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HomeMy WebLinkAbout2013-08-14 NEERB MINUTES' • • • NONEMERGENCY EMPLOYEES RETIREMENT BOARD MEETING August I4 , 2012 Chairperson Haga n called the regular meeting of the Englewood NonEmergency Employees Retirement Plan Board to order at 3:03 p.m . in the Public Works Conference Room of the Civic Center, 1000 Englewood Parkway, Englewood, Colorado . Members Present: Members Absent: Others Present: A quorum was present. Approval of Minutes Frank Gryglewicz, Director of Finance and Administrative Services Bradley Hagan , Chairperson , Employee Representative Bobbi Oxford , Council Appointee John Moore, Council Appointee (by phone) Mahendra Patel , Secretary, Employee Representative Jim Woodward, Council Member James Jordon , Council Appointee (with notice) Wendy Dominguez, lnnovest Portfolio Solutions Jerry Huggins, lnnovest Portfolio Solutions Diane Hunt, Gabriel Roeder Smith and Company Mary Brauer, Reinhart Boener Van Deuren Norris & Reiselbach, PC (arrived at3:16p.m .) Daniel Brotzman , City Attorney (arrived at 3 :55 p.m.) * * * * * MR . GRYGLEWICZ MOVED TO APPROVE THE MINUTES OF THE MAY 8 , 2012 REGULAR MEETING . MR. WOODWARD SECONDED . Ayes: Nays: Absent: The motion carried . Gryglewicz, Hagan , Moore, Oxford, Patel , Woodward None Jordan Approval oflnvestment Policy Statement Changes The Board reviewed the revised Inves tment Policy Statement. MR. WOOD WOOD MOVED TO APPROVE THE INVESTMENT POLICY ST A TEMENT REVISED AS OF MAY 2012. MR. GRYGLEWICZ SECONDED. Ayes : Nays: Absent: The motion carried . Gryglewicz, Hagan , Moore , Oxford , Patel , Woodward None Jordan Innove st Portfolio Solutions, LLC In the interest of time constraints , Ms . Dominguez provided a very brief overview of the second quarter performance . Innovest provided a review of the current large cap growth manager, Allianz Large Cap. Allianz, had two fund managers leave and with disappointing returns, Innovest is recommending a replacement from three candidates . The • • • candidates are Harbor Capital Appreciation, Westfield Large Capital Growth and Aston/Montag Caldwell Growth . Mr. Huggins reviewed the pros and cons of the three candidates for consideration . Mary Brauer arrived 3: 16 p.m . The Board discussed the candidates and lnnovest 's recommendation to change large cap growth managers from Allianz to Harbor Capital Appreciation MR. GRYGLEWICZ MOVED TO APPROVE CHANGING THE LARGE CAP GROWTH FUND FROM ALLIANZ TO HARBOR CAPITAL APPRECIATION . MS. OXFORD SECONDED . Ayes : Nays: Absent: The motion carried. Gryglewicz, Hagan , Moore, Oxford, Patel, Woodward None Jordan Mr. Huggins explained that the Board had previously attempted to increase revenue sharing when they had selected Charles Schwab to provide custodial services. The contract with Schwab did not comply with Colorado Statutes , so the change of custodial services was not completed . Innovest continued its efforts to increase the Plan 's revenue sharing by contacting Wells Fargo , the current custodial bank, and was successful with the efforts. Mr. Huggins reviewed the Wells Fargo Account Agreement. By changing the Wells Fargo Account Agreeme nt , th e Plan will receive additional revenue sharing from the funds in the Plan . The agreement reduces asset based fees to $25 ,000,000 at five basis points and three basis points for amounts greater than $25 ,000,000 from five basis points for amounts less than $50,000 ,000 . With an account balance of about $27 ,000 ,000, this will provide additional savings. The agreement also lowers the Wells Fargo Collective Trust Funds management fee (the Plan has Wells Fargo S&P 500 Index Fund) from 15 basis points to I 0 basis points . MR . GRYGLEWICZ MOVED TO APPROVE THE WE LLS FARGO ACCOUNT AGREEMENT. MR. PATEL SECONDED. Ayes: Nays: Absent : The motion carried . Gryglewicz, Hagan , Moore, Oxford , Patel , Woodward None Jordan Discussion and Consideration of Benefit Request for Mark Trusty Mr. Gryglewicz explained that during the preparation of Mr. Trusty's retirement benefit calculation , it became apparent that since he repeatedly elected to use Holiday Worked and Accrued that his benefit would be reduced from the amount he would receive ifhe had chosen to use Holiday Worked and Paid or Holiday Worked and Comped . The Englewood Employee Association (EEA) contract states Holiday Worked and Accrued is elected by the Member, the eight hours worked are "overtime ." Overtime is not included as eligible compensation when calculating an employee 's retirement benefits. The City has followed the wording of the EEA contract, however, the City has further determined that reducing retirement benefits was not the intent of the contract. City staff is working on changing the Oracle payroll system . The EEA will be notified of the City 's intention to avoid reducing the Member benefits in the future . MR. GRYGLEWICZ MOVED TO APPROVE THE 50 % JOINT AND SURVIVOR BENEFIT AT THE HIGHER AMOUNT OF $2 ,001.90 AS OF JULY I , 2012 , WHICH INCLUDES THE EIGHT HOUR OF REGULAR PAY WHEN HOLIDAY WORKED AND ACCRUED WAS CHOSEN . SECONDED BY MR. WOODWARD . Ayes : Nays : Absent: Gryglewicz, Hagan , Moore , Oxford , Patel , Woodward None Jordan Non E merge ncy Empl oyees Retireme nt Board Mee tin g 2 of 5 The motion carried. • Discussion Related to Normal Retirement Age Restrictions for DROP • • Mr. Gryglewicz reviewed the situation that prompted the memo included in the Board packet. During the review of the Plan Document amendments City staff became aware of an employee who is currently in the Deferred Retirement Option Plan (DROP) but was permitted in the DROP after attaining Normal Retirement Age. The Board and Mr. Brotzman discussed the issue. MR. GRYGLEWICZ MOVED TO APPROVE THE DROP APPLICATION THAT WAS ERRONEOUSLY APPROVED EVEN THOUGH THE MEMBER HAD PREVIOUSLY ATTAINED NORMAL RETIREMENT AGE. ALL REASONABLE EFFORTS WILL BE MADE IN THE FUTURE TO INSURE DROP APPLICANTS COMPLY WITH THE PLAN DOCUMENT RESTRICTIONS ON DROP ELIGIBILITY. MR. PATEL SECONDED. Ayes : Nays : Gryglewicz, Hagan, Moore, Oxford , Patel , Woodward None Absent: Jordan The motion carried. Retirement Approvals and Notifications : a. b . c . d. e . f. g. h . i . j. Consideration of DROP Benefit for Linda Shea Consideration of DROP Benefit for James Veryser Consideration of DROP Benefit for Charles Auner Consideration of DROP Benefit for William Amack Consideration of DROP Benefit for Charles Debaillon Consideration of Retirement Benefit for James Kavinsky Notification of DROP Application for Bradley Hagan Consideration of Retirement Benefit for Sue Carlton-Smith Notification of DROP Application for Jan Grengs Notification of Death of George Garnett k. Consideration of Lump Sum Distribution for the Beneficiary of David Butler MR. GRYGLEWICZ MOVED TO APPROVE THE ITEMS LISTED ON THE BENEFIT APPROVALS AND NOTIFICATIONS . MR. PATEL SECONDED . It was noted that even though an item regarding Mr. Hagan was li sted as an item for approval , the item is for information purposes only. Mr. Hagan is not required to abstain . Ayes: Nays : Absent: The motion carried . Gryglewicz, Hagan , Moore, Oxford, Patel , Woodward None Jordan Discussion of Closing the Plan to New Participants Mr. Gryglewicz explained the idea of closing the NERP to new participants came up during City budget discussions . He explained that this is an effort to reduce future retirement plan costs for the City. In recent years the cost of Non Eme rgency Employees Retirement Boa rd Mee ting 3 o f 5 • • • defined benefit plans continue to increase and the a defined contribution plans generally maintains a consistent level of contributions. Ms . Hunt commented that they have many clients studying options that could reduce the cost of funding defined benefit plans . She explained that it is understandable to want to reduce costs but the unfunded liability will still need to be paid and currently, that is driving increased costs for the Plan. Closing the Plan to new participants generally does not reduce costs for five to ten years. Another issue is that over time the members in the Plan will all retire reducing the liability, but as long as there are retirees there will be ongoing costs without active participants to share in the cost of the funding. Ms. Hunt suggested that some plans are developing new tiers with lower benefits. Mr. Gryglewicz clarified for Mr. Patel that ifthe Plan closes to new participants the new employees would no longer have the choice of the defined benefit or the defined contribution plan. He further explained the funding of the defined contribution plan ( 401 a) and how a 40 I a plan typically works. The NonEmergency Employee Money Purchase Plan (NEMP) is the current 40la plan available to EEA employees. Ms. Hunt commented that a 10 year cost projection may provide a better analytical tool for the Board to review and make a decision to close the Plan to new participants . Also , adding a tier or making other changes might be included in the study. The Board discussed some of the information that may be necessary to help them make a determination. Ms. Brauer mentioned that the IRS has a concept that interprets changes to Plan benefit or member eligibility as a partial termination of the Plan. A partial termination will automatically vest all members . She suggested the Board confirm that any action taken does not cause a partial termination. Additional discussion followed regarding current funding and that there is no intention of making excess assets , if any, of the Plan available to the employer. Documentation is necessary to prevent the IRS from automatically vesting all Plan members. Ms. Hunt presented other changes that might be included in the study, she suggested reducing the annual accumulator, removing the Rule of 88, increasing the employee contribution level or increasing the percent of annual reduction for the early retirement benefit. Chairperson Hagan asked about employee history of the election of the NERP verses the NEMP. Ms. Wescoat responded that it varies and is very unpredictable. She suggested that if it were evaluated in the past 36 months it might be a 50/50 split. Ms . Oxford requested that the issue be tabled until additional information can be presented. MR. GRYGLEWICZ MOVED TO APPROVE A STUDY INCLUDING A PROJECTION OF THE TEN YEAR COST, CLOSING THE PLAN TO NEW PARTICIPANTS, A POSSIBLE TIER WITH A DIFFERENTIAL OF BENEFIT WITH ACCUMULATOR OF ONE PERCENT, REMOVE THE RULE OF 88 , INCREASING THE AVERAGE SALARY FROM THIRTY-SIX MONTHS TO SIXTY, AND INCREASING THE ANNUAL REDUCTION FACTOR TO SIX PERCENT FOR EARLY RETIREMENT. MS . OXFORD SECONDED . Ayes : Nays: Gryglewicz, Hagan, Moore, Oxford , Patel , Woodward None Absent: Jordan The motion carried. Review ofNERP Employee Handbook and Form Revisions The Board reviewed the following and made minor changes: • NERP Handbook • Delayed Retirement Option Form Non Emerge ncy Emplo yee s Retirem ent Board Meetin g 4 of 5 • . , • • • • NERP Application • Pre-Retirement Beneficiary Form (with noted changes) • Irrevocable Election to Participate in the Deferred Retirement Option Plan (DROP) and Resignation from Employment MR. GRYGLEWICZ MOVED TO APPROV E THE NERP HANDBOOK, DELAYED RETIREMENT OPTION FORM , NERP APPLICATION, PRE-RETIREMENT BENEFICIARY FORM AND THE IRREVOCABLE ELECTION TO PARTIPATE IN THE DEFERRED RETIREMENT OPTION PLAN AND RESIGNATION FROM EMPLOYMENT. MR. WOODWARD SECONDED. Ayes : Nays: Absent: The motion carried. Gryglewicz, Hagan , Moore, Oxford, Patel , Woodward None Jordan The Board agreed to review the NERP and NEMP comparison sheet with the additional necessary forms that will be brought to the November meeting. MR . GRYGLEWICZ MOVED TO APPROVE ALL AMENDM ENTS WITH THE CHANGES DISCUSSED DURING THE MEETING . MR. PATEL SECONDED . Ayes: Nays : Absent: The motion carried . Member Choice Gryglewicz, Hagan , Moore , Oxford , Patel , Woodward None Jordan Ms . Brauer informed the Board that the Internal Revenue Service (IRS) has inquiried about various items in the Plan document filed in 2009 and she is providing responses . She commented about one of the inquiries related to the IRS position that the DROP benefit payments must be included for the Section 415 calculations. Although this is a very technical issue , Ms . Brauer said that fortunately for the NERP, another client received a letter from the IRS re gardin g this matter. This means that the research and correspondence will be billed to the other client since they have the lette r requesting the change and the NERP has only had phone inquiries. Mr. Brotzman asked the Board when looking at the NEMP and NERP comparison that they think in terms of simple language in an effort to help new employees make an informed decision. Mr. Gryglewicz reminded the Board that Ms. Wescoat reviews the sheet with new employees at their retirement orientation . The sheet is not provided to new employees without a detailed explanation. The next regular Board meeting is scheduled for November 13, 2012 in the Public Works Conference Room . The time to be determined after the agenda is evaluated . The Board adjourned at 4 :35 p .m . ~~ fi)L<U~ Carol Wescoat Recording Secretary Non Emerge nc y Em ployees Retirement Bo ard Mee tin g 5 of5