03/04/2002
TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING
CITY OF CLEARWATER
March 4, 2002
Present: Brian J. Aungst Chair
Ed Hart Vice-Chair/Trustee
Whitney Gray Trustee
Hoyt P. Hamilton Trustee
William C. Jonson Trustee
Also present: William B. Horne II City Manager
Pamela K. Akin City Attorney
Lee Dehner Pension Trustees Attorney
Margie Simmons Finance Director
Cynthia E. Goudeau City Clerk
Patricia O. Sullivan Board Reporter
The Chair called the meeting to order at 9:35 a.m. at City Hall.
To provide continuity for research, items are in agenda order although not
necessarily discussed in that order.
ITEM #2 - Approval of Minutes:
Trustee Gray moved to approve the minutes of the February 4, 2002, meeting, as
motion
recorded and submitted in written summation by the City Clerk to each Trustee. The
carriedmotioncarried
was duly seconded and unanimously. The was duly seconded and
unanimously.
assumption study report
Item #3 - Approve the prepared by PriceWaterhouse Coopers and
approve changes to the assumptions used in calculating the expected liabilities for the
Employees' Pension Plan
per the report as follows: increase the expected rate of return on
investments from the current 7% to 7.5%, increase the expected salary, increase rate from the
current 5% to 6%, adjust the expected employee turnover rate to the table recommended in
the report which is based upon historical experience, change the mortality table to the 1994
Group Annuity Reserving Table from the current 1983 Group Annuity Table, adjust the
expected retirement rates to the table recommended in the report which is based upon
historical experience (adjusted to be more conservative), and make no changes to the
expected disability rates.
Pension Plan Actuary Steve Metz, of PriceWaterhouse Coopers, reviewed the report to
assist the City in evaluating the appropriateness of current actuarial assumptions.
PriceWaterhouse Coopers was hired this year to evaluate current actuarial assumptions of the
employees’ Pension Plan. A staff committee reviewed the report on February 1, 2002. The
report outlined each assumption, relating its history and comparing it with other plans, and
made recommendations. The assumptions impact plan liabilities and costs and establish what
the City believes is the best estimate of future expectations, regardless of impact or cost.
Recommendations are: 1) economic assumptions: a) expected return on investments –
recommend increase from 7% to 7.5% and b) annual rate of salary increases - recommend
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increase from 5% to 6% and 2) demographic assumptions: a) employee turnover –
recommend changing to the report recommended table, which is based on historical
experience; b) mortality - recommend changing from current 1983 Group Annuity Table to the
1994 Group Annuity Reserving Table; c) retirement rates - recommend changing to the report
recommended table, which is based on historical experience; and d) disability rates -
recommend making no change.
Mr. Metz said he had obtained a letter from the State Division of Retirement, which
recommended acceptance of the 1994 Group Annuity Reserving Table. Finance Director
Margie Simmons said on February 14, 2002, the Pension Advisory Committee had
recommended approval of the assumption study report by a 5:1 vote. The Pension Investment
Committee reviewed the proposed investment rate assumption with investment consultants Bill
Badger and John Willoughby and all were in agreement that a 7.5% investment return rate
assumption was reasonable.
Trustee Hart moved to approve the assumption study report prepared by
PriceWaterhouse Coopers and approve changes to the assumptions used in calculating the
expected liabilities for the Employees' Pension Plan per the report as follows: increase the
expected rate of return on investments from the current 7% to 7.5%, increase the expected
salary, increase rate from the current 5% to 6%, adjust the expected employee turnover rate to
the table recommended in the report which is based upon historical experience, change the
mortality table to the 1994 Group Annuity Reserving Table from the current 1983 Group
Annuity Table, adjust the expected retirement rates to the table recommended in the report
which is based upon historical experience (adjusted to be more conservative), and make no
motion carried
changes to the expected disability rates. The was duly seconded and
unanimously.
Item #4 - Other Business
In response to a question, Ms. Simmons said the Pension Plan no longer has an
investment contract with Alliance Capital. The plan did have one investment in an Enron bond,
which lost $950,000. She said the loss had only a minor impact on the fund. The plan does
not own any other Enron stock.
ITEM #5 - Adjournment
The meeting adjourned at 9:56 a.m.
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