08/17/2009
TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING MINUTES
CITY OF CLEARWATER
August 17, 2009
Present: Chair/Trustee Frank Hibbard, Trustee Paul Gibson, Trustee George N.
Cretekos, and Trustee John Doran.
Also William B. Horne II, Jill S. Silverboard - Assistant City Manager, Rod Irwin -
present: Assistant City Manager, Pamela K. Akin - City Attorney, Cynthia E. Goudeau
- City Clerk, and Rosemarie Call - Management Analyst.
To provide continuity for research, items are in agenda order although not necessarily
discussed in that order.
1. Call to Order
The meeting was called to order at 9:09 a.m. at City Hall.
2. Approval of Minutes
2.1 Approve the minutes of the July 13, 2009 Pension Trustees Meeting as submitted
in written summation by the City Clerk.
Trustee John Doran moved to approve the minutes of the July 13, 2009 Pension
Trustees Meeting as submitted in written summation by the City Clerk. The motion was
duly seconded and carried unanimously.
3. Pension Trustee Items
3.1 Approve the transfer of assets from Independence Investments to Lee Munder
and authorize staff to sign the appropriate documents and authorize Cap Trust to
conduct a small cap growth manager search.
Just before the Trustee meeting of May 15th staff received word that
Independence Investments was having some difficulty and might be closing. At
the Trustee meeting of May 15th the Trustees gave staff permission to terminate
Independence Investments and place the money with Northern Trust in a small
cap growth index fund. The Trustees were also concerned about the high cost of
moving small cap asset around and direct staff to find the lowest cost way given
the situation.
Since the meeting of May15th significant changes have been made relative to the
situation. The parent company of Independence Investments has purchased the
investment management firm of Lee Munder Capital Group. The viable products
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including the one we are invested in at Independence Investments are being
transferred over to Lee Munder Capital Group and Lee Munder will be the
surviving entity.
No changes will be made in personnel or style with the product we have by Lee
Munder. Lee Munder currently has their own viable small cap growth product. Our
Pension Plan investment consultant, Cap Trust, is concerned with how long Lee
Munder can run two separately managed products in the same space. The
consultants believe that at some point in the future the two products will be
combined.
Cap Trust is recommending that we stay with Independence/Lee Munder for the
near future. They also recommend we start the process to find a replacement
manager. Cap Trust has the ability to conduct the search and the cost of the
search is included in their current contract.
The pension plan can save significant money by waiting to do this transition once
a new manager is selected. This would require one transition movement as
opposed to the two if we use Northern Trust as a temporary place to hold the
money. Investment performance for Independence is as follows:
Last Qrtr Last 12 Months
Independence 22.88% -23.69% 33rd
Russell 23.38% 33rd -24.85% 37th
CAI Sm Cap Growth 20.38% 50th -28.38% 50th
Trustee George N. Cretekos moved to approve the transfer of assets from
Independence Investments to Lee Munder and authorize staff to sign the appropriate
documents and authorize Cap Trust to conduct a small cap growth manager search.
The motion was duly seconded and carried unanimously.
3.2 Presentation on Pension Benefit Strategies and Pension Plan Alternatives.
At the May 2009 Pension Trustee meeting, Donna White from
PriceWaterhouseCoopers (Pension Plan actuary) and Robert Klausner from
Klausner and Kaufman (Pension Plan attorney) discussed pension plan
alternatives. As a result of that meeting, the Trustees gave direction to staff to
bring back to a subsequent meeting more refined cost data related to making
changes to the plan to include the following:
- Modify the normal form of benefit to a life annuity (10 year certain and
continuous for hazardous duty)
- Elimination of overtime pay in benefit determination (in excess of 300 hours for
Police)
- Modify retirement eligibility (elimination of "20 and out" for hazardous duty and
"30 and out" for non-hazardous duty
- Placing limits on service credit
- Second tier for newly hired employees
Following discussion by the Trustees, staff would like direction from the Trustees’
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on any further action that they wish staff to pursue.
Donna White from PriceWaterhouseCoopers provided a power point presentation.
Recommendations include: 1) Modifying the normal form of payment to a life annuity; 2)
Eliminating over time payment in benefit determination; 3) Modifying retirement
eligibility; 4) Implementing a 30-year limit on service; and 5) Creating 2nd Tier plan for
newly hired employees. Implementing all of these changes would result in savings of
approximately $5,500,000 annually.
It was stated that any changes would be subject to the collective bargaining process.
Human Resources Director Joe Roseto said the multiplier for all employees is 2.75
times years of service. A defined benefit pension is the norm for public safety
employees.
Consensus was to bargain eliminating no-cost spousal benefit, cap over time for
pension calculation to 300 hours, eliminate years of service. Direction was given to
complete 2nd Tier proposal for September/November 2010 bargaining negotiations.
4. Other Business - None.
5. Adiourn
The meeting was adjourned at 10:14 a.m.
J~~
Chair
Employee's Pension Plan Trustees
Attest
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