HomeMy WebLinkAboutRetirement Committee - Minutes - 05/03/2001City of Fort Collins
Genes Employees Retirement Plan
FORT COLLINS GENERAL EMPLOYEES' RETIREMENT COMMITTEE
MAY 3, 2001, MEETING MINUTES
Approved as amended, June 7, 2001
COUNCIL LIAISON: Mayor Ray Martinez
COMMITTEE Susan Lehman, 221-6813 ABSENT: Michele Hays -Johnson, 416-2158
MEMBERS Terry Van Cleave, 221-6321
PRESENT: Dottie Nazarenus, 204-4429
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) Nancy Wagner, Milliman & Robertson
(Plan actuary)
CALL TO ORDER: Susan Lehman, Chair, called the meeting to order at 1:21 PM.
ITEMS OF NOTE: Before the meeting Michele Hays -Johnson informed Susan in writing that she
would not attend. Susan moved Item #4, "Review of the Valuation Report", to before "Other Busi-
ness "on the agenda because Alan Krcmarik would be leaving at 2 PM for another commitment.
PLAN MEMBER COMMENTS: A Plan member asked Bill Switzer about the calculation of the
death benefit before age 55. Article Vill, Section 1, of the Plan explains the death benefit. This
section states:
"The single -sum death benefit will be determined such that it is equal to 47% of the
Actuarial Equivalent value of the life annuity benefit which would have been paid had
the Member separated from service at the earlier of the actual time of separation or
death, survived until the earliest retirement age and retired with a life annuity"
The Committee discussed the fact the opening balance calculated for the conversion from defined
benefit to defined contribution does not apply when calculating the Plan death benefit.
APPROVAL OF MINUTES: Alan distributed the draft minutes of the April 5, 2001, meeting. Terry
Van Cleave moved approval of the minutes. Bill Switzer seconded the motion. The Committee
voted (5-0) to approve the motion.
DISCUSSION TOPICS:
1. RETIREMENT PHILOSOPHY DISCUSSION
MAIN POINTS: This item provides an opportunity for discussion of retirement philosophy issues.
CONCLUSION AND NEXT STEPS: There were no concerns for this meeting; the Committee
retained this topic for discussion at the next meeting.
300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782
General E —)May
Retirement Committee
May 3, 2001, Meeting Minutes
Page 2 of 4
2. PROPOSED PLAN RESTATEMENT ACTIVITIES
MAIN POINTS: On the Committee's behalf, Greg Tempel prepared a Request for Proposal (RFP)
for the services of an attorney to restate the Plan. Greg sent the request to three legal firms and all
three responded with proposals. Committee members reviewed the proposals. Discussion
included the readability of the proposals (as an indicator of how readable the Plan revision might
be); experience with defined benefit plans; and the cost to do the work. Terry noted one proposal
included a cost estimate for a booklet written in layman's terms for the members. While not
requested, it could be very helpful. Greg mentioned that one of the firms had done some work for
the Committee during the defined benefit -defined contribution conversion and was somewhat
familiar with the Plan. Nancy Wagner reported the higher prices were typical for this type of work.
Alan advised that one firm had previously worked on the Poudre Fire Authority's 401(a) plan; their
work was responsive and satisfactory.
CONCLUSION AND NEXT STEPS: Based on the cost estimate presented in the proposal and
prior positive work experience, Susan moved that the firm of Gorsuch-Kirgis be retained to prepare
the Plan restatement per their proposal. Dottie Nazarenus seconded the motion, which passed 5-
0. Greg will prepare an engagement letter for Gorsuch-Kirgis.
3. MODIFICATIONS TO THE DOMESTIC RELATIONS ORDER PROCESS
MAIN POINTS: Committee members and staff support who have worked with the current
Domestic Relations Order (DRO) process and forms (approved in January 2000) recommended
they should be simplified and improved. Alan, Greg, Susan, Julie Depperman, Deb Weedman, and
Nancy held a conference call to discuss changes. Greg distributed a packet of materials to the
Committee and outlined the proposed changes. One change was to include payment of the
alternate payee's portion as a lump sum or rollover at the time the Committee approves the DRO.
The Committee discussed the possible death of one of the two parties before the approved
payment date and designation of a beneficiary. The actuary suggested some wording changes to
make the DRO more consistent with the Plan and to clarify the terms. Julie asked for clarification of
the method for calculating the benefit after the payment to the alternate payee and the method to
track Plan members who have completed a DRO. Julie will review a sample calculation which
Nancy e-mailed to her and will forward the calculation methodology to the Committee.
[Alan left the meeting during this discussion, but four members remained constituting a quorum.]
CONCLUSION AND NEXT STEPS: The Committee agreed that the DRO packet will include a
reminder to the Participant and the Alternate Payee that both should consider their designation of
beneficiaries and update their designations if necessary. Greg will bring revised documents and a
resolution for consideration at the June meeting. Nancy will see that data on DROs is included in
the Valuation Report and the Personal Retirement Planning Statements next year.
4. FIRST QUARTER 2001 REPORT AND MONTHLY INVESTMENT UPDATE
MAIN POINTS: Julie reported Plan investments showed a 4% loss for the first quarter; this was far
less than the Nasdaq loss of 26%, or even the Standard and Poors 500 Index or Dow Jones
Industrial Average, which experienced losses of 12% and 8% respectively. The guiding investment
policy for the funds is "buy and hold". Even though some of the funds showed losses during the
first quarter reflecting losses in the high-tech stocks they hold, staff will continue to monitor them
• Genpml Employees' Retirement Committee
May 3, 2001, Meeting Minutes
Page 3 of 4
instead of selling them immediately because they are strong funds with proven track records over
many years.
Julie also reported that April provided good news in that the total portfolio was only down 0.45% for
the year-to-date. She also indicated that the portfolio is balanced in its percentage allocations for
domestic stocks, international stocks, and fixed income investments. A detailed quarterly analysis
indicated some equities that had dropped to 2-star status on the Morningstar rating system, were
now back up to 4- and 5-star status.
CONCLUSION AND NEXT STEPS: Finance will continue to monitor the portfolio closely and
provide information and feedback to the Committee.
5. REVIEW OF JANUARY 1, 2001, VALUATION REPORT
MAIN POINTS: Final copies of the Valuation Report were distributed to the members and staff
before the meeting. Nancy reviewed sections of the report, including the Executive Summary, the
Summary of Participant Data, and those relating to compliance with Governmental Accounting
Standards Board requirements. Several small items were noted for change on future reports.
CONCLUSION AND NEXT STEPS: Nancy noted the areas for suggested changes on future
valuation reports.
6.A. OTHER BUSINESS - ACTUARY PERFORMANCE
MAIN POINTS: According to the Committee's Standing Rules, Susan noted the Committee is to
review the actuary on an annual basis in the fall. However, Milliman & Robertson has been the
actuary for the Plan since last summer and it might be beneficial for the Committee and the actuary
to conduct a review now. This would help insure that the actuary is meeting the provisions of the
contract. It would also clarify Committee members' and support staff expectations. She suggested
using a format similar to the one used for an employee evaluation. Nancy said that she is familiar
with a client satisfaction survey.
CONCLUSION AND NEXT STEPS: If Committee members or staff have criteria they would like to
use or a format that has proved useful, Susan asked they be sent to her. This item will be included
on the June agenda.
6.13. OTHER BUSINESS - REQUEST FROM DEFERRED VESTED MEMBER
MAIN POINTS: A deferred vested member requested a single sum distribution to help with
medical bills. The member also requested that the Committee waive the 20% tax -withholding
requirement. Since the Internal Revenue Service (IRS) imposes the withholding requirement, the
Plan administrator must follow tax -withholding regulations.
CONCLUSION AND NEXT STEPS: Staff will resolve this request with the member.
7. SCHEDULE FOR NEXT REGULAR MEETING
The next regular meeting will be June 7, 2001, at 1:15 PM in the Council Information Center of City
Hall. The tentative agenda includes:
1. Citizen Participation and Plan Member Comments
2. Consideration of the May 3, 2001, Minutes
3. Discussion of Retirement Philosophy
General E iloyees' Retirement Committee
May 3, 2001, Meeting Minutes
Page 4 of 4
4. Report on Plan Restatement Activities
5. Review Final Draft of Revised Domestic Relations Order Process and Forms
6. Discussion of Actuary Performance
7. Discussion of Alternative Methods of Calculating Retirement Benefit
(Full-time — Part-time equity issue)
8. Monthly Investment Update
9. Other Business
ADJOURNMENT: Susan adjourned the meeting at 3:15 PM.
FUTURE MEETING SCHEDULE:
The Committee regularly meets at 1:15 p.m. on the first Thursday of each month in the Council
Information Center, City Hall West. The next scheduled meeting will be Thursday, June 7, 2001, at
1:15 PM. The Committee has scheduled the following meetings for 2001:
THURSDAY, JULY 12, 2001
THURSDAY, AUGUST 2, 2001
THURSDAY, SEPTEMBER 6, 2001
THURSDAY, OCTOBER 4, 2001
THURSDAY, NOVEMBER 1, 2001
THURSDAY, JUNE 7, 2001 THURSDAY, DECEMBER 6, 2001