Download CITY OF LAUDERHILL FIREFIGHTERS` RETIREMENT SYSTEM

CITY OF LAUDERHILL FIREFIGHTERS’ RETIREMENT SYSTEM
FIRE PENSION-ANNUAL MEETING
August 13, 2013
Recorded and Submitted by
Fire Headquarters
Barbara White,
3rd Floor Main Conference Room
1980 NW 56 Avenue, Lauderhill, Fl.33313
Plan Administrator
REGULAR MEETING-4:30PM
I
CALL TO ORDER
Chairman Sean Henderson called the meeting to order at 4:35PM
MEMBERS PRESENT:
Sean Henderson, Chairman
Michael Taussig, Vice Chairman
Karen Pottinger, Secretary
Ryan Gabner, Trustee
John Leicht, Trustee
ll
ALSO PRESENT:
Ron Cohen, Ronald J Cohen, PA
Brent Chudachek, Ronald J Cohen, PA
Allison Corbally, SSGA
Chris Long, Manning & Napier
Greg McNeillie, Dahab Associates
Chad Little, Freiman Little Actuaries
APPROVE MINUTES OF SPECIAL MEETING DATED July 9, 2013
MOTION to approve minutes by J. Leicht
SECONDED by K. Pottinger
PASSED 5-0
lll
NEW BUSINESS
1. SSGA Quarterly Report given by Allison Corbally
On June 30, 2013, the portfolio was valued at $2,595,641, an increase of $22,852 from the March quarter. For the
cumulative period since September 2010, the portfolio has posted net contributions totaling $1.3 million, and
recorded net investment gains totaling $258,740. For the period since September 2010, if the fund had returned a
compounded nominal rate of 10.0% it would have been valued at $3.0 million or $408,333 more than the actual
value as of June 30, 2013. For the second quarter the SSGA portfolio returned 0.9%, which was 1.6% greater than
the MSCI EAFE Value Net’s return of -0.7% and ranked in the 20th percentile of the International Equity universe.
Over the trailing year, this portfolio returned 23.2%, which was 4.6% above the benchmark’s 18.6% return, ranking
in the 20th percentile. Since September 2010, the account returned 5.1% on an annualized basis and ranked in the
61st percentile. For comparison, the MSCI EAFE Value Net returned an annualized 4.1% over the same time frame.
The portfolio was fully invested in the SSGA International Alpha SL Fund.
2. Manning & Napier Quarterly Report given by Chris Long
AS of June 30, 2013 Manning & Napier was valued at $2,519,224, a decrease of $22,817 from March. For the
quarter the portfolio lost 0.7%, which was 0.5% above the MSCI EAFE Growth Net’s return of -1.2% and ranked in
the 43rd percentile of the International Equity universe. Over the trailing 12 month period, the return was 18.9%,
which was 0.2% greater than the benchmark’s 18.7% performance, and ranked in the 44 th percentile. Since
September 2009, the portfolio returned 4.5% annualized and ranked in the 79the percentile.
Page 2
3. Dahab Quarterly Report given by Greg McNeillie
As of June 30, 2013, the fund was valued at $52,497,496, representing an increase of $675,305 from the March
quarter. For the cumulative period since December 2007, the fund has recorded net contributions totaling $3.2
million, and recorded net investment gains of $9.0 million. For the period since December 2007, if the total fund
returned a compounded nominal rate of 8.0% it would have been valued at %$65.7 million or $13.2 million more
than the actual value as of June 30, 2013.
Total Fund: the composite portfolio gained 0.8%, which was 0.1$ above the Lauderhill Policy Index’s return of 0.7%
and ranked in the 10th percentile of the Public Fund universe. Over the trailing year, the portfolio returned 16.1%,
which was 2.5% greater than the benchmark’s 13.6% performance, and ranked in the 3 rd percentile. Since
December 2007, the portfolio returned 3.7% on an annualized basis and ranked in the 57 th percentile. For
comparison, the Lauderhill Policy Index returned annualized 3.8% over the same period.
Large Cap Equity: the large cap equity returned 2.7% in the second quarter, 0.2% less than the S&P 500 Index’s
return of 2.9% and ranked in the 54th percentile of the Large Cap universe. Over the trailing 12 months the large
cap equity returned 22.9%; that return was 2.3% greater than the benchmarks’ 20.6% return.
Small/Mid Cap Equity: The Smid cap equity component returned 1.1% in the second quarter; that return was 1.2%
below the Russell 2500 Index’s return of 2.3% and ranked in the 78th percentile of the Smid Cap universe.
International Equity: During the second quarter, the international equity segment returned 0.1%, which was 1.1%
greater than the MSCI EAFE Net Index’s return of -1.0% and ranked in the 30th percentile of the International equity
universe.
The Real Estate asset class will be changed to Real Assets. Real assets will go from 10% to 15%, and fixed
income will go down to 20% as a target. Greg McNeillie will modify the Investment Policy Guidelines after all of the
contracts are in place.
The Administrator also mentioned the Summary Plan Description needs to be updated for October 2013
distribution.
The Chairman asked if they needed to review any of the existing managers. Greg McNeillie advised no manager
need to be reviewed at this time.
4. Freiman Little Actuaries Quarterly Report given by Chad Little
The State Chapter money dollar amount is available and it is $472,633, which is up 7% from last year. This does
not affect how much the City puts into the fund but it does affect how much will be available for the supplemental
benefits. The administrator announced the State Report was reviewed and approved by the Division of Retirement.
5. Set Annual Fixed Rate of Interest credited to Tier One DROP payments
MOTION by J. Leicht to set the annual DROP interest rate at 5.25% (based on 65.625% of the assumed rate of
return which is 8%)
SECONDED by K. Pottinger
Roll call vote:
Henderson yes
Taussig ABSTAINED
Pottinger yes
Gabner yes
Leicht yes
The attorney will send form 8B to Mr. Taussig to complete and file with the administrator.
6. Set Annual Fixed Rate of Interest credited to Active Member Contributions
In the future, the Chairman would like to apply some logic to setting the rate of interest credited to the active
member contribution rather than use the same as the DROP interest rate.
Page 3
MOTION by M. Taussig to use the same rate as the prior year which is 5.25%
SECONDED by K. Pottinger
The Chairman stated it will be prudent to evaluate the policy prior to the next year. The administrator will carry this
item on future agendas until it can be discussed.
PASSED 5-0
The Actuary was asked to provide some ideas that would assist in creating a policy for setting the interest rate for
the active members’ contributions.
7. Approve Warrant in the amount of $46,723.35
MOTION to approve by M. Taussig
SECONDED by K. Pottinger
PASSED 5-0
8. Approve New Hire Applications for Figliolia, Frankel, Grasso, McCranie, Perez
MOTION to approve by M. Taussig pending all paperwork has been received by the administrator
SECONDED by K. Pottinger
PASSED 5-0
IV
OLD BUSINESS
V
ATTORNEY’S REPORT
The attorney was happy to report there is an Agreement with Glovista. Glovista is an Emerging Markets Manager.
The consultant will need to write an Investment Policy or review and agree to the policy written by Glovista.
MOTION by J. Leicht to enter into agreement with Glovista subject to the approval or writing of an Investment
Policy by the Consultant.
SECONDED by M. Taussig
PASSED 5-0
Mr. Chudachek presented a side letter that states Ceres agrees to be a fiduciary. The Ceres agreement is ready.
The application can be completed upon board approval, however, the attorney wrote a letter to the board outlining
the risk factors associated with the agreement. He would like the consultant to review the letter also. Brent
Chudachek pointed out there is a one year lock up once invested with Ceres. After a one year commitment, if the
board decided in September 2014 to take the money out and invest elsewhere they will have to wait until February.
Mr. Chudachek also pointed out that if the board would want to get money out for whatever reason they will have to
tell Ceres in September how much they will want in the coming year. The consultant said this would not be an issue
because there is an R&D account for paying bills and benefits. John Leicht asked to review the recorded meeting
because there are a few things that he heard differently than what the agreement is saying. The administrator will
send the recorded meeting to Mr. Leicht. The Chairman would like Greg McNeillie to address the non legal risks
from an investment standpoint so that the board has opinions from legal and the consultant. He would like a written
response from the consultant after the review of the attorney’s letter.
Lee Munder is a Collective Trust Fund. They want the fund to adopt the collective trust fund as part of the plan. It
may be ok to amend the plan to say that it can invest in Collective Trust Funds without adopting the entire
Collective Trust Fund.
Page 4
There is an indemnity issue with Lee Munder. These are unregistered securities on the Securities Act. The unit the
fund will buy in the Collective Trust is not a registered security nor is it a mutual fund. In order to sell it, it would
have to be to certain qualified investors. If the plan did something wrong in the application that would end up getting
the shares having to be registered under the Securities Act or under the Mutual Fund Act Lee Munder will look to
the Fund to make them whole for that. After much discussion the attorney will continue to work on this issue.
In regard to the Tier Two Multiplier pre tax issue; the option to allow pre tax payroll deductions has become quite
complicated. Some of the concerns are about reporting and tracking the contributions. The IT Department should
be able to make changes to the pensionable payroll report. The custodial bank also separates and reports pretaxed money on the retirees 1099R. After more discussion the attorney pointed out that the IRS has very strict rules
when you purchase the multiplier with pre taxed payroll deductions. The IRS says you have to choose this option
immediately upon hire and it is irrevocable. After contributing for several years, the actuary will tell the member if
they have put in too much or too little. If they have put in too little they can put in addition money by choosing a
different option, but if they have put in too much they cannot be refunded because the option is irrevocable. The
recently hired members have concerns about this option considering it is irrevocable. Zach Ninger was present and
mentioned that it was a great concept to allow the pre taxed payroll deductions, however, it has been labored over
for months and the biggest issue seems to be the IRS rule that it has to be irrevocable. So far there are not any
new hires that are comfortable with making that decision so early in their careers. After more discussion the Board
felt it best not to move forward with the pre tax payroll deduction option. The attorney said he will amend the
ordinance to read payroll deduction on post tax basis only. The trustees agreed that the easiest thing for the
members to do if they want to contribute any pay that is not pensionable pay (Holiday, etc) is to write a check and
send it to the administrator for recording and then forward it to be put into the fund.
V
ADMINISTRATOR’S REPORT
The Board reviewed the R&D monthly activity report.
The administrator asked the board to approve a withdrawal rollover for terminated employee Alexte Simeon.
MOTION by M. Taussig to approve the rollover for Simeon
SECONDED by R. Gabner
PASSED 5-0
The Board was presented with a Disability package that was collaborated on between the attorneys and
administrator. After some discussion a motion was in order.
MOTION by M. Taussig to approve and adopt the Disability procedure package and forms.
SECONDED by R. Gabner
PASSED 5-0
Vl
COMMUNICATIONS
Vll
ADJOURNMENT
MOTION to adjourn at 7:46pm