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HomeMy WebLinkAboutRetirement Committee - Minutes - 07/12/19900 a FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE MEETING MINUTES JULY 12, 1990 MEMBERS PRESENT: MEMBERS ABSENT: Jerry Brown Mollie Mercer Alan Krcmarik Angelina Powell Dennis Sumner Sue Wilcox, Secretary Also present was Bob Eichem, Treasury Administrator, to discuss the First Quarter Investment Report and conduct a class on investments. CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:00 p.m. APPROVAL OF MINUTES: Minutes of the June 28, 1990 meeting were approved with the following corrections: "Angelina Power" was changed to "Angelina Powell"; a formatting reference to "inleft0" was deleted; Item 3 under ITEMS FOR DISCUSSION and agenda item 4 for the September 13th meeting should read "Defined Contribution Study". Because Mollie Mercer was unable to attend the last meeting, she asked for clarification of the Committee's proceedings relating to John Lamprey's request. In some copies of the minutes of the Executive Session, the word "join" should replace the word "joint". MAY 10, 1990 MINUTES CORRECTION: On the top of page 4 of the minutes of the May 10, 1990 meeting, "0.3553" should read ".03553" for the rate of retirement benefit contribution from the City. ITEMS OF NOTE: It was noted that Don Mazanec was asked to provide new copies of the General Employees Retirement Plan reflecting the changes recently approved by City Council. Copies should be available in the next few months. It was also noted that letters would be sent to retirees advising them of the increase in retirement benefits which was recently approved by City Council. AGENDA REVIEW: There were no changes. DISCUSSION TOPICS - OPEN ITEMS The open items will be discussed at the next regular meeting on September 13. DISCUSSION TOPICS - NEW ITEMS 1. INVESTMENT REPORT FOR FIRST QUARTER, 1990 MAIN POINTS: Bob Eichem, Treasury Administrator, distributed the First Quarter Investment Report, which showed an annualized rate of return of 8.84%. Bob highlighted the fact that the last few years have seen a significant increase in the economic impact other countries have on the U.S. stock market. He also advised that because some of the GNMA and FNMA (Ginny Mae and Fanny Mae investments) are very labor intensive for him and for the City's accountants .and are long-term investments at low rates of return, he has begun to sell in favor of other investments. Bob reported that Purchasing and Treasury Administration have begun soliciting responses to a request for proposal to contract -manage a portion of the City's portfolio. It is expected that the addition cost will be justified by expanded research capabilities, improved market timing abilities, and enhanced service levels and credit quality analysis. These improvements should result in a net improvement in the return achieved by these investments. DECISIONS/CONCLUSION: The Investment Report was approved and accepted as submitted. NEXT STEPS: None required. INVESTMENT MARKET CLASS MAIN POINTS: Bob explained that in order to invest for a pension fund, it is critical to know the group of people covered by the pension plan. In the City's case, 70% of present employees have six or more years of service, which makes them at least partially vested in the pension plan. He also explained that a large number of employees are part of the "Baby Boom" era and this large number of people will be retiring in large numbers about 15 to 25 years from now, thus requiring a large outlay of funds at that time. The City's pension fund is actuarily sound and does not have an unfunded liability. The City recently adopted investment policies which point out that according to City Charter, responsibility for investments lies with Alan Krcmarik, who has delegated this to Bob. This is a more workable system than those which place responsibility on a board of trustees who are volunteers with no expertise or experience in investing funds. Colorado and California have the most liberal investment laws, but Fort Collins' home rule status allows us to set our own requirements. The three primary concerns of pension investments are 1-Safety, 2- Liquidity, and 3-Yield. Although yield is most often the standard by which investments are rated, safety is the most important characteristic, since the money must be there when needed. With this in mind, investments with fixed incomes must make up the major portion of the portfolio (35-50%). Equities, including mutual funds, make up the next biggest portion with 25-40%, -with cash equities having about 6%, and real estate or other investments comprising 4%. There were a number of questions discussed at some length. DECISIONS/CONCLUSIONS: The consensus of opinion was that the members had a better understanding of the investment process and direction, and commended Bob for the presentation and the information that he shared. NEXT STEPS: The members felt they would better understand future investment reports and were better educated in expectations for the fund. 0 Bob encouraged members to participate in investment seminars and programs when opportunities arose. ITEMS FOR FUTURE DISCUSSION 1. Pension investment seminar or public benefit plans workshops. Seminars currently available deal primarily with the hands-on practice of paying retirement benefits rather than trends or comparisons of retirement plans. 2. Evaluation of plan based on Total Comp Study. This is on hold until the study is completed. 3. Defined Contribution Study. Also deferred until the Total Comp Study is completed. AGENDA AND SCHEDULE FOR NEXT MEETING THE NEXT MEETING WAS CHANGED TO SEPTEMBER 13, 1990, 1:00 P.M. IN THE FINANCE CONFERENCE ROOM. AGENDA: 1. Benefit Commencement Interpretation 2. Spousal Consent Form 3. Total Comp Conclusion in relation to GERP 4. Defined Contribution Study 5. Second Quarter Investment Report ADJOURN: The meeting was adjourned at 3:20 p.m.