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HomeMy WebLinkAbout2010-05-11 NEERB MINUTES-' ! • • • NONEMERGENCY EMPLOYEES RETIREMENT BOARD MEETING May 11 , 2010 Chairperson Bowman called the regular meeting of the Englewood NonEmergency Employees Retirement Plan Board to order at 3:00 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. Seating of Board Member Gary Bowman, Chairperson, Council Appointee Frank Gryglewicz, Director of Finance and Administrative Services Bradley Hagan, Secretary, Employee Representative, Council Appointee John Moore, Council Appointee Mahendra Patel, Employee Representative (arrived 3:30 p .m .) Jim Woodward, Council Member Brandon Williams, Council Appointee (no notice) Colin Weim, Buck Consultants Douglas Fiddler, Buck Consultants Wendy Dominguez, Innovest Portfolio Solutions Gordon Tewell , Innovest Portfolio Solutions Dan Brotzman, City Attorney * * * * * The Board acknowledged Mr. Williams reappointment. Approval of Minutes MR. GRYGLEWICZ MOVED TO APPROVE THE MINUTES OF THE FEBRUARY 9, 2010 REGULAR MEETING. MR. MOORE SECONDED . Ayes: Nays: Absent: The motion carried. Bowman, Gryglewicz, Hagan, Moore, Woodward None Patel, Williams The Board agreed to take the agenda items out of order . Discussion of Plan Document -Englewood Municipal Code section 3-4-8-7 Chairperson Bowman reviewed the Board's actions regarding the beneficiary form as completed by Timothy Charlson during the February 9, 2010 meeting. Mr. Moore inquired about the ability to value the lump sum benefit and then divide it for the family . Mr. Gryglewicz commented on his numerous discussions with the family members and the referred to the copy of the 1989 Council Communication that created the Englewood Municipal Code (Code) subsection 3-4-8-7 . The intent of the ordinance was to allow the Member or Deferred Vested Member to name whomever as their beneficiary. Discussion ensued regarding the ability to name a beneficiary other than a spouse and informing the participant of the reduced death benefit for the non-spousal beneficiary. Mr. Fiddler indicated that Code section 3-4-8-7 Beneficiary, states the member can name a beneficiary is under Code section 3-4-8 : Optional Forms of Benefits. Buck Consultants' reasoned that the Beneficiary definition was not in the section that defined death benefit and did not apply . The Code subsection 3-4-9-2: Death of a Vested or • Disabled Member Prior to Commencement of Payments provides the preretirement death benefit. Mr. Moore questioned the verbiage that possibly provides the beneficiary a lump sum distribution at the time of death . Discussion ensued regarding clarification of the lump sum at the time of the member's death and Mr . Fiddler's suggestion regarding deleting the section related to at the time of the member's death. When asked, Mr. Brotzman stated that if the Board is trying to get back to the intent of the Plan changes from 1989, the Board has the authority to make the decision and clarify the Plan language at another time . After reviewing the 1989 Council Communication , Mr. Moore summarized that the intent was to be flexible with naming beneficiaries and the death benefit section provided for an immediate lump sum distribution to aid with possible financial needs . The Board determined since they had not addressed the lump sum at the time of death they might do so now . Mr. Moore was not comfortable with the method discussed at the last meeting that split the monthly annuity first and then dividing creating a clear loss of value to the family. The split provides a lifetime of payments for the spouse and only ten years(120 months) for the children, which is a lost of value to the non-spousal beneficiaries and perhaps is an acceptable choice the participant makes , but he thinks it is difficult to allow a participant to walk away from assets they are entitled to. Discussion followed related to the possible calculation of the lump sum benefit for this and future distributions. Mr. Patel arrived 3 :30 p.m. MR. MOORE MOVED TO PROVIDE, WITH HELENANN CAMPBELL 'S CONSENT, A LUMP SUM DISTRIBUTION CALCULATED BASED ON THE SPOUSAL LIFETIME BENEFIT AND DIVIDING THE BENEFIT ACCORDING TO MR. CHARLSON'S BENEFICIARY FORM PROVIDING 50% FOR HELENANN • CAMPBELL AND 50% TO BE SHARED EQUALLY WITH ROBIN CHARLSON, TIMOTHY CHARLSON AND HEATH CHARLSON. THE MONTHLY PAYMENTS PAID MS. CAMPBELL WILL BE DEDUCTED FROM HER PORTION . MR. GRYGLEWICZ SE CONDED. Mr. Moore noted the Board feels this is the correct actuarial value and is consistent with the Plan's intent to be flexible with the beneficiary designations and to use discretion on offering a lump sum distribution . Ayes: Nays: Bowman, Gryglewicz, Hagan, Moore, Patel, Woodward None Absent: Williams The motion carried. Discussion ensued concerning document language and the need to address the method for calculating death benefits if a spouse waives the right to benefits. Ms. Wescoat suggested that the pension attorney address the verbiage clarification with next Plan document changes. The Board agreed to consider altering the beneficiary form allowing a statement of the difference of benefits when naming a non-spouse beneficiary. Staff will provide a revised beneficiary form at the next meeting for the Board's review. Mr. Brotzman left 3 :40 p.m. lnnovest Portfolio Solutions, LLC Ms. Dominguez presented possible candidates to consider to replace the Artio Total Return Fund with an opportunistic fixed income fund. She clarified this is not a change to the asset allocation and the investment will be included in the fixed income portion of the asset allocation . Non Emerge ncy Emplo yees Retir ement Boa rd Meet in g 2 of 5 • '· • • • Innovest presented three funds to be considered. Ms. Dominguez said the Board might consider including two of the funds for the allocation. The funds to be considered are JP Morgan Strategic Income Opportunities , Driehaus Active Income Fund, and PIMCO Unconstrained Bond Fund. Discussion followed regarding the risk level of Driehaus and that a potentially better blend might be created using PIM CO and JP Morgan. Ms. Dominguez said JP Morgan appears to be more willing to invest internationally . Discussion followed about the differences of funds and sector variances. MR . GRYGLEWlCZ MOVED TO APPROVE LIQUIDATING THE ARTIO TOTAL RETURN FUND AND PURCHASE EQUAL AMOUNTS OF PIMCO UNCONSTRAINED BOND FUND JP MORGAN STRATEGIC INCOME OPPORTUNITIES. MR. PATEL SECONDED. Ayes: Bowman, Gryglewicz, Hagan, Moore, Patel, Woodward Nays : None Absent: Williams The motion carried Mr. Moore stated that he no longer employed by JP Morgan and is now with AON Consulting. Innovest presented the first quarter's performance review . Ms. Dominguez reviewed the market volatility , conditions and fluctuations during the period . Mr. Tewell reviewed the individual funds and the overall performance for the quarter. Mr. Tewell left 4:25 p .m . Buck Consultants presentation January l, 2010 Actuarial Report Mr. Fiddler reviewed the changes made with the January 1, 2009 actuarial report which changed the assumption from a five year smoothing with a corridor to five year smoothing without a corridor. The discussion last year also included conversations about the amortization period of the unfunded liability and left it at 13 years and declining to 10 years and then remain constant at I 0 years. As he reviewed the handout he outlined Buck Consultants' process to prepare the report. He stated part of the process is using a smoothing method to help eliminate market fluctuations, however, a big factor requiring the contribution change is market fluctuation and 2008 losses and increased accrued liability for the additional service credits, older average Plan entry age and increased average compensation rates . Mr. Fiddler noted the payout of benefits has just about doubled in the past ten years and they are expected to double in the next ten years as well. The January 1, 2010 draft actuarial report indicates an increase from 9 .8% to 13% for 2011. This is approximately a $200,000 increase over the 2010 required contribution . Discussion followed considering possible changes to allow the required contribution rate to be adjusted . Changes include extending the amortization period and the five-year smoothing period to a ten-year smoothing and resetting the amortization period . The impact permitting these changes is it slows the recognition of losses and reciprocally the increase in contributions which slows the decline of contributions. The change could potentially keep the contributions higher for a longer period ohime. The options presented are within the Government Accounting Standard Board guidelines. Buck is presenting the options and does not recommend the changes . Discussion ensued regarding the increased contribution impact on the City budget and the discussions during 2009 on not extending the time horizon of the amortization period . Mr. Fiddler responded to the questions regarding the standard amortization period for most public sector plans stating 30 year open as the most prevalent. Mr. Fiddler said if he were to make a suggestion it would be restarting the amortization at 20 years with 20 I 0 and that would lock in the amortization payment unless there are future gains to reduce it. No nEmergency Emp lo yees Re tirement Boa rd Mee ti ng 3 of 5 Mr. Moore commented on a recent article that stated that public pensions are creating debt that the general public does not appreciate and is his reason for pushing to fund the plan without incurring additional debt and cannot base his position on other public sector plans. Discussion continued re garding the fact the Board had compromised with the • adjustment to assumptions during 2009 and should maintain the decision for one more year and review increases at that time. Mr. Gryglewicz commented about expected funding increases for the City's other defined benefit plans and the impact on the budget could possibly mean cutting people and services during a time of declining revenue growth which cannot support contribution increases . Discussion continued regarding agreement to not prolong the reduction of debt, changing market conditions, continuing with the current course and reevaluating with the next report. MR. GRYGLEWICZ MOVED TO APPROVE TH E JANUARY 1, 2010 ACTUARIAL REPORT. MR. PATEL SECONDED. Ayes: Nays: Absent: The motion carried. Bowman, Gryglewicz, Hagan, Moore , Patel , Woodward None Williams Consideration of benefit for Eddie Perdue Eddie Perdue was employed from April 1, 1985 to April 30 , 2010. Mr. Perdue is requesting an Early Retirement at age 55. MR. GRYGLEWICZ MOVED TO APPROVE A 50% JOINT AND SURVIVOR MONTHLY BENEFIT IN THE • AMOUNT OF $1,176 .87 BEGINNING MAY 1, 2010 . MR. HAGAN SECONDED. Ayes: Nays: Absent: The motion carried . Bowman, Gryglewicz, Hagan, Moore, Patel, Woodward None Williams Consideration of benefit for John Koppenhafer John Koppenhafer was employed from June 19, 1989 to May 28, 2010. Mr. Koppenhafer is requesting a Regular Retirement at age 65 . MR. GRYGLEWICZ MOVED TO APPROVE MONTHLY 100% JOINT AND SURVIVOR BENEFIT OF $1 ,221.61 FOR JOHN KOPPENHAFER BEGINNING JUNE I, 2010 . MR. HAGAN SECONDED . Ayes : Nays : Absent: The motion carried . Bowman, Gryglewicz, Hagan, Moore, Patel, Woodward None Williams Colorado Public Plan Coalition Annual Conference -September 8-10, 20 I 0 The Board member s wishing to attend should contact Carol Wescoat before June 15 . NonE merge ncy Empl oyees Reti rement Board Meeting 4 of 5 • • • • MR. GRYGLEWICZ MOVED TO APPROVE NORMAL AND CUSTOMARY EXPENSES FOR ANY BOARD MEMBER ATTENDING THE COLORADO PUBLIC PLAN COALITION ANNUAL CONFERENCE. MR. MOORE SECONDED . Ayes: Nays: Absent: The motion carried. Bowman, Gryglewicz, Hagan, Moore, Patel, Woodward None Williams The Board adjourned at 5:02 p.m. Caro I W escoat Recording Secretary NonEm erge nc y Em plo yees Retirement Bo ard Mee tin g 5 of 5