Loading...
08/13/2007 TRUSTEES OF THE EMPLOYEES' PENSION FUND SPECIAL MEETING MINUTES CITY OF CLEARWATER August 13, 2007 Present: Frank Hibbard Chair – arrived 4:14 p.m. Carlen Petersen Trustee John Doran Trustee George N. Cretekos Trustee Paul Gibson Trustee Also Present: William B. Horne, II City Manager Garry Brumback Assistant City Manager Pamela K. Akin City Attorney Stuart Kaufman Attorney for the Pension Plan Joe Roseto Human Resources Director Cynthia E. Goudeau City Clerk Brenda Moses Board Reporter The meeting was called to order at 4:00 p.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. 2 - Approval of Minutes 2.1 Approve the minutes of the July 16, 2007 Pension Trustees meeting as submitted in written summation by the City Clerk. Trustee Cretekos moved to approve the minutes of the July 16, 2007, Pension Trustees meeting, as recorded and submitted in written summation by the City Clerk to each motioncarried Trustee. The was duly seconded and unanimously. 3 - Pension Trustee Items 3.1 Employees listed below be accepted into the City of Clearwater's Employees' Pension Plan Pension Elig. Name, Job Class, & Dept./Div. Hire Date Date John McDowell, Police Communication Operator/Police 4/30/07 4/30/07 Fatos Pojani, Electronics Technician/Public Utilities 6/11/07 6/11/07 Richard Rozzi, Solid Waste Worker/Solid Waste 6/11/07 6/11/07 Brian Whitehead, Police Officer/Police 6/11/07 6/11/07 Douglas Ambrose, Police Officer/Police 6/11/07 6/11/07 Ronald Wichowski, WWTP Oper. Trainee/Public Utilities 6/25/07 6/25/07 Pension Trustees Special 2007-08-13 1 Trustee Petersen moved to accept the listed employees into membership in the City of motion carried Clearwater's Employees' Pension Plan. The was duly seconded and unanimously. 3.2 Pension Investment Discussion and Direction At the annual pension plan update to the Pension Trustees in May 2007, the Trustees expressed interest in discussing and providing direction to staff regarding Pension Plan investments. The white paper outlines recommendations of the Asset Allocation Study and the status with respect to the implementation of those recommendations. Also provided in the white paper is performance information on the Pension Plan’s investments, including the overall plan performance, performance by asset category, and performance by individual manager. The performance is given for three- and five-year rolling periods since that is the criteria that are used to judge a manager's performance. In the cases where the manager is new and not enough history exists for three- and five-year rolling performance, data for the last quarter and last year have been presented. There are four managers that are new and no performance numbers are available. All performance is using the Callan database of active money managers with a score of one being the best and 100 being the worst. Additional information is also included in the paper such as: 1) Duties of the Trustees; 2) Current Advisors to the Pension Plan; 3) The process to hire a manager; 4) The process to terminate a manager; 5) Current manager benchmarks; 6) Other public pension plan invest mixes; 7) Allowable investments and restrictions; 8) Other investment vehicles; and 9) Pension Investment Objectives and Guidelines. Pension Plan Attorney Stuart Kaufman reviewed Pension Trustee fiduciary duties, reporting that they have discretion over administration of the plan. He suggested the Trustees participate in additional investment education as required by law. Paul Troup, Callan Associates, reviewed Periodic Table of Returns and said no investment style is consistently rated best. His firm supports diversifying investments. John Willoughby, Charles D. Hyman, Inc., said the City has made progress with diversification. He reviewed current Pension Plan investment allocations and said it is possible to increase the return on investment by further diversifying investments. Cash & Investments Manager Steve Moskun said over the past year, the Pension Plan has performed at approximately 15%. Some items recommended in the 2005 asset allocation study have been accomplished. The City still needs to add REITS (Real Estate Investment Trusts) and high-yield bonds to its portfolio. Trustee Petersen moved to continue implementing the asset allocation study. The motion was duly seconded. Pension Trustees Special 2007-08-13 2 In response to a question, Mr. Moskun said staff plans to implement investments in REITs and emerging markets and then will request another asset allocation study. Mr. Troup said professional money managers determine specific changes in types of allocations. He said the standard for reviewing allocations is every three to five years. Mr. Moskun estimated an asset allocation study costs between $15,000 to $75,000, depending upon the firm and amount of detail. A team of partners including staff, Mr. Troup, Mr. Willoughby, and the PAC (Pension Advisory Committee) monitors investments and makes recommendations to the Trustees if asset allocations and/or studies are needed. The team tries to build classes of assets that will provide the best returns over time. It was recommended that a certain level of proactive re-allocation is needed. Mr. Kaufman said most public pension plans do not participate in active management. Mr. Troup said Global Tactical Asset Allocation managers, which shift assets worldwide between stocks and bonds, can be engaged as active managers. He said a combination of international and domestic stocks would be less volatile in those classes. It will take three to five years to establish asset allocation goals. carried Upon the vote being taken, the motion unanimously. Member Doran moved to continue the 10% allocation to REITS and hire Dahab to motion conduct a search for a REITS manager at a cost of $15,000. The was duly seconded. Trustees Petersen, Doran, Cretekos, and Gibson voted “Aye”; Chair Hibbard voted “Nay.” carried. Motion Trustee Cretekos moved to continue the 8% allocation to emerging markets and hire an active EAFE manager after performing a REIT search and emerging market search by Dahab. motion The was duly seconded. Discussion ensued. In response to a question, Finance Director Margie Simmons said Callan & Associates, which performed the asset allocation study, recommended an 8% allocation in emerging markets. Mr. Kaufman said by law, only 25% of the City’s portfolio can be in international funds. Upon the vote being taken, Trustees Peterson, Doran, Cretekos, and Gibson voted carried. “Aye.” Chair Hibbard voted “Nay.” Motion Trustee Petersen moved to approve investing up to 10% of the portfolio in high yield motion bonds and to use existing managers to manage this asset class. The was duly seconded. Discussion ensued. Mr. Moskun said the professional managers have recommended investing 3% of the portfolio in high-yield bonds, as it is worth the risk. Staff indicated to them that they can invest up to 10% in high-yield bonds. Pension Trustees Special 2007-08-13 3 motion Upon the vote being taken, the carried unanimously. Trustee Doran moved to continue current benchmarks and retain Northern Trust to motioncarried expedite manager terminations. The was duly seconded and unanimously. Trustee Cretekos moved to continue with investing 30% in fixed-income as motioncarried recommended by the Asset Allocation Study. The was duly seconded and unanimously. It was suggested the Pension Investment Committee consider investing in MLPs (Master Limited Partnerships). Staff requested that the Pension Trustees schedule a half-day of investment training. 3.3 John Correll, Public Utilities Department; Lester Pulfer, Solid Waste/General Services Department; Yacub Bilal, Engineering Department; Lloyd Wentz, Police Department; and Timothy Treble, Police Department, be granted regular pensions under Section(s) 2.393 and 2.397 of the Employees’ Pension Plan as approved by the Pension Advisory Committee. John Correll, Wastewater Treatment Plant Operator A, Public Utilities Department, was employed by the City on October 26, 1987, and his pension service credit is effective on that date. His pension will be effective November 1, 2007. Based on an average salary of approximately $46,809 per year over the past five years, the formula for computing regular pensions, and Mr. Correll’s selection of the 100% Joint & Survivor Annuity, this pension will approximate $25,243 annually. Lester Pulfer, Solid Waste Equipment Operator, Solid Waste/General Services Department, was employed by the City on January 6, 1986, and his pension service credit is effective on that date. His pension will be effective September 1, 2007. Based on an average salary of approximately $44,998 per year over the past five years, the formula for computing regular pensions, and Mr. Pulfer's selection of the 10-year Certain & Life Annuity, this pension will approximate $32,046 annually. Yacub Bilal, Electronics Technician, Engineering Department, was employed by the City on February 21, 1980, and his pension service credit is effective on that date. His pension will be effective December 1, 2007. Based on an average salary of approximately $44,873 per year over the past five years, the formula for computing regular pensions, and Mr. Bilal’s selection of the 100% Joint & Survivor Annuity, this pension will approximate $33,474 annually. Lloyd Wentz, Police Sergeant, Police Department, was employed by the City on May 16, 1983, and his pension service credit is effective on that date. His pension will be effective July 1, 2007. Based on an average salary of approximately $82,014 per year over the past five years, the formula for computing regular pensions, and Mr. Wentz’ selection of the 100% Joint & Survivor Annuity, this pension will approximate $53,662 annually. Pension Trustees Special 2007-08-13 4 Timothy Treble, Police Officer, Police Department, was employed by the City on February 17, 1987, and his pension service credit is effective on June 30, 1987. His pension will be effective July 1, 2007. Based on an average salary of approximately $62,726 per year over the past five years, the formula for computing regular pensions, and Mr. Treble’s selection of the Life Annuity, this pension will approximate $35,642 annually. These pensions were approved by the Pension Advisory Committee on July 12, 2007. Section 2.393 provides for normal retirement eligibility when a participant has reached age 55 and completed twenty years of credited service, has completed thirty years of credited service, or has reached age 65 and completed ten years of credited service. Section 2.393 also provides for normal retirement eligibility when a participant has completed twenty years of credited service or has reached age 55 and completed ten years of credited service in a type of employment described as “hazardous duty” and further defines service as a Police Sergeant and Police Officer as meeting the hazardous duty criteria. Messrs. Correll and Bilal qualify under the age 55 and twenty years of service criteria. Mr. Pulfer qualifies under both the age 55 and twenty years of service and the age 65 and 10 years of service criteria. Messrs. Wentz and Treble qualify under the hazardous duty criteria. Trustee Cretekos moved that John Correll, Public Utilities Department; Lester Pulfer, Solid Waste/General Services Department; Yacub Bilal, Engineering Department; Lloyd Wentz, Police Department; and Timothy Treble, Police Department, be granted regular pensions under Section(s) 2.393 and 2.397 of the Employees’ Pension Plan as approved by motion carried the Pension Advisory Committee. The was duly seconded and unanimously. 3.4 David Nardin, Development and Neighborhood Services Department; Kevin Slattery, Public Utilities Department; and Robyn Haywood Thomas, Fire Department, be allowed to vest their pensions under Section(s) 2.397 and 2.398 of the Employees’ Pension Plan as approved by the Pension Advisory Committee. David Nardin, Building Inspector, Development and Neighborhood Services Department,was employed by the City on February 22, 1994, and began participating in the Pension Plan on that date. Mr. Nardin terminated from City employment on July 20, 2007. Kevin Slattery, Public Utilities Supervisor II, Public Utilities Department,was employed by the City on September 23, 1985, and began participating in the Pension Plan on that date. Mr. Slattery terminated from City employment on June 19, 2007. Robyn Haywood Thomas, Fire Medic, Fire Department,was employed by the City on May 28, 1996, and began participating in the Pension Plan on that date. Ms. Haywood Thomas terminated from City employment on March 25, 2007. The Employees’ Pension Plan provides that should an employee cease to be an employee of the City of Clearwater after completing ten or more years of creditable service (pension participation), such employee shall acquire a vested interest in the retirement benefits. Vested pension payments commence on the first of the month following the month in which the employee normally would have been eligible for retirement. Pension Trustees Special 2007-08-13 5 2.393 (p) also provides for normal retirement eligibility when a participant has completed twenty years of credited service in a type of employment described as "hazardous duty" and further specifically defines service as a Fire Medic as meeting the hazardous duty criteria. Mr. Nardin would have completed at least 20 years of service and reached age 55 on August 26, 2018. His pension will be effective September 1, 2018. Mr. Slattery would have completed at least 20 years of service and reached age 55 on February 3,2015. His pension will be effective March 1, 2015. Ms. Haywood would have completed 20 years of hazardous duty service on May 28, 2016. Her pension will be effective June 1, 2016. These pensions were approved by the Pension Advisory Committee on July 12, 2007. Trustee Gibson moved that David Nardin, Development and Neighborhood Services Department; Kevin Slattery, Public Utilities Department; and Robyn Haywood Thomas, Fire Department, be allowed to vest their pensions under Section(s) 2.397 and 2.398 of the Employees' Pension Plan as approved by the Pension Advisory Committee. The motion was duly seconded and carried unanimously. 4 - Other Business - None. 5 - Adjourn The meeting adjourned at 5: 13 p.m. ~j(~ Cnair Employee's Pension Plan Trustees ~~ Clt lerk ;i. DODo . Pension Trustees Special 2007-08-13 6