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HomeMy WebLinkAboutRetirement Committee - Minutes - 07/13/2000Retirement Plan City of Fort Collins FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE JULY 13, 2000, MEETING MINUTES Approved on August 3, 2000 COUNCIL LIAISON: Mayor Ray Martinez COMMITTEE MEMBERS ALL PRESENT: Terry Van Cleave, 221-6321 Dottie Nazarenus, 204-4429 Alan Krcmarik, 221-6788 Bill Switzer, 221-6713 Susan Lehman, 221-6813 Michele Hays -Johnson, 416-2158 OTHERS PRESENT: Julie Depperman (Staff Support — Investments) Vincent Pascale, Deb Weedman (Staff Support — Human Resources) Greg Tempel (Staff Support - Legal) Nancy R. Wagner & Gary Heaston, Milliman & Robertson, Inc. (the Plan's actuarial firm) Sue Wilcox (Staff Support — Clerical) Jim Hume (Purchasing, former Chair of Committee) CALL TO ORDER: Chair Susan Lehman called the meeting to order at 1:20 PM. ITEMS OF NOTE: Susan introduced and welcomed Nancy Wagner and Gary Heaston representing Milliman & Robertson, Inc., the Plan's new actuarial consulting firm. APPROVAL OF MINUTES: Julie Depperman distributed of the draft minutes for the June 1, 2000, meeting. Dottie Nazarenus moved that the minutes with corrections be approved. Bill Switzer seconded the motion. With Alan Krcmarik not yet present, the Committee approved the minutes unanimously (5-0). DISCUSSION TOPICS: 1. PLAN MEMBER(S) COMMENTS: No comments. 2. STATUS OF ACTUARIAL CONTRACT MAIN POINTS: Susan distributed copies of the new actuarial services contract. The contract included a form the Committee may use to request special services not specifically addressed in the contract. The form includes information about the request approval process, scope of request, cost, and time needed to complete the request. Jim joined the meeting and Susan thanked him for his efforts on the request for proposal process and the clarity of the contract. The Committee reviewed the actuarial contract. Nancy asked when the Committee would discuss the actuarial assumptions for the valuation report. Alan responded the assumptions could be presented to the Committee in September, with possible action by the Committee at the following meeting. This will allow time during July and August for the actuary to review documents concerning the Plan. 300 LaPorte Avenue • P.O. Box 380 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 GERC Meeting Minutes July 13, 2000 Page 2 of 4 CONCLUSION AND NEXT STEPS: Milliman will provide the staff with a list of documents they would like to have. Greg Tempel will e-mail the draft restatement of the Plan document and amendments that he prepared earlier this year. 3. RETIREMENT PHILOSOPHY MAIN POINTS: At a previous meeting, Alan distributed copies of the January, 1997, GERC Retirement Philosophy. The Committee continued the discussion that began at the June meeting. Alan explained that most of current GERP investments are long-term equities, as the average member won't reach age 65 for 19 years. Alan asked if the Committee should look at moving some of the equities to more liquid investments. Gary pointed out that some members will choose to retire when they reach 55, the earliest age they are eligible for a GERP benefit. Long-term investments will continue to be needed for those electing a monthly benefit at that time. Nancy noted that the average retirement age is 61, but based on historical experience, about 10% will take a single -sum benefit or begin drawing a monthly retirement benefit at 55, about 5% between ages 55 and 60, about 10% at age 60, about 40% at age 62, and 20% at ages 63 and 64, with the rest of the members taking a benefit at age 65 or possibly even later. Bill asked if there were "warning flags" if the investment earning expectations are not being met causing the Plan to become underfunded? Nancy said that investment return is a key driver in a closed plan and that there is a model that will show the results of various "what -if' scenarios in terms of the actuarial effects on the Plan. Alan explained the Plan's current allocation and diversification targets and asked if the Committee should consider other alternatives, such as investments in real estate or further diversification? Alan described the background when the Committee created the philosophy in 1997. The members saw the GERP as one part of a multi -part retirement package. The other components were Social Security, investments in the ICMA-RC 457 deferred compensation plan, the ICMA-RC 401(a) Money Purchase Plan, and personal savings. In 1997, the Committee members felt an employee who worked for the City for 30 years would have adequate assets in the components to retire package. At the time the Committee formulated the philosophy, some alternatives for expanding Plan benefits were presented to the members. All alternatives required increased City contributions from the total compensation calculation. After extensive discussions, the Committee decided not to pursue any of the alternatives. A Committee member asked if prior retirees would have a valid claim on enhancements to the current Plan. Greg said that the Plan and Plan amendments describe who is eligible to receive any enhancements. The language in the current amendments related to benefit enhancements does not include current retirees or deferred vested members. CONCLUSION AND NEXT STEPS: The Committee agreed to resume discussion at future meetings. 4. FULL-TIME EMPLOYEE— PART-TIME EMPLOYEE EQUITY EDUCATION PROGRAM MAIN POINTS: Nancy asked if a person who is hired to work 20 hours a week, but who actually works more hours, has contributions to the Plan based on the actual hours worked. Currently, contributions are made on the 20 base hours only. The Committee reviewed and made changes to the cover memo and reply form Susan had drafted to accompany the Issue Paper when it is sent to the Plan members. CONCLUSION AND NEXT STEPS: Susan will make the suggested changes and will work with Sue to have the information ready for distribution with the July 281" paychecks. It was agreed that the number and kind of responses received will be discussed at the September meeting and will determine the Committee's next action. The actuaries requested the Watson Wyatt analysis of the issue. • GERC Meeting Minutes July 13, 2000 Page 3 of 4 5. IMPROVEMENTS TO THE PROCEDURE TO CALCULATE BENEFIT CALCULATIONS MAIN POINTS: Julie described the database she created to include ten years of salary history on current members and deferred vested members. Deb and Human Resources employees are almost done entering data from 1991 to 2000. The database will capture all of the salary history in one place and will make calculating benefits much quicker, easier, and more consistent. CONCLUSION AND NEXT STEPS: Deb will review the data that has been entered to make sure that all classification changes are included. She will calculate salaries for those needing employment history for a partial year. Staff still needs to create and test a report that will extract the necessary year-end information from the JD Edwards payroll system. 6. BENEFICIARY DESIGNATION CHANGE FOR DECEASED PLAN MEMBER MAIN POINTS: Greg reported that he had contacted the attorney for the parents of a deceased em- ployee who had a deferred vested retirement benefit, in order to determine the status of a trust agreement being established for the deceased employee's son. The attorney reported that due to the purchase of Norwest Bank by Wells Fargo, the bank has not yet indicated whether it is willing to act as the trustee. CONCLUSION AND NEXT STEPS: Greg will continue to monitor this item and will bring it to the Committee for a vote when the documents are received. 7. MONTHLY INVESTMENT UPDATE MAIN POINTS: Despite the stock market showing negative returns through June, the Plan investments rose 3.6% for the year to date. Since January, staff has continued to rebalance the mix of domestic and international funds by selling $600,00 worth of Janus Overseas; $500,000 of Nicholas; and $750,000 of JAI Regional shares. There is about $750,000 worth of IAI left to sell. Alan reported that IAI has been sold to another mutual fund company. The proceeds from the sales were used to purchase shares of the Dreyfus Emerging Leaders Fund and Meridian Value Fund, both of which meet the criteria set out in the Investment Policies and which fit into the small cap niche of the portfolio. The total value of the assets at the end of June was just over $35 million. CONCLUSION AND NEXT STEPS: Julie will present the full quarterly report in August. 8. OTHER BUSINESS A. BENEFICIARIES FOR PLAN MEMBERS, DEFERRED VESTED MEMBERS & RETIREES MAIN POINTS: Deb reported that Human Resources is in the process of verifying beneficiary information for all Plan members. Besides active members, letters will go to deferred vested members and retirees who chose the 120 month Certain and Life benefit. CONCLUSION AND NEXT STEPS: No further action is needed by the Committee. B. MEMO REGARDING COMMITTEE ATTENDANCE MAIN POINTS: Alan distributed copies of a City Council -approved resolution outlining the standards for boards and commission member attendance and the procedure for dismissing a non -attending member. It was noted that the terms of office for all board and commission members have been extended through December of the year their term expires, in order to better fit Council's schedule for making commission appointments. CONCLUSION AND NEXT STEPS: No further action is needed by the Committee GERC Meeting Minutes July 13, 2000 Page 4 of 4 C. PLAN RESTATEMENT PROCESS REMINDER MAIN POINTS: Greg reminded members and staff that part of the 2000 Work Plan was to approve a restatement of the Plan document by the end of the year. The actuaries advised the Committee that the federal compliance deadline has been extended to December, 2001. CONCLUSION AND NEXT STEPS: Greg will provide the draft Plan restatement to the actuary. 9. SCHEDULE FOR NEXT REGULAR MEETING: The next regular meeting will be Thursday, August 3, 2000, at 1:15 PM in the Council Information Center (CIC) of City Hall West. The agenda will include: The tentative agenda included the following: 1. Citizen Participation and Plan Member Comments 2. Consider approving the July 13, 2000, minutes 3. Discussion of Retirement Philosophy 4. Continued Discussion with Actuarial Firm on the Scope of GERC Work 5. Full-time — Part-time Issue Education Program 6. Improvements to Procedures to Calculate Benefit Calculations 7. Action on Beneficiary Designation Change for Deceased Plan Member _ 8. Status of Kratz Domestic Relations Order 9. 2nd Quarter & Monthly Investment Report 10. Other Business ADJOURNMENT: Susan adjourned the meeting at 2:52 PM. GERC AND GERP WEB PAGE ADDRESS: http://www.ci.fort-collins.co.us/CITY HALL/BOARDS_COMMISSIONS/RETIREMENT/index.htm FUTURE MEETING SCHEDULE: The Committee normally meets at 1:15 p.m. on the first Thursday of each month in the Council Information Center, City Hall West. The next scheduled meeting will be Thursday, August 3rd, 2000, at 1:15 PM. The Committee will hold remaining meetings for 2000 as shown below: THURSDAY, AUGUST 3, 2000 THURSDAY, SEPTEMBER 7, 2000 THURSDAY, OCTOBER 5, 2000 THURSDAY, NOVEMBER 2, 2000 THURSDAY, DECEMBER 7, 2000