HomeMy WebLinkAbout1995-01-26 Minutes•
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MINUTES OF A MEETING OF THE FIRE PENSION BOARD
A meeting of the Fayetteville Firemen's Pension and Relief Board
was held on Thursday, January 26, 1995, at 11:00 a.m. in Room 326
of the City Administration Building, 113 W. Mountain, Fayetteville,
Arkansas.
PRESENT: Marion Doss, Pete Reagan, Retirees Darrell Judy and
Howard Boudrey, Ron Wood, and City Clerk/ Treasurer Traci
Paul.
ABSENT: Mayor Fred Hanna
CALL TO ORDER
Marion Doss called the meeting to order.
MINUTES
Boudrey, seconded by
of December 1, 1994.
PENSION LIST
Reagan, made a motion to approve the minutes
The motion was approved unanimously.
Paul stated there were no changes in the pension list. Judy,
seconded by Boudrey, made a motion to approve the pension list for
February, 1995. The motion was approved unanimously.
NEW BUSINESS
PENSION FUND - LETTER OF DETERMINATION
Reagan stated he had been in contact with a tax attorney regarding
a letter of determination to find out if the fund is in compliance
with IRS regulations. The attorney will charge $100 an hour for
his services. The retainer fee would be waived. We would be
responsible for supplying all information needed.
Doss stated a letter of determination is necessary.
In answer to a question from Wood, Reagan stated the letter is a
certificate from the IRS saying that the plan abides by all the
rules and regulations of the IRS.
Reagan stated the attorney will give his legal opinion as to
whether we need a letter of determination or not. The only opinion
we have at this point is from the Personnel Director.
In answer to a question from Boudrey, Reagan stated we do not need
the letter to have the DROP Plan. The reason we need a letter is
because the Personnel Director said we need one.
Doss stated the Pension Relief Board recommends that fire
departments in Arkansas have letters of determination.
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January 26, 1995
Reagan stated the letter of determination has nothing to do with
the DROP Plan.
Reagan stated getting a letter of determination is very expensive.
possibly $2,500 up front. There are two areas in the plan that we
could be penalized on. There are members who are drawing more than
their retirement salary.
Doss question whether the City Attorney thinks a letter is
necessary.
Reagan stated the plan is either in compliance or it's not. The
tax attorney can give us his opinion.
Judy asked if the plan is not in compliance, what has to happen to
get in compliance?
Reagan stated we would have to notify the IRS and ask them for a
letter of determination on the fund. The IRS would review the
books since 1921.
Doss stated the people who are drawing more than their retirement
salary could be affected.
• In answer to a question from Judy, Reagan stated the fire fighters
are trying to get legislation passed on 415 and 457.
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In answer to a question form Doss, Reagan stated the attorney could
not determine how many hours he would work.
Doss suggested finding out if the plan is in compliance and if a
letter of determination is necessary. He stated if we want to
think about the DROP, we need to have an actuary done to see if
that is going to effect it negatively.
Reagan stated the actuary is not going to give any indication of
what it is going to do to the fund.
Reagan stated we have been asked not to get a letter of
determination because it will create problems for every old plan in
Arkansas. No other city has asked for a letter.
Boudrey stated the department should not request a letter
is a requirement.
Reagan asked if the Board wanted the tax attorney to
opinion. It will probably cost $500 to $600 minimum.
Reagan, seconded by Judy, made a motion to have Gregory Jones
research to determine if the fund is in compliance with IRS
guidelines. The motion was approved by a vote of 5 to 1, with
Boudrey voting no.
until it
give an
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January 26, 1995
NEW BUSINESS
PENSION AFFIDAVITS
Reagan stated it was time to send out pension affidavits.
Paul stated she would take care of it.
INVESTMENT REPORT
Curtis Williams, Merrill Lynch, distributed a asset allocation
summary and a summary of the portfolio performance as of December
31, 1994.
Williams stated 1994 was not the best year in the stock and bond
markets. It was one of the worst bond markets in U.S. history.
Williams reviewed figures in the distributed asset allocation
summary. He stated in the targeted allocation, we have a higher
cash position than we would normally keep. The second highest
performing investment in 1994 was cash. When the markets were
beginning to look bad, money was moved into three month bills, CDs,
and money market funds to protect the portfolio. The cash flow on
the fixed income fund was 7% this year.
Williams reviewed figures in the distributed portfolio performance.
He stated we did have a net gain in the stock fund for the year.
In the income account, we ended the year a little down on the fixed
income side. We outperformed the market because of the money that
was moved.
In answer to a question from Judy regarding 1995, Williams stated
things are still rough. When the Fed is raising interest rates, it
is bad for investments. The market is gong to remain unsettled as
long as there is any doubt about what the Fed is going to do with
interest rates. The yield curve is flat right now. That is an
indication that rates are peaking. Rates have depressed a number
of issues in this account so that they are undervalued. When rates
stop going up they will rebound. We need to see the indexes catch
up to the broad market averages. The latter half of 1995 should be
much better. The average bare market lasts 18 months.
In answer to a question from Reagan, Williams stated New Mexico is
a value manager. They did well in this market because this market
favored value stocks. The next cycle may not favor them as much.
We will watch closely for needed adjustments.
ADJOURNMENT
The meeting adjourned at 11:40 a.m.