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HomeMy WebLinkAboutRetirement Committee - Minutes - 02/13/1989• GENERAL EMPLOYEE RETIREMENT COMMITTEE MEETING MINUTES FEBRUARY 13, 1989 PRESENT: Gwyn Strand Angie Powell Dennis Sumner Alan Krcmarik Sue Wilcox Mollie Mercer ABSENT: Deb McClurkin Mickelson Angie called the meeting to order and stated that the two major items were the 4th Quarter Investment Report and the 1989 Work Plan. 4TH QUARTER INVESTMENT REPORT - Gwyn Strand reported that he is still waiting for the market to stabilize. Investments have been mainly short-term (2 years or less) with maturity rates in the area of 9.38%, as opposed to 30-year Treasury bonds which paid 8.90. Gwyn explained that it would not be desirable to sell some of the GNMA's which have a lower rates of return than the current market as they generate monthly payments which are reinvested at current rates. If we sold them now, the selling price would be significantly lower than the book value and we would have to invest in something with a much higher rate of return in order to recover the resulting loss. Gwyn reported that our investments earned 8.6 - 8.7% last year, compared is with inflation which is running about 4%. Gwyn then left the meeting. Angie asked if filling the Treasurer's position will result in a change in investment policies and procedures. It is expected that the new treasurer will not be in place before April 1st and that there will be a 3-month training period. There should be no significant changes for at least 6 months. Alan explained terms used in the quarterly report: "par value" is the face value of the investment at maturity plus periodic interest payments and "amortized cost" is what we paid for it. WORK PLAN - The five major areas of concern to be considered in 1989 are: 1. A cost of living increase for current retirees. 2. Adopting 5-year vesting instead of the current 10-year vesting. 3. Allowing retirement benefits to go to an estate. Currently, they can only go to the surviving spouse. 4. Offering City employees the option of converting from the retirement plan to a money -purchase plan similar to the Police Department. 5. Would it be possible to allow the beneficiary to change the benefit? • For example, if the retiree stipulates 100% joint and then dies, can the beneficiary change this to ten-year certain? • Gen'l Employees Retirement Comm. Minutes February 13, 1989 Page 2 Information on the plans listed below was provided by Mercer Meidinger Hansen in a report dated November 3, 1988. The report and cover letter signed by Don Mazanec can be found in G.E.R.C. files if more information is desired. A summary is provided below: Plan A would increase benefits for current retirees by 1 - 5% for those who retired before January 1, 1987. This can be done without requiring additional funds. Plan B would increase benefits for current retirees by 3 - 15% for those who retired before January 1, 1987 without requiring additional funds. Plan C is the same as the current plan except that the death benefit for the spouse of a vested member is equal to 50% of the accrued benefit payable when the member would have attained age 55 or immediately if older. If the vested member is not married at the time of death, the death benefit is a lump sum equal to 50% of the member's accrued benefit at death, payable at age 65. This option results in increased costs to the fund. • Plan D involves implementing both Plans B and C and would result in increased costs to the fund. After discussion it was agreed to recommend implementation of Plan B and to look at Plans C and D more closely. In an effort to keep the Council informed and to make sure the new Council members are aware of our activities, a summary of this meeting will be sent to Council members and the Council/GERC liaison will be invited to participate in our next meeting to be held March 27th at 1:30 p.m. More information can then be given to Council members in April. To begin research into the possibility of a money purchase plan for the general retirees, Mike Powers will be asked to meet with us to outline the steps involved. Other staff people who might be involved are Edna Hoernicke and Pam Stultz. There was discussion about Angie's term as chairperson expiring in July. She wanted to make members aware that another member would be completing the 1989 Work Plan and asked that, as a committee, everyone be aware of the work involved so that a smooth transition would follow. Mollie Mercer also noted that she had nearly completed two four-year terms, which is the maximum allowed. It will be important to research all the terms of the members through the boards and commissions records.* The meeting was adjourned. Appr ed - Angie Powell, Chairperson n U • CI Gen'l Employees Retirement Comm. February 13, 1989 Page 3 *SECRETARY'S NOTE: The Boards and Commissions Handbook shows the following information: Debra D. McClurkin (Mickelson) Mollie Mercer Dennis Sumner Angie Powell Original Term Appointment Expiration Date Date Nov. 17, 1981 July 1, 1989 November 23, 1982 July 1, 1990 July 7, 1987 July 1, 1991 November 23, 1982 July 1, 1992