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HomeMy WebLinkAboutRetirement Committee - Minutes - 02/03/2000Services Finance Administration City of Fort Collins FORT COLLINS GENERAL EMPLOYEES RETIREMENT COMMITTEE FEBRUARY 3, 2000 MEETING MINUTES Approved, as Amended, on March 2, 2000 COUNCIL LIAISON: Mayor Ray Martinez COMMITTEE MEMBERS PRESENT: Jim Hume, 221-6776 Alan Krcmarik, 221-6788 Susan Lehman, 221-6813 Dottie Nazarenus, 484-7592 ABSENT: Terry Van Cleave, 221-6321 One Committee position vacant due to Kevin Westhuis' resignation OTHERS PRESENT: Mark Sanford, Watson Wyatt Worldwide, the Plan's actuarial firm Vincent Pascale (Staff Support — Human Resources) Greg Tempel, (Staff Support — Legal) Julie Depperman, (Staff Support — Investments) Sue Wilcox, (Staff Support — Clerical) Michele Hays -Johnson, Plan Member Dave Meyer, Plan Member CALL TO ORDER: Chairperson Jim Hume called the meeting to order at 1:21 PM. ITEMS OF NOTE: Terry Van Cleave was away on vacation and unable to attend this meeting. With four members present, a quorum was determined. Jim explained that Dottie could only stay until 2:30 PM and that without her, the Committee would not have a quorum. APPROVAL OF MINUTES: Alan Krcmarik distributed the draft minutes of the January 6, 2000 meeting. Alan noted that some suggested comments and changes had_been incorporated in the draft, but he noted that a formatting change to item 7 had been missed and would be made to the final minutes. Jim Hume moved that the minutes be approved as distributed with the formatting change. Susan Lehman seconded the motion, which passed unanimously 4-0. ADDITIONS OR CHANGES TO AGENDA: The Committee members present agreed to try to cover any items that might require a vote before Dottie had to leave. DISCUSSION TOPICS: 1. GERC PLAN MEMBER(S) COMMENTS AND CITIZEN PARTICIPATION: There were no comments at this time. 300 LaPorte Avenue • P.O. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6788 • FAX (970) 221-6782 GERC Meeting Minutes February 3, 2000 Page 2of5 2. TRACKING OF DOMESTIC RELATIONS ORDERS (DRO) BENEFIT MAIN POINTS: Greg Tempel distributed copies of GERC Resolution 2000-1 approving the revised method for handling domestic relations orders (DRO) involving Plan members. He also provided an outline of the revised method. As revised, the procedures will now be consistent with a recent state law change which allows the parties to a DRO to agree upon a change to an approved DRO providing the Court approves the change. CONCLUSION AND NEXT STEPS: At present the Human Resources Department is responsible for tracking the benefit for a DRO and Vincent Pascale said he is comfortable with that. Human Resources will contact the Committee and support staff should there be a need for any action corresponding to a DRO. 3. EDUCATION PLAN ON FULL-TIME - PART-TIME ISSUE MAIN POINTS: Jim Hume explained that he had drafted an issue paper explaining the part- time — full-time issue to the members. This had been sent electronically to the Committee members and staff for comments and changes and a second draft was circulated. The Committee members generally agreed that information should be added to the issue paper indicating that individual's calculations of accrued benefits earned up to the point of the proposed Plan change. The Committee discussed the wording in the first paragraph. Alan suggested explaining the Committee's fiduciary responsibility, as well as the original intent of the Plan and how the Plan has evolved in response to members needs. Greg Tempel suggested adding some definition of base hours or perhaps referring to the definitions used in the Plan. Before a change can be made, the Finance Department needs to confirm that the new Payroll system can track base hours consistently and transmit that information to the actuary. Committee members raised questions about whether to use scheduled hours versus actual hours worked, especially for people scheduled for a part-time position who routinely work additional hours; situations where an employee switches between full and part time during the year (currently calculations are based on the pay rate from the new Pay Plan implemented each January); exporting data from the JD Edwards system to other formats; and ensuring that the new payroll system can deliver what the Plan directs. Mark Sanford advised that Watson Wyatt will need the base hours in a calendar year. Vincent said he and Debbie Weedman would also use the system data to prepare preliminary calculations for members and it would be helpful if the system could keep a running total. In addition to the Issue Paper, Susan suggested the Committee solicit questions from members prior to the meeting so answers could be prepared in advance of the meeting. She also suggested that dates be set for group presentations in order to reserve meeting rooms, as they fill up quickly. CONCLUSION AND NEXT STEPS: Alan wants to verify the capabilities of the JD Edwards system in relation to the proposed changes and suggested a staff group to determine and coordinate the various needs and the system's capabilities. Susan volunteered to provide the Committee (before the next meeting) with samples a draft agenda and possible slides for the meeting. • • GERC Meeting Minutes February 3, 2000 Page 3 of 5 4. VALUATION REPORT ASSUMPTIONS AND PERSONAL RETIREMENT PLANNING STATEMENTS (PRPS) MAIN POINTS: A. Mark Sanford distributed excerpts from the 1999 Valuation Report showing the assumptions used last year. The assumed rate of interest return was 7.5%. The assumed rate for future inflation was 3.5%. The assumed rates of merit increase for employees ranged from 5.7% for 25 years olds to 1.0% for 64 year olds. The mortality assumptions are based on the 1983 Group Mortality Table. B. Mark also distributed copies of a sample personal retirement planning statement from last year and asked that any changes be forwarded to him. Mark will contact ICMA Retirement Corporation about updating their information on page 4. Dave Meyer asked if the PRPS needed any change to clarify it for an employee who is affected by a domestic relations order. Greg Tempel suggested some wording to cover that situation. CONCLUSION AND NEXT STEPS: A. After discussion, Alan Krcmarik moved to keep the actuarial assumptions the same for the 2000 Valuation Report as they were outlined in the handout from the 1999 report. Susan Lehman seconded the motion, which passed unanimously (4-0). B. In light of member requests to have the PRPS statements earlier in the year, a goal was set for distributing them with paychecks for March 24. 5. UPDATE ON COST OF LIVING ADJUSTMENT (COLA) FOR CURRENT RETIREES MAIN POINTS: Alan reported that the data for the COLA for current retirees did not get loaded in time to be included on their January 24th retirement check, so a check for the January COLA and a letter of explanation are being sent today to all GERP retirees. The COLA will be included in the retirees checks beginning in February. Vincent accepted responsibility for this delay and apologized for the inconvenience to the retirees and staff. CONCLUSION AND NEXT STEPS: Alan will continui) to monitor implementing this increase to make sure that the February distribution goes smoothly. 6. 1999 YEAR-END AND FOURTH QUARTER INVESTMENT REPORTS MAIN POINTS: Julie Depperman distributed the GERP 1999 Year -End and Quarterly reports, noting that the portfolio's market value at year-end was almost $35 million, with a total return for 1999 of 25.3%. This is 17.8% above the 7.5% actuarial assumption. It is rare for a conservative portfolio of mutual funds to outperform the Standard and Poor's 500's, but the GERP domestic mutual funds rate of return was 24.4% compared with the S & P 500's return of 19.5%. The GERP international mutual funds (66.8% return) also outperformed the EAFE (European, Asian and Far East Index benchmark), which returned 25.3% for the year. The annual reportsuggested the following Proposed Future Strategies for the next 3-6 months: 1. Analyze the composition of the remaining GERP members and revise investment objectives and asset allocation targets accordingly; GERC Meeting Minutes February 3, 2000 Page 4 of 5 2. Perform a cost -benefit analysis of purchasing annuities to cover the expected cost of the retiree portion of the portfolio; 3. Reposition the mutual fund portfolio by a) reducing holdings in under -performing funds, and b) rebalance the mix of holdings to take advantage of gains in larger position funds. CONCLUSION AND NEXT STEPS: Alan will provide the City Manager and the Finance Committee members with a copy of the report. A copy of the year-end and fourth quarter report can be obtained by contacting Alan or Julie via E-mail or the Finance Administration Office at ext. 6788. OTHER BUSINESS: A. MAIN POINTS: Greg advised the Committee that a retired vested GERP member had recently passed away and an issue concerning the beneficiary had arisen. Although the member had designated the spouse as the beneficiary, the member had not changed this designation following the dissolution of the marriage. The member had designated his parents as the contingent beneficiaries. Under -a provision of state law (15-11-804, CRS), the parents are now requesting that no beneficiary benefit be paid until it can be determined whether the parents and the ex -spouse can reach agreement as to the proper disbursement of the benefit. Attorneys for both parties have informed Greg that they anticipate an agreement in the near future. Greg advised that no action by the Committee is required at this time, however, action may be necessary at the March meeting. CONCLUSION -AND NEXT STEPS: No action required at this time. B. MAIN POINTS: Alan suggested that perhaps there needs to be some training provided for the board members. Mark Sanford volunteered that Watson Wyatt could provide some training on actuarial aspects. Susan agreed that she thought training would be helpful. Related to training, Alan had received the GERC's approval last year to attend a seminar on public pension fund management, with the GER Plan sharing the cost with the Finance Department. Do to the press of business, he was unable to attend. There is another conference this March that Alan believes would be a particularly valuable conference because the topics are closely focused on public fund management concerns. In addition, the cost is usually more reasonable than other conferences. The conference will be held in Phoenix and the registration fee is $395. CONCLUSION AND NEXT STEPS: Dottie Nazarenus moved that the Committee approve sharing the cost 50/50 with the Finance Department for Alan to attend the Public Funds Summit in Phoenix. Jim Hume seconded the motion and the vote was unanimous (4-0) in favor of the motion. SCHEDULE FOR NEXT REGULAR MEETING: The next regular meeting will be Thursday, March 2, 2000 at 1:15 PM in the Council Information Center (CIC) of City Hall West. The agenda will include: 1. Citizen Participation and Plan Member Comments 2. Consider approving the February 6, 2000 minutes 3. Approve Personal Retirement Planning Statement format GERC Meeting Minutes • February 3, 2000 Page 5 of 5 4. Review draft of Valuation Report COLA final report Education Plan for Full-time — Part-time Issue Discussion of mid -year pay changes not included in benefit calculation Other Business ADJOURNMENT. The meeting was adjourned at 2:35 PM. GERC AND GERP WEB PAGE ADDRESS: http://www.ci.fort-collins.co.us/CITY HALUBOARDS COMMISSIONS/RETIREMENT/index htm FUTURE MEETING SCHEDULE: The General Employees Retirement 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 regularly scheduled meeting will be Thursday, March 2, 2000 at 1:15 PM. Remaining meetings for 2000 are scheduled as shown below: THURSDAY, MARCH 2, 2000 THURSDAY, APRIL 6, 2000 THURSDAY, MAY 4, 2000 THURSDAY, JUNE 1, 2000 THURSDAY, JULY 6, 2000 THURSDAY, AUGUST 3, 2000 THURSDAY, SEPTEMBER 7, 2000 THURSDAY, OCTOBER 5, 2000 THURSDAY, NOVEMBER 2, 2000 THURSDAY, DECEMBER 7, 2000