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HomeMy WebLinkAboutRetirement Committee - Minutes - 03/05/1992r 0 FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE MARCH 5, 1992 MEETING MINUTES MEMBERS PRESENT: MEMBERS ABSENT: Jerry Brown* Mollie Mercer Loren Maxey, Council Liaison Dennis Sumner Angelina Powell Alan Krcmarik (Member & Staff Support)** *arrived at approximately 2:10 p.m. **was absent from the meeting from 3-4:30 p.m. Sue Wilcox (Staff Support Secretary) Mary Crumbaker (Legal Staff Support) Bob Eichem (Investment Staff Support) Visitors included Don Mazanec and Amy Coffern of William M. Mercer, Inc. CALL TO ORDER: Chairperson Dennis Sumner called the meeting,to order at 1:25 p.m. in the Finance Conference Room. APPROVAL OF MINUTES: Mollie Mercer moved that the minutes be approved as written and Angelina Powell seconded the motion. The motion passed. ITEMS OF NOTE: The agenda for today's meeting is very full. REVIEW OF DISCUSSION TOPICS: None DISCUSSION TOPICS: Open Items I. DISCUSSION OF STOCK INVESTMENT MAIN POINTS: Bob would like the Committee to consider allowing him to diversify the investment fund by beginning to buy common stock through mutual funds. He suggested that up to 20% of the retirement portfolio be changed to mutual funds and that it might take about 20 months to do this. The current portfolio is about $18 million dollars and the bulk of the work force is 12-20 years from retirement when they will begin drawing benefits. The funds now are primarily in bonds, which are very safe, but the rate of return is a set percentage and the value of the bonds is limited to that amount of increase. Common stocks, however, while they are more volatile from day-to-day and week -to -week, will appreciate in value over the long term, making the rate of return much higher. Over the past 6 (+or -) years, and factoring in inflation, stock investments have repeatedly had a higher return than bond investments. Bob brought samples. 0 Morningstar Mutual Fund subscription, which provides extensive information about 1,250 mutual funds. He would consider only those funds with a 5-star rating (the highest), which had a track record of at least 10 years, and they must be "no-load", i.e. do not -1- charge a commission. He feels those which have a total portfolio of less than $2 billion dollars are the best because they are most flexible and have a greater return than larger mutual funds. He would work to buy approximately $100,000 a month of these funds whenever the stock market drops, up to a maximum of 20% of the GERP's total investments. A poll of the members found that most favored or agreed with this change. However, Alan would like to see us proceed with caution. He believes that the market has been going steadily upward and a drop may be imminent. He would hate to see the fund take a major hit in the first year of such a changeover. Don Mazanec reported that all of the other municipal retirement plans his firm deals with now have mutual funds, most of them to the extent of 40-50% of their funds. He will ask Don Eibsen of his firm to create a summary of the performance measures of other public funds for comparison. Don suggested that Don Eibsen be allowed to give a 15-20 presentation, perhaps at the next meeting, about his fundings. CONCLUSIONS/DECISIONS: The group agreed to defer a decision and discuss this at the next meeting. They also invited Don Eibsen to make a presentation of his findings. NEXT STEPS: Don Eibsen will be invited to the next regular meeting. 2. REVIEW OF FINAL CHANGES IN PENSION PLAN Resolution Wording and Final Recommendation of GERC. MAIN POINTS: The revision of Section 2 on Breaks in Service does not contain the cost of this change (less than .05%), which Council may wish to know. No other changes. CONCLUSIONS/DECISIONS: Jerry Brown moved and Mollie Mercer seconded a motion to approve the changes. Angelina Powell removed herself from the vote because a section could directly benefit her. The vote was 3-0 in favor of the motion. (Alan Krcmarik had left the meeting before the vote.) The revisions will be presented to Council on April 7th and 21st. CONCLUSIONS/DECISIONS: The cost of this change needs to be added. NEXT STEPS: Mary will make the changes to the resolution. Alan will be responsible for preparing the agenda item summary and putting the item on the Consent Calendar (and appropriation ordinance mentioned later in the minutes of March 9). Mary will prepare the resolution for Alan. A number of the members will plan to be at the Council meeting. Article I. IDENTIFICATION AS A GOVERNMENTAL PLAN MAIN POINTS: It was not stated that this was a governmental plan, which could create difficulties. The dates weye.changed-as necessary. CONCLUSIONS/DECISIONS: This needs to be specifically identified as a governmental plan. -2- NEXT STEPS: This addition and change was approved. Article II. DEFINITIONS MAIN POINTS: Section 2i(3) includes employees who moved from classified to unclassified positions, but retain a vested interest in the Plan. Stewart Ellenberg requested that Section 2k(1) contain the words "City's long-term disability" before "Insurance Company". Section 2k(2) allows those recognized by the Federal Social Security Administration as "disabled" to receive disability benefits. Stewart also asked that Section 2k(3) include "Workers Compensation" before the word physician. Section 21 is a new definition of disability benefits and Stewart requested that the words "for disability" follow the word "payment". Section 2n(3) Latter defines employees who qualify, but Mary will check to see if anyone hired before January 1, 1971 (when there was no retirement plan) might also be a qualified employee. CONCLUSIONS/DECISIONS: These changes and additions were approved. NEXT STEPS: They will be recommended to Council. ARTICLE IV. Credited Service MAIN POINTS: Section la(2) and Section la should have the words "Workers Compensation" added before "physician" per Stewart Ellenberg. Three new paragraphs outlined the ways credited service can be accrued and delineates the accrual period for someone receiving a lump sum payment. Section 2 extends the allowable period for a break in service to five years. In the last sentence of Section 3, the words ",if any," will follow "Repayment". CONCLUSIONS/DECISIONS: These changes and additions were approved. NEXT STEPS: They will be recommended to Council. ARTICLE V. Retirement Dates MAIN POINTS: There is new wording in the last paragraph of Section 4 of Disability Retirement. CONCLUSIONS/DECISIONS: These changes and additions were approved. NEXT STEPS: They will be recommended to Council. ARTICLE VI Requirement Benefits MAIN POINTS: "...as defined in Article IV, Section 1." was added to the end of the last sentence of Section 3. Section 4 states that benefits will be-«paid•-at.the end of -each -month and allows partial payments -for a beneficiary who dies during the month. Paragraph 2 of this Section 4 will be reworded by Mary. Section 7 outlines the increase in benefits which began July 1, 1990. -3- CONCLUSIONS/DECISIONS: These changes and additions were approved. NEXT STEPS: They will be recommended to Council. ARTICLE VII OPTIONAL FORMS OF BENEFITS MAIN POINTS: Section 1 will add the requirement for a spousal consent form. CONCLUSIONS/DECISIONS: These changes and additions were approved. NEXT STEPS: They will be recommended to Council. ARTICLE IX Severance Benefits MAIN POINTS: The word "last" shall replace the word "first" before "of any month..." in the last paragraph. CONCLUSIONS/DECISIONS: These changes and additions were approved.. NEXT STEPS: They will be recommended to Council. ARTICLE XIII Retirement Benefits and Rights Inalienable MAIN POINTS: An addition in this section addresses payment of child support either directly or through garnishment. CONCLUSIONS/DECISIONS: These changes and additions were approved. NEXT STEPS: They will be recommended to Council. 3. STANDING RULES MAIN POINTS: The suggestions from the last meeting had been incorporated in this draft. Mary suggested that the two item on meeting times be reversed and the wording slightly altered. March 30 should be changed to March 31. CONCLUSIONS/DECISIONS: Jerry Brown moved that the Standing Rules be adopted with the proposed changes. Angelina Powell seconded the motion, which passed unanimously (4-0). NEXT STEPS: Angelina will send a final copy to Sue for inclusion in these minutes. 4. PENSION EDUCATION PROGRAM MAIN POINTS: Amy Coffern and Don Mazanec from William M. Mercer, Inc presented a tentative schedule for implementing a Pension Education Program and a list of costs for"VlMas mis'm%gs, surveys, and -printed and video materials to support this program. They reviewed each item in detail, answered questions, and explained how each piece fit in the -4- i education program. CONCLUSIONS/DECISIONS: The members decided they needed some time to digest all the information presented and then should meet and discuss their next steps. NEXT STEPS: The Committee will hold a special meeting on Monday, March 9, at 3:30 p.m. in the Finance Conference Room to discuss the options available to them for the Pension Education Program. 5. GERP/WORKERS COMP/DISABILITY QI PROPOSAL MAIN POINTS: Dennis introduced a memo he had written to Pete Dallow regarding the possible formation of a Quality Improvement Team to evaluate a relationship between on-the-job injuries to older workers (with resulting high disability costs) and the economic penalty suffered by older employees who choose early retirement. CONCLUSIONS/DECISIONS: Committee members felt this was a question worthy of study, but a very large project involving multiple department representatives. They felt it was too large for the GER Committee to take on without significant impact on its 1992 Work Plan. They felt that the E-Team (Executive Team) should act as the Lead Team for such a study, which would be independent of the Education Program. Dennis expressed an interest in serving on such a team, separate from the GERC, and volunteered to draft a memo to Pete Dallow expressing the Committee's feelings. NEXT STEPS: The Committee authorized Dennis to address this topic in a memo to Pete Dallow and offer the Committee's support of such a study. ITEMS FOR FUTURE DISCUSSION 1. Pension Investment Seminar/Public Benefit Plans Workshop 2. Defined contribution study. (Refer to 10/26/89 meeting minutes.) Delayed until changes to the current plan have been studied and resolved. (Refer to 1/25/90 minutes.) 3. Monitor progress by Staff Committee on Pension Activities. 4. Plan improvements A. See November 1, 1990 minutes and October 29, 1990 letter from Don Mazanec for costs. B. Rule of 80 5. Resolve retirement benefit questions related to employees injured during employment with the City, i.e. Sehestedt and Hattan. 6. Demonstration by Bob Eichem of computer system used for investments. -5- i AGENDA & SCHEDULE FOR NEXT MEETING The next meeting will be April 2, 1992 in the Finance Conference Room. The agenda will include: 1. Investment in equities (mutual funds) 2. Update on plan changes schedule. 3. Pension Education Program 4. Disability versus Early Retirement QI Program 5. Former vested City employees update 6. Don Eibsen presentation on other pension investment funds. ADJOURNMENT The meeting was adjourned at 5:15 p.m. -6-