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HomeMy WebLinkAboutRetirement Committee - Minutes - 02/21/2008loins is a way of life GENERAL EMPLOYEES' RETIREMENT COMMITTEE MINUTES FEBRUARY 21, 2008 COUNCIL LIAISON: COMMITTEE MEMBERS PRESENT: COMMITTEE MEMBERS ABSENT: Councilman Ben Manvel General Employees' Retirement Committee 215 N. Mason PO Box 580 Fort Collins, CO 80522 970.221.6788 970.221.6782 - fax fcgov.com Jim O'Neill, Chair, 221-6779��''""' Charles Seest, 221-6795 Bill Switzer, 221-6713 Rick Richter, Vice Chair 221-6798 Jim Lathrop, 226-1826 Dennis Freeburg OTHERS PRESENT: Pat Kahle, Milkman Harold Hall, 221-6784 Tracy Hoffman, 2216747 Heather Shepherd 221-6788 Greg Tempel, City Attorney Janie Appleton (HR) Meeting called to order at 1:1Op. m. Citizen Participation and Plan Member Comments Bill Switzer stated that there was a comment from plan member Ellen Switzer. She requested that the committee review the current Death Benefit policies as they pertain to beneficiaries. Consider approving the minutes from the meeting of January 10, 2008 Bill Switzer moved to approve the minutes and Rick Richter seconded the motion. The motion carried unanimously. Election of Officers For the position of Committee Chair person, Bill Switzer nominated Jim O'Neil[. Rick Richter seconded, and the motion passed unanimously. Jim O'Neill is the Committee Chair. For the position of Vice -Chair, Jim O'Neill nominated Rick Richter. Dennis Freeburg seconded the motion and the motion passed unanimously. Rich Richter is the Committee Vice -Chair. Review GERC standing rules Jim O'Neill asked the Committee to review the current `Standing Rules' and propose any changes they may have. Rick Richter moved to continue use the standing rules as revised in 1996 with no changes. Bill Switzer seconded the motion and it passed unanimously. Discussion of Entry Age Normal Method Pat Kahle from Milkman asked the Committee to consider changing the cost method used for the actuarial valuation from the aggregate cost method to the entry age normal cost method (EAN). EAN calculates an explicit unfunded actuarial accrued liability (UAAL). Tracking an explicit UAAL from year to year makes it easier to identify the sources of gains and losses. This will make it easier for the Committee to review and set assumptions. EAN has several advantages for purposes communicating with the City Council. EAN develops an explicit actuarial accrued liability (AAL) and UAAL. This will allow the Council to review the funded ration of the plan for year to year. The aggregate cost method does not develop an explicit AAL and does not have a funded ratio. Further under EAN, the annual required contribution is divided into two pieces, the normal cost or accrual for the year and the amortization of the unfunded actuarial liability. The City Council will be able to identify how much of a contribution is going to pay off past under funding. Pat explained that we will be able to simulate the current method using EAN by using a short amortization period for the UAAL. GASB (the Governmental Accounting Standards Board that regulates how governmental entities report their pension plan liabilities) allows plans to amortize the UAAL over 10 to 30 years. Pat said that if we adopt the shortened period of 10 years, the annual contribution will be similar to that calculated under the aggregate funding method. She said that we could use EAN as our funding method and use aggregate as our funding policy target. EAN is used by approximately 85-90% of governmental plans. Overall, EAN provides an easier and more understandable method for reporting funded ratios, tracking UAAL and communicating with the City Council. The Committee will discuss and consider this change in cost method at the March meeting. Monthly Investment and Other reports Harold Hall reviewed the investment progress for January. Total portfolio was down 4.02% He stated that he's been watching the market carefully since there is the possibility of a recession in the coming year. Also there were two changes in Morningstar ratings. The Brandywine fund increased from 3 to 4 stars, and the T. Rowe Price fund was decreased from 3 to 2 stars. where renewal is a way of life Other Business Jim O'Neill announced that the City Clerk is offering required training regarding serving on a board or commission and he encouraged everyone to attend. The next training session is on March 26th, 2008 Greg Temple brought copies of the revised Working Plan Document and the 6th Amendment signed by Council for the Committee members. Next meeting topics: Discussion of actuarial assumptions Personal retirement planning statements At 2:29 p.m., Dennis Freeburg moved to adjourn the meeting and Rick Richter seconded the motion. The motion passed unanimously. where renewal is a way of life