heaston was asked to collect any comment on the restatement from the actuary team and provide them to the Committee before the August meeting. 3. DISCUSSION OF PROPOSED NEW METHOD OF CALCULATING RETIREMENT BENEFIT (FULL-TIME - PART-TIME EQUITY ISSUE) MAIN POINTS: The Committee has been evaluating a s method to provide more equitable benefits for members who move from a full-time position to a part-time position or vice versa. The method would note all pay changes over the member's work career and the duration of each. Each pay rate would be annualized and the benefit calculated based on whether they worked full-time or part-time. Alan reported staff revised a memo (originally drafted by Jim Hume) explaining the problem and the proposed solution to the members. Members and staff suggested a few wording changes, but in general, the information presented met with the Committee's approval. Gary questioned whether this Plan was subject to ERISA and IRS Code Section 411(d)6. The Committee and staff discussed this issue intensely. In a telephone call subsequent to the meeting, Gary verified the Plan is not subject to that provision. CONCLUSION AND NEXT STEPS: Committee members will review the memo and forward them to Alan for inclusion in the memo. Alan is to review the proposal with the pension attorney. When the memo is complete, the Committee will discuss a notification and implementation schedule at the next meeting. 4. JUNE, 2001, INVESTMENT REVIEW AND SECOND QUARTER INVESTMENT REPORT MAIN POINTS: Julie Depperman reported the market value of the portfolio is $32.5 million as of June 30, 2001. The year-to-date loss is 1.56%. The stock market has begun to make up some of the losses that occurred at the beginning of the year. The asset allocation targets are still being met, with 42% in fixed income investments, while domestic and foreign mutual funds make up 44% and 14%, respectively, of the portfolio's market value. During the second quarter of 2001, the bond portion of the portfolio returned 6.13%, while the five- year treasury benchmark yield was only 4.8%. Although the quarterly return for domestic mutual funds was 6.83%, this portion of the portfolio was not enough to recoup the losses experienced in the first quarter of 2001. The returns for the international mutual funds in the portfolio were mixed ---some funds performed well while others continued to sustain losses. The international mutual funds declined slightly (0.1 %) during the second quarter, but the year-to-date loss totaled 14.9%. According to a survey conducted by Bloomberg News, analysts expect the U.S. economy to escape recession this year as lower interest rates and tax rebate checks provide a boost in the second half and extend the record expansion. • GenEmployees' Retirement Committee July 12, 2001, Meeting Minutes Page 3 of 4 CONCLUSION AND NEXT STEPS: Members may contact the Finance Department to obtain a copy of the quarterly investment update. Julie will present a quarterly compliance report on mutual funds next month. 5. OTHER BUSINESS MAIN POINTS: Greg distributed copies of the final Domestic Relations Order (DRO) forms and process outline, which were reviewed and approved as Resolution 2001-01 at the last meeting. At this time, Gary Heaston left the meeting. 6. REVIEW OF ACTUARIAL PERFORMANCE MAIN POINTS: Susan noted the actuarial services have at times been less than satisfactory. She cited the actuary providing conflicting information, missing deadlines, and providing information at the last minute or late. Alan commented that the bills for services did not match the charges outlined in the contract. Most of the major functions, services, and the timelines for providing this information are outlined in the Scope of Services part of the contract. Copies of the scope of services will be provided to staff. Susan asked staff members report to the Committee any experiences with the actuary where the services did not meet their expectations. CONCLUSION AND NEXT STEPS: Suggestions included rating actuarial performance in each of the areas outlined in the scope of services, creating a format for tracking work items, and implementing consequences for missed deadlines. Alan will provide copies of the scope of services to the Committee members and staff. 7. SCHEDULE FOR NEXT REGULAR MEETING The next regular meeting will be August 2, 2001, at 1:15 PM in the Council Information Center (CIC) of City Hall. The tentative agenda includes: ♦ Citizen Participation and Plan Member Comments ♦ Consider approving the July 12, 2001, Minutes ♦ Discussion of Retirement Philosophy ♦ Report on Plan Restatement Activities and Schedule ♦ Discussion of Possible Change in Calculating Retirement Benefit ♦ Second Quarter, 2001 Compliance Report and Monthly Investment Update ♦ Other Business ♦ Actuary Performance ADJOURNMENT: Susan adjourned the meeting at 3:17 PM. GENERAL EMPLOYEES' RETIREMENT PLAN AND COMMITTEE WEB PAGE ADDRESS: Since the switch to FCGOV.com, our web page is "under construction". FUTURE 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, City Hall. The next scheduled meeting will General Emnloyees' Retirement Committee ly 12, 2001, Meeting Minutes Page 4 of 4 be Thursday, August 2, 2001, at 1:15 PM. The Committee has scheduled meetings for 2001 as shown below: 2001 CALENDAR THURSDAY, AUGUST 2, 2001 THURSDAY, SEPTEMBER 6, 2001 THURSDAY, OCTOBER 4, 2001 THURSDAY, NOVEMBER 1, 2001 THURSDAY, DECEMBER 6, 2001 • General Employees Retirement Plan REISSUED Citv of Fort Collins FORT COLLINS GENERAL EMPLOYEES' RETIREMENT COMMITTEE JULY 12, 2001, MEETING MINUTES Approved August 2, 2001 COUNCIL LIAISON: Mayor Ray Martinez COMMITTEE Terry Van Cleave, 221-6321 Susan Lehman, 221-6813 MEMBERS Michele Hays -Johnson, 416-2158 Dottie Nazarenus, 204-4429 PRESENT: Bill Switzer, 221-6713 Alan Krcmarik, 221-6788 OTHERS Julie Depperman & Sue Wilcox (Finance) Greg Tempel (City Attorney's Office) PRESENT: Deb Weedman (Human Resources) Gary Heaston, Milliman USA (actuary) CALL TO ORDER: Chair Susan Lehman called the July 12 regular meeting to order at 1:37 PM. ITEMS OF NOTE: Susan moved the discussion item regarding actuarial performance to the end of the agenda. PLAN - MEMBER COMMENTS.- A -Plan -member asked Michele Hays -Johnson -if the Committee- --- would consider a "rule of 80" type of benefit. The Committee agreed the Plan Restatement and the revision to the method of calculating the retirement benefit would remain to be the focus. The Committee may discuss the `rule of 80" after these two topics are resolved. APPROVAL OF MINUTES: Alan Krcmarik distributed the June 7, 2001, draft meeting minutes. Terry Van Cleave moved approval of the minutes. Dottie Nazarenus seconded the motion. The Committee approved the minutes unanimously (6-0). DISCUSSION TOPICS 1. DISCUSSION OF RETIREMENT PHILOSOPHY MAIN POINTS: The Committee did not have any items to discuss related to this topic. CONCLUSION AND NEXT STEPS: The Committee agreed to retain this item on the agenda. 2. PLAN RESTATEMENT TASKS AND SCHEDULE MAIN POINTS: Greg Tempel reported a subgroup of staff members and Susan and Alan met on July 9, 2001, review the Steve Weinstein's (Pension attorney) first draft of the Plan restatement. In the Plan restatement, the Committee intends to incorporate all amendments since 1992, the last restatement and to insure that the Plan complies with all state and federal laws. The purpose of the small group review is to reduce the number of questions. Greg said that other Committee members are welcome to attend these sessions, but that if three or more Committee members attend, formal public notice of the meeting is required. Filename: CnninJuly2001172 215 North Mason Street • 2nd Floor • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 General Em, ees' Retirement Committee ,ruiy 12, 2001, Meeting Minutes Page 2 of 4 CONCLUSION AND NEXT STEPS: The subgroup will meet again on Wednesday, July 18. The schedule calls for Mr. Weinstein to provide the second draft to the Committee and staff a week before the August 2 Committee meeting, a very ambitious schedule. Gary Heaston was asked to collect any comments on the restatement from the actuary team and provide them to the Committee before the August meeting. 3. DISCUSSION OF PROPOSED NEW METHOD OF CALCULATING RETIREMENT BENEFIT (FULL-TIME - PART-TIME EQUITY ISSUE) MAIN POINTS: The Committee has been evaluating a method to provide more equitable benefits for members who move from a full-time position to a part-time position or vice versa. The method would document all pay changes over the member's work career and the duration of each. Each pay rate would be annualized and the benefit calculated based on whether they worked full-time or part-time. Alan reported staff revised a memo (originally drafted by Jim Hume) explaining the problem and the proposed solution to the members. Members and staff suggested a few wording changes, but in general, the information presented met with the Committee's approval. Dottie was concerned that the new method provides benefits not consistent with the current Plan. Gary questioned whether this Plan was subject to ERISA and IRS Code Section 411(d)6. The Committee and staff discussed this issue intensely. In a telephone call after the meeting, Gary verified -the Plan -is -not -subject to that provision. - —= CONCLUSION AND NEXT STEPS: Committee members will review the memo and forward them to Alan for inclusion in the memo. Alan is to review the proposal with the pension attorney. When the memo is complete, the Committee will discuss a notification and implementation schedule at the next meeting. 4. JUNE, 2001, INVESTMENT REVIEW AND SECOND QUARTER INVESTMENT REPORT MAIN POINTS: Julie Depperman reported the market value of the portfolio is $32.5 million as of June 30, 2001. The year-to-date loss is 1.56%. The stock market has begun to make up some of the losses that occurred at the beginning of the year. The asset allocation targets are still being met, with 42% in fixed income investments, while domestic and foreign mutual funds make up 44% and 14%, respectively, of the portfolio's market value. During the second quarter of 2001, the bond portion of the portfolio returned 6.13%, while the five- year treasury benchmark yield was only 4.8%. Although the quarterly return for domestic mutual funds was 6.83%, this portion of the portfolio was not enough to recoup the losses experienced in the first quarter of 2001. The returns for the international mutual funds in the portfolio were mixed -- some funds performed well while others continued to sustain losses. The international mutual funds declined slightly (0.1%) during the second quarter, but the year-to-date loss totaled 14.9%. • Gen*Employees' Retirement Committee July 12, 2001, Meeting Minutes Page 3 of 4 According to a survey conducted by Bloomberg News, analysts expect the U.S. economy to escape recession this year as lower interest rates and tax rebate checks provide a boost in the second half and extend the record expansion. CONCLUSION AND NEXT STEPS: Members may contact the Finance Department to obtain a copy of the quarterly investment update. Julie will present a quarterly compliance report on mutual funds next month. 5. OTHER BUSINESS MAIN POINTS: Greg distributed copies of the final Domestic Relations Order (DRO) forms and process outline, which were reviewed and approved as Resolution 2001-01 at the last meeting. At this time, Gary Heaston left the meeting. 6. REVIEW OF ACTUARIAL PERFORMANCE MAIN POINTS: The purpose of the annual review is to identify problems so they can be corrected and avoided in the future. Susan noted the actuarial services have, at times, been less than satisfactory. She cited the actuary providing conflicting information, missing deadlines, and providing information at the last minute or late. Alan commented that the bills for services did not match the charges outlined in the contract. Most of the major functions, services, and the timelines for providing this information are outlined in the Scope of Services part of the contract. Copies of the scope of services will be provided to staff. Susan asked staff members report to the Committee any experiences with the actuary wher€-the services -did- not meet -their -expectations: - - - ----- CONCLUSION AND NEXT STEPS: Suggestions included rating actuarial performance in each of the areas outlined in the scope of services, creating a format for tracking work items, and implementing consequences for missed deadlines. Alan will provide copies of the scope of services to the Committee members and staff. 7. SCHEDULE FOR NEXT REGULAR MEETING The next regular meeting will be August 2, 2001, at 1:15 PM in the Council Information Center (CIC) of City Hall. The tentative agenda includes: ♦ Citizen Participation and Plan Member Comments ♦ Consider approving the July 12, 2001, Minutes ♦ Discussion of Retirement Philosophy ♦ Report on Plan Restatement Activities and Schedule ♦ Discussion of Possible Change in Calculating Retirement Benefit ♦ Second Quarter, 2001 Compliance Report and Monthly Investment Update ♦ Other Business ♦ Actuary Performance ADJOURNMENT: Susan adjourned the meeting at 3:17 PM. GENERAL EMPLOYEES' RETIREMENT PLAN AND COMMITTEE WEB PAGE ADDRESS: Since the switch to FCGOV.com, our web page is "under construction". General Emr ees' Retirement Committee .,,may 12, 2001, Meeting Minutes Page 4 of 4 FUTURE 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, City Hall. The next scheduled meeting will be Thursday, August 2, 2001, at 1:15 PM. The Committee has scheduled meetings for 2001 as shown below: 11 d_A►17_lN THURSDAY, AUGUST 2, 2001 THURSDAY, SEPTEMBER 6, 2001 THURSDAY, OCTOBER 4, 2001 THURSDAY, NOVEMBER 1, 2001 THURSDAY, DECEMBER 6, 2001