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Home My WebLink AboutRetirement Committee - Minutes - 07/06/1995FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE JULY 6, 1995 MEETING MINUTES COUNCIL LIAISON: Ann Azari, Mayor COMMITTEE MEMBERS PRESENT: ABSENT: Jerry P. Brown Jacci Peterson Gary Ellis Dave Meyer Alan Krcmarik (Member & Staff Support) OTHERS PRESENT: Sue Wilcox (Staff Support - Secretary) Dave Agee (Staff Support - Controller) Laurie Harvey (Staff Support - Benefits Administrator) Mark Sanford & Ken Jamison of The Watson Wyatt Company, the City's actuarial firm Bobbie Burnette (Staff Support - Assistant City Attorney) Bob Eichem (Staff Support - Investments) CALL TO ORDER: Chairperson Jerry P. Brown called the meeting to order at 1:15 p.m. in the 2nd Floor Conference Room of City Hall West on July 6, 1995. ITEMS OF NOTE: Jerry welcomed Gary Ellis, recently appointed to fill Dennis Sumner's position. Gary is a crew chief from Light and Power, where he has worked for 24 years. Gary is not on the E-mail system, but he can be reached by sending hard copy information to him at Light and Power, calling his portable phone number (222-2406), or by FAX at 221-6619. Dennis Sumner will be recognized at 6:30 p.m. at the July 18th Council meeting with a plaque noting his eight years of service to the GERC. Members and staff were invited to attend and congratulate Dennis. Jerry also relayed information from his visit with Mayor Azari, GERC Council Liaison. Mayor Azari reviewed the items which will come to Council for approval soon and she reiterated her support of the GER Committee. Ken Jamison and Mark Sanford from the Watson Wyatt Company were present, replacing Russ Proctor, who is on vacation. Beginning with the August 3rd meeting, the GERC will convene in the Finance Conference Room, lower level of City Hall West. (This room is just inside the Meldrum Street door to City Hall.) APPROVAL OF MINUTES: Sue suggested adding the following sentence to Item 5, "First Quarter, 1995 Investment Report" in the June Ist minutes: "The yield for the bond portion of the GER Plan for First Quarter, 1995, was 7.53%, with the mutual fund portion returning 4.16%." Also in Item 3, the City Council meeting is actually July 18th. Dave Meyer moved and Alan Krcmarik seconded the motion to approve the June 1, 1995 minutes with these corrections. The motion passed unanimously (4:0:1) with Gary Ellis abstaining. -I- DISCUSSION TOPICS: 1. PLAN MEMBER/CITIZEN COMMENTS: There were no member or citizen comments. 2. PROPOSED PLAN CHANGES (DEATH BENEFIT AMENDMENT) MAIN POINTS: A memo presenting the wording for the proposed Plan changes contained three items: 1. One proposed change relating to the composition of the GERC membership was included in error. This may be a topic of discussion at a later time, but will not be included at this time. 2. The change to Article VIII, Sections 1 and 2 of the Plan to provide a death benefit amendment that was equitable among all employees had two options: Option 1 reworded and explained the existing wording and Option 2 rewrote Section .1 of the Plan. 3. The new vesting schedule required a change in wording in Article V, Section 2 of the Plan. CONCLUSIONS/NEXT STEPS: In Option 2 the 47% used to calculate the death benefit assumes the spouse or beneficiary is always the same age as the employee. The members felt that option 2 was clearer, made the calculations simpler, and raised no interpretation questions. Dave Meyer moved and Jacci Peterson seconded a motion to approve the change related to the new vesting schedule and Option 2 (with the deletion of "his or her Normal Retirement Date and prior to" in the last paragraph). The motion was approved unanimously. Assuming the changes are passed by City Council on July 18th, the effective date of the changes will be August 1, 1995. Watson Wyatt will provide a chart and explanation of the 47% death benefit calculation and also an estimate of the financial impact of this change. Alan will coordinate the work to place this on the Council agenda. 3. REVIEW PERCENTAGE OF INVESTMENTS IN EQUITIES/TOP END LIMIT FOR INTERNATIONAL INVESTMENTS MAIN POINTS: These two items were combined and Bob Eichem discussed the role of equities in investments, He gave a brief history of the acquisition of equities and the conversion of some Plan assets from bonds to mutual funds beginning in 1993. This diversification of the portfolio is being done to reduce the risk and to increase the rate of return over time. Historically, equities have outperformed bonds. The bulk of members in the Plan will not retire for 12-15 years. Therefore, the investment horizon is longer and can absorb the volatility in equity investments. Currently the portfolio has 22% in mutual funds. International mutual fund investments represent over 6% of the total portfolio. The Wilshire Report of 82 state and municipal investment funds, shows the median among the funds allocates 40% for domestic equities and the percent of international equities is 4.8%. Bob would like to move the GER Fund to the presently -approved 35% equities, bring in some new international funds, and over three years bring the total in equities to 50%, with 10% being international. -2- CONCLUSION/NEXT STEPS: For the present $25,000 per month will continue to be invested in the approved list of equities. Next month Bob will bring a list of expanded investment opportunities, including domestic and international funds for the Committee to review. 4. UPDATE OF •PLANNING FOR YOUR RETIREMENT" PAMPHLET MAIN POINTS: The "Planning for Your Retirement" pamphlet was created during the education program in 1992, but is now inaccurate due to changes in the Plan benefits. CONCLUSION/NEXT STEPS: A sub -group of Jacci Peterson, Laurie Harvey, Sue Wilcox, and Russ Proctor will review the publication and suggest changes to the Committee. No completion date was set. 5. EARLY -OUT RETIREMENT OPTION UPDATE MAIN POINTS: Dennis Sumner had electronically forwarded a letter from Jaime Mares discussing the Early Retirement Option. The Executive Lead Team will be given three alternatives after July 12th and they will analyze them to determine if the City can break even within three years. Jaime cautioned that the Early Out Option may not work, but it is still under consideration. CONCLUSIONS/NEXT STEPS: Dennis will continue to serve as the Committee's liaison to the Early Out Task Force. SEE POST NOTE. 6. OTHER BUSINESS A. Final copies of the January 1, 1995 valuation report will be sent to the Committee members before the August Meeting. B. Sue has drafted and Jerry, Jacci, Russ Proctor and Laurie Harvey have reviewed an article about the possible decline in Social Security benefits. This would be published in the August issue of the Employee Benefits Newsletter. Copies will be forwarded to everyone when the comments/changes have been incorporated. C. Laurie reported that the September Retirement Planning Class is filled and she has a waiting list started. If there is enough demand, a second class will be scheduled for spring. D. Human Resources is researching including hourly employees in the medical benefits plan and as part of this, they will review including medical insurance for retirees. Jerry thanked Jaime and Laurie for reviewing this GERC request. E. Committee members and staff who cannot attend the farewell luncheon for Dennis Sumner on August 3rd at 11:30 a.m. are asked to call Sue at -6788. -3- F. Laurie will talk to Mark Sanford and Ken Jamison of Watson Wyatt about the possibility of making some small changes to the computer program that performs the benefit calculations. POST NOTE: A subsequent memo from Jaime Mares states that the Early -Out Option does not appear financially viable for the City at this time. AGENDA 1 SCHEDULE FOR NEXT MEETING The next meeting will be August 3rd at 1:15 p.m. in the Finance Conference Room of City Hall West. The agenda will include: 1. Plan Member/Citizen Comments 2. Potential Options for Shortfall Funding 3. Second Quarter, 1995 Investment Report 4. Expanded List of Investment Opportunities 5. New Format for Personal Benefit Report Form 6. Preliminary Discussion on "Break in Service" Policy ADJOURNMENT The meeting was adjourned at 3:30 p.m. FUTURE MEETING SCHEDULE: The General Employees Retirement Committee normally meets at 1:15 p.m. on the 1st Thursday of each month in the Finance Conference Room, City Hall West. THURSDAY, AUGUST 3, 1995 THURSDAY, SEPTEMBER 7, 1995 THURSDAY, NOVEMBER 2, 1995 -4- THURSDAY, OCTOBER 5, 1995 THURSDAY, DECEMBER 7, 1995