HomeMy WebLinkAbout1975-10-06 Minutes•
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MINUTES OF A MEETING OF THE FIREMEN'S PENSION AND RELIEF BOARD
October 6, 1975
The regular monthly meeting of the Firemen's Pension and Relief Fund
Board was held October 6, 1975 at 4:30 p.m. in the Office of the City
Manager.
PRESENT: Chairman Donald L. Grimes; Treasurer Pat Tobin; Secretary
Darlene Westbrook; and Board members Charles McWhorter, Don
Miller, Ronald McArthur, and Dean Harris.
ABSENT: Howard Boudrey
The meeting was called to order by Chairman Grimes. Upon motion by
Charles McWhorter and second by Don Miller, the minutes of the
September 8, 1975 meeting were unanimously approved as submitted.
Charles McWhorter, seconded by Dean Harris, moved that the October
Pension List be approved. The motion carried unanimously in voice
vote of the Board.
Old business included the discussion of a proposed investment. The
treasurer reported that a $28,000 certificate of deposit referred by
him at the last meeting, was not due to mature until 1976 and not
September, 1975 as he had reported. He therefore recommended that
$25,000 cash be combined with an existing $15,000 certificate at First
Federal Savings and Loan at an interest rate of 8 percent for a one-year
period. Charles McWhorter so moved and Don Miller seconded the motion.
In voice vote of the Board, the motion passed unanimously.
Mr. Tobin introduced for discussion the possibility of an actuarial
study being made for the pension fund. He reported that he had recently
discussed the subject with Dr. Bob Hall of King -Hall Associates and that
the study would be a basic one costing between four and five hundred
dollars. The study would provide basic information as to individual
firemen's future benefits but would not project the needs of the pension
fund for the future. Members of the Board reported that many of the
firemen had contacted them and did not seem to think that the study
would provide enough beneficial information to warrant the expenditure.
Following discussion, Charles McWhorter, seconded by Don Miller, moved
that a study not be made and that the treasurer contact Dr. Hall and
notify him of the Board's decision. In voice vote of the Board the
motion carried unanimously.
Chairman Grimes introduced correspondence received from the Federal
Deposit Loan Insurance Corporation and the Federal Savings and Loan
Insurance Corporation regarding insurance of pension fund monies.
The treasurer stated that his interpretation of the correspondence was
that each member's contributions were insured for the maximum if each
member's contributions were recorded on a separate ledger and that
the City did maintain separate ledgers for pension fund contributors.
There being no further business, Charles McWhorter, seconded by Dean
Harris, moved that the meeting be adjourned. The motion met with Board
approval and the Chairman Declared the meeting adjourne
ATTEST: Lattethecto-4-ki APPROVED �,�rc,.&Q,.,2. . k _
Darlene Westbrook, Sec. Donald L. Grimes, Chairman
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111 Rue Iberville
R. Richardson King, LL.B.
Bob E. Hall, Ph.D., C.P.C.U./C.L.U.
-c 4
Di
KING, HALL & ASSOCIATES, INC.
EMPLOYEE BENEFIT CONSULTANTS
New Orleans 70130 Phone: (504) 581-6543
October 2, 1975
Arkaruas 011ice:
850 East Elm Street
Fayetteville, Arkansas 72701
Phone: (501) 575-3950
(501) 521-7531
Mr. Pat Tobin
City Controller
Department of Finance
P.O. Drawer F
Fayetteville, AR 72701
Dear Pat: Re: Firemen's Pension Fund Study
I have obtained a quotation from the Actuary who would assist
me on the study of the Fireman's Pension and Welfare Fund. The
cost for the study would run between $400 - $500 (not over $500)
and would provide the following information:
1. For each active fireman, we would project the retirement
• benefit—and illustrate the accured benefit on:
(a) His current salary; and
(b) his projected salary to retirement.
2. We will also show a break down of the active force by age
and service breakdown in order to give the Board an idea of
the age and service distribution of its members in the Plan.
3. For retired fireman, we will show a breakdown of the monthly
benefits payable by attained age. This primarily for the
Boards informational purposes to give the Board an idea of
the benefit and age distribution of the group of lives cur-
rently receiving benefits.
4. We would present a survey of the several surrounding states
as to the benefit formulas,plan operation and financing
of plans in those states.
The Board conceivably could use Item #4, along with a request
to the State Association for an actuarial valuation of the
solvency of the funds in the state with the hopes of the
legislature authorizing the funds for such a valuation as
was done in Louisiana.
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KING, HALL & ASSOCIATES, INC.
• Mr. Pat Tobin
October 2, 1975
Page 2
5. A concise explanation of how
provides benefits that would
to present participants, and
the pension and welfare fund
be suitable for distribution
new firemen.
After you and the Chief have reviewed this, please let me know
if I can be of further assistance.
A copy of a study I did for the State of Arkansas Public Employees
Plan (sponsored by the Public Employees Association, Inc.) is
enclosed to give you an idea of the work I did there. Some of
the recommendations were adopted this last session of the
legislature and funds have been appropriated for a new actuarial
valuation and study.
BEH/ch
Enclosure
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Respectfully submitted,
el Z. /GAG/
Bob E. Hall, Ph.D., CPCU/CLU
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Federal Home Loan Bank Board
Mr. Donald L. Grimes
City Manager
Office of City Manager
P. 0. Drawer F
Fayetteville, Arkansas 72701
Dear Mr. Grimes:
320 First Street. N.W.
Washington, D.C. 20552
Federal Home Loan Bank System
Federal Home Loan Mortgage Corporation
Federal Savings and Loan Insurance Corporation
September 10, 1975
This is in response to your letter of Septebmer 4, 1975
concerning the insurance coverage available on Fire and
Police Pension Funds for the City of Fayetteville.
Pension trust fund accounts fall under the FSLIC's trust
account category for the sake of insurance coverage. As
such, each fully vested beneficiary in such an account
would be separately insured to $40,000. In addition, any
beneficiaries who were not fully vested would have their
proportionate shares aggregated and insured to $40,000
separately from the fully vested participants.
Using your example, this would mean that if the 30 firemen
were all fully vested, you could have an account for them
which would be completely insured up to $1,200,000.
I trust this answers your question -that the amount mentioned
in your letter could be fully insured. If you have any
further questions, please do not hesitate to contact me.
Sincerely,
12-1:041f2eht-svo
Frank L. Evans, Chief
Insurance Division
Federal Savings and Loan
Insurance Corporation
RECEIVED
SEP 121975
CCCIILY 01 AYEIISE`VI OFFICE
OFFICE OF THE GENERAL COUNSEL
FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, D.C. 20429
September 25, 1975
Mr. Donald L. Grimes
City Manager
City of Fayetteville
P. 0. Drawer F
Fayetteville, Arkansas 72701
Dear Mr. Grimes:
This is in reply to your letter concerning the insurance of fire and
police pension funds maintained in your bank by the City of Fayetteville,
Arkansas. Specifically, you ask if the interest of each participant in
the pension plan is separately insured or if the funds are considered to
belong to the city and one maximum is applicable to the total deposit.
The insurance of such funds is governed by Section 3(m) of the Federal
Deposit Insurance Act. This section defines the term "insured deposit"
and requires that all deposits maintained in the "same capacity and same
right" must be added together and insured to the maximum of $40,000.
Right and capacity are determined by the ownership of the deposited funds.
Where the deposits in a pension fund such as you describe have vested in
particular employees, the interests of each beneficial owner in such an
account would be separately insured to the maximum of $40,000 provided
certain requirements are met. These requirements are:
(1) that the custodial nature of the deposit must be
indicated on the records of the insured bank; and
(2) that the depositor maintains records in the regular
course of business which show the name and interest
of each participating owner.
Whether an interest is vested will be determined by the provisions of the
pension plan or other contract as interpreted under your state law When
pension funds and other similar plans are drawn up in the form of an
irrevocable trust, the insurance coverage of a beneficiary would be
separate from his deposits held in any other capacity.
RECEIVED
SEP 2 91c'
CRY OFFICE
of FAYETTEVILLE
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Mr. Donald L. Grimes 2
Of course, any commingled funds held in such a pension trust account
which have not vested in a particular employee would be added together
and insured in the aggregate to the $40,000 maximum.
A xerox copy of section 330.10 of our regulations pertaining to this
type of account is enclosed.
Enclosure
Sincerely,
Mary D. Ryan
Attorney
1-2-75 FDIC Rules and Regulations
J§ 330.10 Trust accounts.
All trust interests for the same beneficiary deposited in deposit accounts estab-
lished pursuant to valid trust agreements created by the same settlor (grantor)
1 be added together and insured up to 540,000 in the aggregate, separately from
er deposit accounts of the trustee of such trust funds or thesettlor or beneficiary
of such trust arrangements.
[Codified to 12 C.F.R. § 330.10]
[Section 330.10 amended at 35 Fed. Reg. 460, January 14, 1970, effective December
)23, 1969; 39 Fed. Reg. 41359, November 27, 1974]
0 330.11 Deposits evidenced by negotiable instruments.
If any insured deposit obligation of a bank be evidenced by a negotiable certifi-
cate of deposit, negotiable draft, negotiable cashier's or officer's check, negotiable
certified check, or negotiable traveler's check or letter of credit, the owner of such
deposit obligation will be recognized for all purposes of claim for insured deposits to
the same extent as if his name and interest were disclosed on the records of the
bank provided the instrument was in fact negotiated to such owner prior to the date
of the closing of the bank. Affirmative proof of such negotiation must be offered in
all cases to substantiate the claim.
[Codified to 12 C.F.R. § 330.11]
1305
§ 330.12 Deposit obligations for payment of •Items iorwz rdcd fcr ^^1e^ -Von by
bank acting as agent.
Where a closed bank has become obligated for the payment of items forwarded
for collection by a bank acting solely as agent, the owner of such items will be recog-
• nized for all purposes of claim for insured deposits to the same extent as if his
name and interest were disclosed on the records of the bank when such claim for
insured deposits, if otherwise payable, has been established by the execution and
delivery of prescribed forms. Such bank forwarding such items for the owners
thereof will be recognized as agent for such owners for the purpose of making an
assignment of the rights of such owners against the closed insured bank to the Fed-
eral Deposit Insurance Corporation and for the purpose of receiving payment on
*half of such owners.
odified to 1£ C.F.R. § 330.12]
§ 330.13 Continuation of prior coverage.
All deposit accounts insured under the rules and interpretations heretofore in
effect shall continue to be insured, anything in this part to the contrary notwith-
standing, until April 15, 1968.
[Codified to 12 C.F.R. § 330.13]
§ 330.14' Notification of depositors.
Each insured bank is required to provide notice of these revisions to the Rules
and Regulations for Clarification and Definition of Insurance Coverage of Deposit
Accounts, Part 330, not later than April 1, 1968, to the depositors of each deposit
account which had a balance in excess of $5,000 on any date selected by the bank
between September 1, 1967, and April 1, 1968. Such notice shall consist of mailing
to such depositors at their last known address as shown on the records of the in-
sured bank, a question and answer brochure on insurance of deposit accounts pre-
pared by the Federal Deposit Insurance Corporation. Such brochure shall also be •
made available to the public at each teller's station or window where deposits are
normally received and at new account stations of an insured bank. Additional ex-
planatory materials may also be sent to depositors at the option of the insured bank:-
Modified
ank: -[Codified to 12 C.F.R. § 330.14]
[Section 330.14 amended at 33 Fed. Seg. 530, January 16, 1968] -
rcpuel Deposit Insurance Coroaretion
FDIC Rules and Regs, § 330.14