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HomeMy WebLinkAbout2013-08-20 NEERB MINUTES• • • NONEMERGENCY EMPLOYEE S RETIREMENT BOARD MEETING August 20 , 20 l 3 Chair person Ha gan called the reg ular mee tin g of th e Englewoo d No n Emergency Emplo yees Retirem ent Plan Board to order at 3: I 0 p.m. in the Public Works Co nference Room of the Civic Center, !000 Eng lewood Parkw ay , Eng lewood, Co lor ado. Member s Present: Members Absent: Ot hers Pr ese nt: A q uorum wa s pre sent. Approval of Minutes Frank Gryg lewi cz, Director of Finance and Administrative Services (left at 4: 17 p.m .) Bradley Hagan , Chairp erso n, Employee Representative James Jordo n, Counc il Appoi nt ee John Moor e, Co uncil A pp oint ee Mahe nd ra Patel , Secretary , Employee Representative Jim Woodward, Co un ci l Member No ne Eri c Overbey, lnn ovest Portfolio Solutions Wendy Dominguez, lnnove st Portfolio So lu tions Diane Hunt , Gabriel Roeder Sm ith and Company (ORS) Jo e Herm , Ga briel Roeder Smith and Company Dan Brotzman , City Attorney (left at 3:25 p.m.) * * * * * MR. GR YO LEWI CZ MOVED TO APPR OVE THE MINUT ES OF THE MAY 14, 2013 REGULAR MEET ING WITH TH E CO RR ECT ION ON PAGE TWO C HAN GING Tl-IE WORD "MORALITY TABLES" TO "MO RTALI TY TABLES." MR. PATEL SECONDED. Ayes: Nays: Absent: The motion carr ied. Gryg lew icz, Hagan , Jord an, Moore , Patel, Woodward None No ne Di scussion of Memo from Daniel Brotzman The Board rev iewed Mr. Brotzman 's memo agreeing wi th the recommendation from Mary Brauer, Pens ion Attorney. The memo states that the changes are to correct the mort ality tab le error s. The participants benefits with increases will receive the increa sed amou nt and th e retroactive inc re ase an d th e pa1iicipants whose benefits are redu ced will receive the lesser benefit going forward without a deduction for excess payments previous ly received. MR. MOO RE MOVED TO ADD AN ADENDMENTTO THE MAY 14 , 20 13 MOTION COR RE CT ING Tl-IE BENEF ITS BECAUSE OF THE USE OF AN OLD MORTALITY TABLE AND ALLOWING FO R TI-IE RE T IR EES TO I-IA VE PAYMENTS C HANG ED TO THE CORRECT BENEFIT AN D RETROACTIVE ADJUSTMENTS TO THOS E WITH IN C REASES AND NO RETROACT IV E ADJUSTMENTS FOR THOSE WITH DECREASES , THE ADJUSTMENTS ARE AS OUTLINED ON THE HA NDOUT. MR. GRYGLEW ICZ SECONDED. Ayes: Nays: Absen t: The mot ion ca rri ed. Gryg lew icz, Haga n, Jord an , Moor e, Patel , Woodwa rd None None Discuss ion of Board Term Limitations Mr. Moor e stated the Board perpetually has problem s filling vaca nt Board po siti ons wh ich increase th e likel ih ood of not obtain in g a quorum. The Board discussed changi ng the number of members necessary for a quorum and other optio ns . Disc uss ion followed regardi ng alternates, the experience necessary for Board Members , and term limits. The Board al so di scussed amend in g the Plan document and how potential changes mi g ht in crease th e probabi li ty of obtain in g a quorum. MR. MOORE MOVED RECOMMENDING CITY COUNCIL AMEND TI-IE NERP PLAN DOCUMENT REDUCING THE QUORUM FROM f!VE TO FOUR MEMBERS. MR. GRYGLEWICZ SECONDED. Ayes: Nays: Absent: The motion carried Dan Brotzman left 3 :25 p.m. Gryglew icz, Hagan , Jordan , Moore, Patel, Woodward None None lnnove st Portfolio Solutions, LLC Ms. Dominguez introduced Eric Overbey. Mr. Overbey heads Innovest's due diligence department. The Board discussed changing the order of the agenda so fund search presentations go first and then discuss portfolio performance after the other agenda items. Mr. Overbey explained the need to replace the Perkin s Mid Cap Value Fund . Two replacement funds options are John Hancock Disciplined Mid Cap Value and Touchstone TS & W Mid Cap Value Fund. Mr. Overbey reviewed th e pros and cons of each fund and how the funds differ from Perkins . The Board discussed the volatility, pa st performance, and the asset allocations of the two funds. The Board reviewed the share classes available and the fees associated with each share class. MR. MOORE MOVED TO REPLACE THE PERKINS MID CAP VALUE WITH THE JOHN HANCOCK DISCIPLINED MID CAP VALUE FUND. MR. GRYGLEWICZ SECONDED. Ayes: Nays: Absent: The motion carried Grygiewicz, Hagan, Jordan , Moore , Patel , Woodward None None Ms. Domingue z explained the need to replace the J.P. Morgan Highbridge Dynamic Commodities Fund. The PIM CO Co mmodities Fund will be retained. Mr. Overbey reviewed the pro s and cons of the fund of the Credit Suisse Commodity Return Strategy Fund. Mr. Gryglewicz asked if the Credit Suisse Commodity fund followed the Dow Jones Commodity Index , why buy the fund rather than an index fund. Mr. Overbey ex plained the difference s and that some of SEC regulation s limitation s. MR. MOORE MOVED TO REPLACE TI-IE J.P. MORGAN 1-IIGHBRIDGE FUND WITH THE CREDIT SUISSE COMMODITY STRATEGY FUND. MR. GRYGLEWICZ SECONDED. Ayes: Nays: Absent: The motion carried Gryglewicz, Haga n, Jordan, Moore, Patel , Woodward None None The trades will be made as soon as po ss ible. Gabrie l Roeder Smith and Company Ms. Hunt reviewed the studie s requested by the Board. Studies build on each other study. Study I -Decrease the investment return assumption from 7.5% to 7.0%. Study 2 -Changes from Study I plus decre ase the inflation assumption from 3.0% to 2.5%. Study 3 -Changes from Study 2 plu s update the mortality ass umption to RP-2000. Study 4 -Changes from Study 3 plu s revise the retirement rate assumption . An analyzed the impact of revi s ing the retirement assumption of those eligible from I 00% retirement at first eligibility (but no earlier than age 61) to the following schedule: NonEmergcncy Empl oyees Retirement Board Meeting 2 of 4 • • • • • • Current Propo sed Age Rate Rate 61 100% 50% 62 100% 50% 63 100% 30% 64 100 % 30% 65 100% 100% Study 4 was included by GRS based on the observations of the Plan 's pas t ex perience with Member s not retirin g as soo n as the y are eligibl e for Special Ea rl y Ret irement (Rule of 88.) Ms. Hunt reviewed resu lts of the studies indicatin g both potential increa ses and decrea ses in funding liabilitie s. Mr. Moore inquired about th e timeline of changing the assumptions. Ms. Hunt suggested the assumption changes need to be approved prior to the ne xt Plan valuation. I-l e also inquired about th e timeline from the City's budgeting per spective. The Plan contributions are delaye d to th e be g innin g of the yea r following th e actuarial report th at provides the contribution amount s for the budgetin g process. The delay al low s th at ass umption s approved for th e January l, 2014 report will be reflected in the 2015 Budget. Mr. Moore asked GRS if the se st udie s were compared to the GRS capital market assumptions or if it were benchmarked against th e NERP peer group , where the Plan wou ld stand. Ms. Hunt stat ed th at for other pl ans with a hi gher equity ratio , the y are finding 7.0 to 7.5 percent return s and she think s a 7.5 percent ass umption is hi gh for the NERP investment allocation and from the actuarial position that 7.0 percent is still within the viable range for the lon g term. Mr . Moore que stioned ifthe Board determined to make the ass umption changes , s hould the Board consider lowerin g the capital market percen tage below 7.0. Discussion continued on the additional studi es and the appropriateness of th e assu mption s . The Board agreed th e sa lary scale assumption s hould be reduced ifthe City's Hum an Re sources Dep artment foreca st is lower. Ms. Hunt sa id mort a lity experience for the City of Denv er and State of Wyoming prompted both to change to the RP-2000 mortality table. Mr. Moore lent suppo rt for eac h study with the caveat that th e sa lary sca le should be studied further to verify forecasted increa ses in the future. I-l e s upport s making the changes; however , he defers puttin g the amendment on the table until more information about the City's forecasted salary scale can be determined. Mr. Gryglewicz will provide the information for the next meeti ng. Ms. Hunt asked ifthe Board would lik e to review the GRS capital market analys is. She also commented that next year it ma y be wo11hwhile to perform funding projection s of twenty to twenty-five years o ut. Thi s will provide a forecast of the funding ratio if the City makes the actuarially required contributions. Ms . Wescoa t asked ifthe changes are made to the mo11 ality table s, would the Plan ne ed amendments. Ms. Hunt said that the joint and sur vivor optional factors are based upon th e mo11ality tables . Mr . Moore sa id that the Plan document mo11ality tabl es for calculation of optional ben efit s do not need to matc h the mo11al ity tables assumptions use d for the actuarial repo1t , but is a good idea to review the Pl an from time to tim e and update it and that wa s done at the be g innin g of2012. Ms. Hunt will provid e Ms. We sco at an estimated cost of the cap it al mark et assumptions study. A phone poll will be performed if necessary. Mr. Gryg lew ic z left at 4 : 17 p.m. lnno ves t Portfolio Solutions. LLC -Continued Ms. Dominguez continued the pr ese ntati on of last qua11er's market performance. Mr. Overbey pr ese nted the analy s is of each fund in the Plan . Henry O'Dell Retiree Death Notification Ms. Wescoa t explained th e Henry O'Dell Retiree Death Notification wa s li sted separately on th e agenda because hi s fin al paym en t was returned by the bank. Mr. O 'Dell died in at an ass isted livin g re s iden ce . I-le contacted Ms. Wescoat in 2009 to reque st that no co nt act or information be provided to any fa mil y memb er. When Ms. We scoat contacted the ass isted livin g residence after hi s dea th , she was told th at the family had not responded afte r repe ated contacts rega rding the death and Mr. O'Dell was buried with no information from any friend s or family. Ms. Wescoat rel ayed this inform ation to Mr. Brotzman and he sa id since there are no beneficiaries the funds should be return ed to th e Pl an. Mr. Moore asked if the fund s would be se nt to Colora do Treasurer and Ms. We scoat sa id Mr. Brotzma n sa id no t to se nd th e funds to th e state. NonEmergency Empl oy ee s Retirement Board Meeting 3 or 4 Retirement Approvals and Not ifi cat ions: a. Cons id erat ion of Retirement Benefit for Barbara Krecklow b. Notification of Ret ir emen t Benefit Requ est for Janet Grimmett c. Consideration of Retirement Benefit for Dennis Stowe d. Notificat ion of DROP Application Wi thdrawn for Randy Pierce e. Notification of DROP Application for James Black f. Benefit Approval for the Beneficiary of Thomas C he sher Mr. Stowe 's ret irem ent benefit was sched ul ed to begin in .Jun e but he ha s not co mpl eted hi s paperwork , so hi s benefit will be app roved at a future Boa rd meet in g after the paperwork is comp leted. Mr. Pierce withdrew hi s DROP application prior to completing the ir revocable ag reement. CHA IRPERSON HAGAN MOVED TO APPROVE TI-IE ITEMS LISTED ON THE BENEF IT APPROVALS AND NOT IFI CA TION S. MR. MO ORE SECONDED. Ayes: Nays: Absent: The motion carried. Hagan , Jordan, Moore , Patel , Woodward None Gryg lew ic z Rev iew of James Jordan's Attendance Mr. Jordan has attended on ly three of the past four meet in gs. Mr . Moore inquir ed if it is Mr. Jordan 's int ention to attend futur e me et in gs . Mr. Jordan sa id he will attempt to attend all of the meet in gs. Member Choice The Board considered changing the date of the ne xt Board meeting because Co uncil Member Woodward, current Counc il li aison , may not to run for reelection. Mr. Woodw ard will rem ai n on C ity Counci l and th e Board until Nove m be r 18 (the end of hi s term) regard less of his decision to run for another Co uncil term. November 12 , 20 13 wi ll remain the next meeting date. The Board discussed future vaca ncie s due to terms ending. The Board adjo urn ed at 4:45 p.m. Caro l Wescoat Re co rdin g Secretary Non Emergency Employees Retirement Board Meeting 4 of 4 • • •