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HomeMy WebLinkAboutRetirement Committee - Minutes - 02/03/1994FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE FEBRUARY 3, 1994 MEETING MINUTES COUNCIL LIAISON: Ann Azari, Mayor MEMBERS PRESENT: MEMBERS ABSENT: Jerry P. Brown Jackie Davis None Dennis Sumner Dave Meyer Alan Krcmarik (Member & Staff Support) OTHERS PRESENT: Sue Wilcox (Staff Support - Secretary) Ann Turnquist & Dave Agee representing the JAD Committee, a subcommittee of the Pension Oversight Committee (POC) CALL TO ORDER: Chairperson Dennis Sumner called the meeting to order at 1:25 p.m. in the 2nd Floor Conference Room on February 3, 1994. APPROVAL OF MINUTES: Alan moved to approve the minutes of the January 6th meeting with correction of the spelling of the firm "T. Rowe Price". Jackie seconded the motion and the minutes were approved unanimously. ITEMS OF NOTE: A list of the Committee members and their term expiration dates was distributed. REVIEW OF DISCUSSION TOPICS: There were no changes in the discussion topics. DISCUSSION TOPICS: 1. MEMBER COMMENTS: There were no member comments. 2. 4TH QUARTER INVESTMENT REPORT MAIN POINTS: Bob Eichem, investment officer for the GER Plan, presented the 4th Quarter Investment Report. He noted that the bond portion of the investments showed a return of 7.85%, reflecting rates that were locked in when these long-term investments were made some time ago. The equity portion of the portfolio showed a return of 8.1% in 1993. Bob illustrated the volatility of the stock market with some graphs of two mutual funds which were particularly active. He pointed out that investments earning an interest rate of 10% will double in value in 7.2 years. When interest rates fall to 3%, it takes 20 years to double the value of the investment. At Bob's request, Jerry clarified his motion from the January 6th meeting by explaining that the intent was for Bob to discontinue investing in Nicholas and SIT when the timing was appropriate and after the total invested in those funds had reached $500,000. Jackie Davis, who seconded the motion last month, stated that this was her understanding of the motion also. The members concurred with the explanation. -1- Bob discussed the strategies for the coming year and his report contains quotes from reference materials which explain the strategies. Copies of the report are available for posting or routing by calling Sue Wilcox at -6788. CONCLUSIONS/NEXT STEPS: Jerry P. Brown moved to accept the 4th Quarter 1994 Pension Investment Report. Dave Meyer seconded the motion and the vote was unanimous in favor of the motion. On behalf of the Committee and the Plan members, Dennis thanked Bob for his efforts and for meeting the Plan's projected income needs for 1993. 3. REPORTING ANNUAL INVESTMENT RETURNS MAIN POINTS: Bob reported to the Committee that we don't have a system in place for reporting the blended rate of return for bonds and stocks. Historically, the GER Fund has used an "accounting" approach to value bonds. Changes in the value of mutual funds is typically viewed from an "investment" perspective. Bob and Dave Agee agreed they could work through this difference to provide the GER Plan with a generally accepted and appropriate approach to track the annual value of these blended investments. CONCLUSIONS/NEXT STEPS: Bob and Dave Agee, City Controller, will be working on a way to show a "blended rate of return" that will accurately reflect the increase (or decrease) in the portfolio's value. 4. EQUITY CONCERNS: DEATH BEFORE AGE 55 MAIN POINTS: The question of equity in the value of the early death benefit in relation to married versus single employees was discussed. It was concluded that more information was needed to quantify this issue. At the last meeting Dennis had asked Don Mazanec to provide the Committee with some information on this topic, but Don was unable to attend this meeting. Jackie Davis suggested that since Don probably would be attending the JAD/GERC meeting tentatively scheduled for February 17th, that perhaps a special GERC meeting could be called before the joint meeting to discuss this item. The members concurred. Jackie asked that Don provide written information in advance of the meeting. (See Page 4 for meeting schedule details.) CONCLUSIONS/NEXT STEPS: Dennis will contact Don about this request and confirm the February 17th meeting time with him. 5. COMMUNICATING PLAN CHANGES TO EMPLOYEES MAIN POINTS: The GER Plan changes recently approved by City Council are generating interest among the Plan members. It was suggested that an article for FortNotes be drafted to explain the changes. CONCLUSIONS/NEXT STEPS: Sue will draft an article for FortNotes using the agenda item summary material. She will also send a copy of the signed resolution to Don Mazanec for his files. -2- 0 6. JAD COMMITTEE REPORT MAIN POINTS: The JAD Committee (a subcommittee of the Pension Oversight Committee and GERC composed of Jerry Brown, Ann Turnquist, and pave Agee) was formed to determine and address differences and equity concerns among the various pension and deferred compensation plans that the City operates. The JAD members advised that the JAD Committee had interviewed three companies to be the actuarial consultants for this project and had chosen Wyatt Co. of Denver. The JAD members described the Wyatt Co. representatives as "very well prepared, creative, enthusiastic, and having many ideas about how to present and communicate the information". In addition they were "open to City suggestions and committed to the proposed time schedule". At present the City' Benefits Fund will pay for these actuarial services. CONCLUSIONS/NEXT STEPS: The JAD Committee will meet with the Wyatt repre- sentatives next week and begin the actual work. Dave Agee described the JAD members as the "worker bees", providing information to the POC and the GERC. Jerry P. Brown moved and Jackie Davis seconded a motion to formally schedule a special meeting with Don Mazanec on Thursday, February 17th in the Employee Development Conference Room pending confirmation of the time and place for all involved. This will take place before the joint meeting with Wyatt Co. at 2:00 p.m. The vote was unanimously approved. (See Agenda E Schedule for Next Meeting on page 4.) Bob Eichem asked to be kept appraised of JAD activities, as they might have some bearing on investment strategies. The Committee asked Bob to join the meetings with the Wyatt Co. and provide his comments to help the GERC in this. Dave will ask for a breakdown of an invoice received from William M. Mercer, Inc. for Don Mazanec's assistance on the RFP. On behalf of the GERC, Dennis thanked the JAD Committee for their good work and expressed the Committee's support for their continued efforts. 7. GERC ACTUARIAL SERVICES RFP MAIN POINTS: Jackie Davis and Dave Agee feel that much of the RFP used to contract with Wyatt Co. can be used for the bid process for an actuarial advisor to the GERC. Opal will still solicit copies of RFP's used by other cities or districts. No firm would be excluded from bidding on the GERC actuarial services RFP because of present services they provide to either the GERC or JAD. The timetable for securing these services is that the firm awarded the GERC actuarial contract would begin work 1/1/95. Bob offered to assist the GERC by reviewing the draft RFP for the GERC actuarial services. CONCLUSION/NEXT STEPS: Jackie will work with Dave Agee to prepare a timeline for this work. ITEMS FOR FUTURE DISCUSSION Possible seminars or workshops to increase GER Committee members' knowledge of their roles and responsibilities. -3- 2. GERP / Workers Comp / Disability Proposal to E-Team 3. Settlements with retired employees with low monthly benefit payments. 4. Method to report Blended Yields (Bonds and Equities) on Investments AGENDA & SCHEDULE FOR NEXT MEETING The next meeting will be a special working lunch meeting with Don Mazanec of William M. Mercer to discuss the question of equity in death benefits on Thursday, February 17th at noon. The GERC will then meet with the JAD Committee and the Wyatt Co. at 2:00 p.m. to discuss expectations for the actuarial firm and the timeline of future activities. Both meetings will be in the Employee Development Conference Room, 200 W. Mountain Ave. The next regular meeting is scheduled for Thursday, March 3rd at 1:15 p.m. in the 2nd Floor Conference Room of City Hall West. The agenda will include: 1. Plan member comments 2. JAD Update 3. Actuary Services RFP Status Report 4. Equity Concerns re: Death Before Age 55 5. Designating Beneficiaries (Death Before Age 55) ADJOURNMENT The meeting was adjourned at 3:10 p.m. MEETING SCHEDULE: The General Employees Retirement Committee meetings are normally held at 1:15 p.m. on the 1st Thursday of each month in the 2nd Floor Conference Room, City Hall West. Any change from that will be noted. THURSDAY, MARCH 3, 1994 THURSDAY, MAY 5, 1994 THURSDAY, JULY 7, 1994 THURSDAY, SEPTEMBER 1, 1994 THURSDAY, NOVEMBER 3, 1994 -4- THURSDAY, APRIL 7, 1994 THURSDAY, JUNE 2, 1994 THURSDAY, AUGUST 4, 1994 THURSDAY, OCTOBER 6, 1994 THURSDAY, DECEMBER 1, 1994