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HomeMy WebLinkAbout1999-07-29 - Agendas - FinalAGENDA FIREMEN PENSION AND RELIEF FUND July 29, 1999 1. Approval of Minutes 2. Approval of the Pension list 3. Investment report 4. New business 1. NASDAQ Antitrust Litigation 5. Old business • • • MINUTES OF A MEETING OF THE FAYETTEVILLE FIRE PENSION AND RELIEF FUND JUNE 24, 1999 A meeting of the Fayetteville Fire Pension and Relief Fund was held on June 24, 1999 at 11:00 a.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Mayor Fred Hanna, Assistant Fire Chief Manon Doss, John Dill, Ron Wood, and City Clerk Heather Woodruff. MINUTES Mr Dill moved to approve the minutes. Mr. Wood seconded the motion. Upon roll call the motion carried unanimously PENSION LIST It was noted that Eddie Bachman and Ron Wood's retirement amounts were switched on the pension list. Mr. Doss moved to approve the pension list as amended. Mr. Dill seconded the motion. Upon roll call the motion carried unanimously. INVESTMENT REPORT Mr. Curtis Williams explained the investment report. He stated there was a growing sense in the investment community that they many be entering a phase where there would be a shift in interest rates not only in this county, but around the world. Historically, interest rates went up for twenty to thirty years then down for twenty or thirty years Last summer they hit a thirty-year low in treasury bonds. Many believed interest rates were going to start back up. If interests rates were going to start long secular up trends, then what they were doing the fixed income account would not work. They had been managing the account as an income and growth account for thirteen years. They could still manage for income, but there would be no growth because everything they purchased would be worth less for a long time. With the long term security they should still be able to exceed the two percent above inflation. From an actuarial point of view it would not look good. monitory it would not affect their pensions. if they continued what they were doing the impact would be negative for the auctorial report, although it would not hurt the fund monitory. For the time the interest rates are rising they would not get any growth out of the fixed income portfolio. One alternative was to manage the portfolio for a rising interest rate environment. They would purchase six month maturities, CDs and treasuries. If rates rise they would go down, but because they had such a short life they did not down much. So the portfolio value would remain relatively stable. Unfortunately they would not be able to exceed the two percent inflation. Historically short term fixed income securities did not exceed the rate of inflation by two percent. While their portfolio value would remain relatively constant, it would have a negative impact on the actuanal condition of the fund. He thought under either style of investment their benefits would not be affect, however, they would not receive any increases. The third alternative was to rethink their investment policies and guidelines. The guidelines had worked well for them. They had put together a very conservative and restrictive policy and guidelines so they would not have to much risk and bulk of the money would always be in fixed income, conservatively invested. A decision would have to be made to continue or to look at income from a different perspective. They would not be getting growth from fixed income, they were going to get growth from equities A nsing inflation environment was not good for investments, but equities performed better in that environment than the fixed income did. Equity was a better hedge against inflation than fixed income. He thought they should have several meetings on the subject before they made any changes. OLD BUSINESS DROP ACCOUNTS. Mayor Hanna stated he had called a meeting with Marilyn Crammer, Jerry Rose, Don Bailey, and Kevin Crosson on the Drop Fund. They went over it thoroughly. When the Drop Plan was instituted it was understood at the time that it was not a qualified plan An individual should get tax advise from their accountants. It was required law that if they changed from a non-qualified plan the city had to withhold twenty percent. What they had decided was when the take the money out there would be a 1099R form sent out It would be marked liabilities unknown All they needed to protect the city was a letter from the retirees accountant stating that the money was going into a qualified plan and that the Drop plan was a qualified plan. Mahon Doss stated they had looked to the PRB for guidelines. They had replied they had been holding 20% out if they wrote the check to the individual If they wrote it to the investment company they did not with hold the tax. Mayor Hanna added if the IRS challenged the decision they could state that it was not a qualified retirement plan. No one has ever receive a qualifying letter from the IRS on this Drop Plan. Mr. Doss added the entire pension plan did not have a letter of determination. Because the pension plan was older than the letter of determination from the IRS. The plan was covered by State Statute. Meeting adjourned at 11:40 a.m. • • • FAYET 1 EVIL LJE • THE CITY OF FAYETTEVILLE, ARKANSAS • • To: Fire Pension Board Members From: Marsha Farthing, Fixed Assets Coordinator f Through: Marilyn Cramer, Accounting Manager Date: July 20, 1999 Subject: NASDAQ Antitrust Litigation The City of Fayetteville Fire Pension Fund has received notice of a settlement in the NASDAQ Antitrust Litigation case. The settlement involves all persons and entities who traded securities on the NASDAQ Market between May 1, 1989 and July 17, 1996. Brokerage firms that traded on the NASDAQ Market during this time have prepared preprinted claim forms for their clients. Because of the volume of transactions involved, I am asking for your approval to submit these preprinted forms as proof of claims for the City's Fire Pension Fund. If you feel the preprinted forms are not adequate documentation of the City's stock activity during this period, you might entertain the idea of hiring a part time employee to research the claims. I, however, feel the amount of resources used in the process will exceed any increased gain from the settlement. Please let me know how you wish to proceed in this matter. 113 WEST MOUNTAIN 72701 501 521-7700 FAX 501 575-8257 1V1O1 3O lNEOdBd 0) 0 O ONl3 1V101 996'99E' l l 0 SIN31611S3ANI CI -13H ALIO HONA1111HH3W 1VIO1 O1 N CO 0 O W O V A 9bC96# — 1DOV 9b£96# — 13OV 99090# — 130V HONA111IHH301 c cgs; -r! _n J N m W N o O D J m + O N m Vto W O J N N. �. I j Si - 0 90 > 090> mx w CO N N -n w N c J 0. 01 A v N >• 0 0▪ 1 01 0) + a W co o o A J J O O O T O 01 m 0 m a 0) 10 N O N b is o 0 CO 0 --4 0) 01 01 O 0 U d% A IWO 00 D Be A 01 A L L 01 N J N 0 CO 0 ▪ 0) A ✓ (0 0 CD CO 0 * zg m c In m z T 2 • • • • 1VIO1 JO 1N3083d ONl3 11/101 O) N W ID 01 SIN3W1S3ANI Ol3H ALIO HONAI 11188311 11/101 94696# — 133V 94E96# — 100V 99090# — 103V N N CO CO el N O U1 v O a) W N v N 0 J N0 co 3e a oO 01 .9 N 0) 0) CO A -• CO A O O m O O 3 co O (R. D *` N O a D. HONA111I183W C m T n D m m.7 o O • N O O m m 1< (D 0, co O C D( 7N.S. I m ▪ D R. icor w O • N E m N y C N � 13 N O (Op w 0 ANIFJId\N3M FAYETTEVILLE • THE CITY OF FAYETTEVILLE, ARKANSAS • • • To: Fire Pension Board Members From: Marsha Farthing, Fixed Assets Coordinator, Through: Marilyn Cramer, Accounting Manager, Date: July 20, 1999 Subject: NASDAQ Antitrust Litigation The City of Fayetteville Fire Pension Fund has received notice of a settlement in the NASDAQ Antitrust Litigation case. The settlement involves all persons and entities who traded securities on the NASDAQ Market between May 1, 1989 and July 17, 1996. Brokerage firms that traded on the NASDAQ Market during this time have prepared preprinted claim forms for their clients. Because of the volume of transactions involved, I am asking for your approval to submit these preprinted forms as proof of claims for the City's Fire Pension Fund. If you feel the preprinted forms are not adequate documentation of the City's stock activity during this period, you might entertain the idea of hiring a part time employee to research the claims. I, however, feel the amount of resources used in the process will exceed any increased gain from the settlement. Please let me know how you wish to proceed in this matter. 113 WEST MOUNTAIN 72701 501 521-7700 FAX 501575-8257 • FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS • • DEPARTMENTAL CORRESPONDENCE To: Mickey Jackson, Fire Chief Thru: Larry Freedle, Battalion Chief/A Shift From: Michael Bonaduce/Captain/Station 3 WIINib Date: July 6, 1999 RE• Retirement from the Fayetteville Fire Department After a twenty-two year career with the Fire Department I wish to respectfully submit my resignation for retirement as of July 8, 1999. My career with the fire department has been most rewarding and my brothers will be sincerely missed. If you should need anything further from me you need only call. Thank you. MB/ca cc: Fayetteville Fire Department Pension Board Civil Service Commission Personnel Division RECEIVED JUL 08 1999 CITY OF FAYETTEVILLE CITY CLERK'S OFFICE • Fayetteville Firemen's Pension and Relief Fund Deferred Retirement Option Plan (DROP) Distribution Election Form To be completed by Employee with regard to the distribution of his DROP acco Member Name (please print) Retirement Di _\L Please select option A, B, or C: A. The Fayetteville Firemen's Pension and Relief Fund is directed to make ful less 20% federal withholding tax. I understand that the entire amount of d ?1-(AjtYInternalaccount will be reported to the Internal Revenue Service. /��� ��/ Signature of Member 1 % i i� 1-42 ` B. The Fayetteville Firemen's Pension and Relief Fund is directed to mail my for deposit. I understand that the entire amount of distribution from my D -��/+'AC J the Internal Revenue Service. G Signature of Member C. The Fayetteville Firemen's Pension and Relief Fund is directed to mail $ (fill in the amount) of my distribution to ec% (Name of Annuity Provider) for deposit. The remainder will be paid dives Federal withholding tax. I understand that the entire amount of distribution from my unv, will be reported to the Internal Revenue Service. Signature of Member Date (To be completed by the Annuity Provider if option B or C is selected) In accordance with the above authorization of the depositor, we agree to deposit the forthcoming distribution amount from the Fayetteville Firemen's Pension and Relief Fund in the following account: Type of Account: (fill in the blank) I(we) certify that the account is a qualified account, as defined by the Intemal Revenue Service, to receive distributions, from the Fayetteville Firemen's Pension and Relief Fund, on which the income tax may be deferred. • Return to: Annuity Provider Authorized Signature ' Mailing Address Date City State Zip Telephone Number Firemen's Pension and Relief Fund City of Fayetteville 113 West Mountain Fayetteville, AR 72701 Page 1 of 2 The following is an excerpt from the original DROP Member Election Form: IMPORTANT NOTICE Attorneys for the Fayetteville Firemen's Pension and Relief Fund Board of Trustees has advised that there may be serious potential tax consequences as a result of participating in the Deferred Retirement Option Plan (DROP, A.C.A. &24-11-830) as follows: An application for a letter of determination as to the tax deferral status of the Firemen's Pension and Relief Fund Plan and Trust has never been filed with the IRS. Also, no determination request has been made for the Deferred Retirement Option Plan (DROP), an amendment to the pension and relief fund plan and trust. Reliance on another State's qualification is not permitted. An adverse ruling on the tax deferred status of the plan could have serious detrimental tax consequences to each participant. DROP distributions will be treated as ordinary income in the year constructive receipt occurs and rollover into an otherwise qualified plan, IRA, or other investment may not be possible. By not acting to formally tax qualify the plan, an array of possible options for the DROP participants may not be available. We strongly urge you to seek advice from a competent tax accountant and/or an attorney before participating in the DROP program. You assume the risk of such adverse tax consequences if you elect to participate. • I understand that the Fayetteville Firemen's Pension and Relief Fund has no liability for any adverse tax consequences which may accrue to me as a participant in the DROP plan. Member Signature Date • Page 2 of 2 ;dLUratung Module nup://www.arkleg.statc.ar.usIltprooVacts/1999/hIMaclb?U.htm • Stricken language would be deleted from and underlined language would be added to law as it existed prior to the 82nd ( • 1 State of Arkansas As Engrossed: S2/&99 S2/9/99 S3/1/99 2 82nd General Assembly 3 Regular Session, 1999 4 5 By: Senator Hopkins 6 7 8 For An Act To Be Entitled A Bill 9 "AN ACT TO AMEND ARKANSAS CODE § 24-11-203 TO ALLOW 10 THE FIRE AND POLICE PENSION REVIEW BOARD TO ASSURE THE 11 TAX QUALIFICATION OF LOCAL PENSION PLANS; TO AMEND ARKANSAS CODE TITLE 24, CHAPTER 11, SUBCHAPTER 2 TO ADD A SECTION TO MEET REQUIREMENTS FOR QUALIFIED PLANS UNDER THE INTERNAL REVENUE CODE; TO AMEND ARKANSAS CODE § 24-11-434 TO CLARIFY A DROP BENEFIT PROVISION FOR POLICE PENSION AND RELIEF FUNDS; AND FOR OTHER PURPOSES." 12 13 • 14 15 16 17 18 19 Subtitle 20 "TO ALLOW THE PENSION REVIEW BOARD TO 21 ASSURE THE TAX QUALIFICATION OF LOCAL 22 PENSION PLANS AND TO ADD A SECTION TO 23 MEET IRS REQUIREMENTS FOR QUALIFIED 24 PLANS." 25 26 • 27 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 28 f5 Act 670 o/i/gG] SENATE BILL // SIT Ffi *7 N7pf 7/1/99 2:15 PM • SECTION 1. Arkansas Code § 24-11-2030), regarding authority of the 30 Fire and Police Pension Review Board to make rules and regulations, is amended 31 to read as follows: 32 "(1)(I) The review board shall have the power to make all rules and 33 regulations necessary to enforce the laws governing funding standards and 34 benefit levels for fire and police pension and relief funds. Further. the 35 review board shall have the authority to make all rules and. regulations 36 necessary to assure continued tax qualification of each firemen's and End of Pave 1 1 policemen's pension and relief fund that is subject to this subchapter 2 (2) All rules and regulations must be promulgated in accordance 3 with the provisions of the Arkansas Administrative Procedure Act, § 25-15-201 4 et seq. /n addition. all rules and regulations relating to continued tax 5 qualification of such plans shall be specifically presented to the Joint 6 Committee on Public Retirement and Socia! Security Programs. or the 7 Legislative. Council when the General Assembly is not in session. for review 8 prior to final adoption " uup:u www.arnlcg.state.a r.us/I tproo&acts/ 1999/htnvact67U.htm 9 10 SECTION 2. Arkansas Code Title 24, Chapter 11, Subchapter 2 is amended 11 to add the following section to be appropriately numbered by the Arkansas Code 12 Revision Commission: 13 "Tax Qualification of Firemen's and Policemen's Pension and Relief 14 Funds 15 fa) This section shall be considered a part of the plan of each pension 16 and relief fund that is subject to this subchapter. Each nlan is intended to 17 qualify under Section 401(a) of the Internal Revenue Code and is for the 18 exclusive benefit of its members retired members. and their survivors 19 (b) A member. retired member. or survivor of a member or retired member r5 2I retirement pension disability retirement allowance death benefit allowance. 7/1/99 2:15 PM DRQP benefit. or any other benefit under the fund in excess of the benefit 23 limits applicable to the fund under Section 415 of the Internal Revenue Code. 24 The board shall reduce the amount of any benefit that exceeds those limits by 25 the amount of the excess. If total benefits under this fund and the benefits 27 Plans maintained by the employer that employs the member would otherwise u LLp:u w wwiL n6g.Matc.ai.u.11pl uuUhcl91 YYY/IIIIwaCU) /V.hlm 29 the benefits the member would otherwise receive from the fund shall be reduced 30 to the extent necessary to enable the benefits to comply with Section 415 of 31 the Internal Revenue Code. unless the employer has provided other rules that 32 satisfy those requirements 33 fel Any member or survivor who receives any distribution that is an 34 eligible rollover distribution as defined by Section 402(c)(4) of the Internal 36 another eligible retirement plan of the member's or survivor's choice on • End of Page 1 providing direction to the pension and relief fund ryarding that transfer in 2 accordance with procedures established by the board of trustees of the pension 3 and relief fund 4 (d) The total salary taken into account for any purpose for any member 5 or retired member who it an ineligible participant under any firemen's or 6 policemen's pension and relief fund may not exceed one hundred fifty thousand 7 dollars ($150.000) a year This dollar limit shall he adjusted from time -to - 8 time in accordance with puidelines provided by the United States Secretary of 9 the Treasury. For purposes of this subsection. an elieihle participant is a 10 person who first became a member before 1996 and an ineligibl participant is 11 a member who is not an elipible participant 12 fel In the event that a firemen's or policemen's pension and relief 13 fund is terminated or partially terminated. or employer contributions to the 4.14 fu d are discontinr e ely the ri hts of the members to their accrued 15 benefits to the extent funded. shall be nonforfeitable if 5 7/1/99 2:15 PM 111.1.11.11\11 al KIeg.s late. ar.u9 Itpr°UVactsi 1 YYY/uwvac[U FUME 111 16 f Distributions of benefits must begin not later than April 1 of the 17 year following the calendar year during which the member becomes seventy and 18 one-half (70'11 years of aee or terminates employment with the employer. 19 whichever is later. and must otherwise conform to Section 401(a)(9) of the 20 Internal Revenue Code 21 fg) If the amount of any benefit is to be determined on the basis of 22 actuarial assumptions that are not otherwise specifically set forth for that 23 purpose in this subchapter. the actuarial assumptions to be used are those 24 earnings and mortality assumptions being used on the date of the determination 26 Review Board. The actuarial assumptions beine used at any particular time 27 shall be treated for all purposes as a part of the rules and regulations of 28 the pension and relief fund. The actuarial assumptions may be changed by the 30 assumptions may not result in any decrease in benefits accrued as of the • 31 effective date of the change 32 (hl Notwithstandine any other provision in this subchapter to the 33 contrary. contributions. benefits. and service credit with respect to 34 qualified military service will be provided in accordance with Section 414(u) 35 of _thelmernalRethne 36 nerson from receiving more eenerous treatment for military service pursuant to End of Page 3 1 state law or the provisions of anv firemen's or policemen's pension and relief 2 fund if such treatment is not inconsistent with the tax qualification 3 requirements " 4 5 SECTION 3. Arkansas Code § 24-11-434(b)(2)(D), regarding the interest 6 earned on a deferred retirement option plan account under the policemen's 7 pension and relief fund, is amended to read as follows: •8 "(D) The interest credited after the first five (5) years 15 7/1/99 2:15 PM uuje I111N.a w ww.al AICb.SWIC.J1.ub up, UOU LCIS I YYY/1141ULCLO,U.IILill 9 on the deferred retirement option plan shall be two (2) percentage points 10 below the rate of return of the investment portfolio of the fund and shall not • 11 be determined under subdivision (e)(2) of this 'section but in no event shall 12 the interest rate credited be less than zero percent and" 13 14 SECTION 4. All provisions of this act of a general and permanent nature 15 are amendatory to the Arkansas Code of 1987 Annotated and the Arkansas Code 16 Revision Commission shall incorporate the same in the Code. 17 18 SECTION 5. If any provision of this act or the application thereof to 19 any person or circumstance is held invalid, such invalidity shall not affect 20 other provisions or applications of the act which can be given effect without 21 the invalid provision or application, and to this end the provisions of this 22 act are declared to be severable. 23 24 SECTION 6. All laws and parts of laws in conflict with this act are • 25 hereby repealed. 26 /s/Hopkins 27 28 29 APPROVED: 3/17/1999 30 31 32 33 34 • 35 36 r5 End of Page 5 7/1/99 2:15 PM. RE: MLAM A/C# 08659300 CITY OF FAYETTEVILLE FIRE PENSION & RELIEF FUND Dear Ms. Wo N y O m= 0 'O -O g 0 CO EtL 5 94 a fn 0 0L Q _0 e3 -' W▪ c7e • 7 0 0 >• .. 0 -\' OD—c ` v 0. V= V 0 c-. O N so �s Do ea0 Q >> 0 V .+ tot C r U O to .- C ... .O o L • al V > M O .O N y .c WO C N fn p^ to 0 .. 3;0 c s aL o V C>" C a torr; a C C K v knc" -g o OU V y y 'O ..N. O a. 'O Q y.0 V as5 O.0 0 g 0 T N h 0 t N •—•3. .N .�. N O V • .. 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'� A o U m E P. o 0m Z e- a 'A a pa � F CC t Savings & Loan Credit Senstve&Fincl O 1--t NO N N O O N O 00 o o h o 0' N_ V h T T NO rel 0 VI M N VOi ON E 7 0 uU ti a0 -00 Q a° o U r a u =~ Co u O W= INY CODE 7107 (12-98) b 0 AS OF: 06/30/99 w 0 • — L O • i 0 u • 4,1 O O 00 ^I tri •,I el • VI 00 V? N N • O O t^ b N tai o 00 • = o 1D, ✓ 1 V W G N NO ICI N M VI VI 0 tfl 0 0 V1 O b VI N N N_ 1Z Q\ 111 OC ‘40 0 Q Q N O 7 7 0 O M C N. 0 0 M N kr. or 'O VI M M ti 7 N 0 til ON ON 0 fV fV 7 OC O; D. O v1 a o o o 0 M a O P O: ON N VI 0 VI el D N CI, 0 N r 00 N O N - O N ON OC .-. '+ N M CC OOO VI 00 N 0 afel 0 o 0 N ICI VI 0 N N: N O M el 0 0 O, b 00 h P 7 D , N 00 CO r--� 0 r, O Oil Services N 2.506.747.40 Common Stock llld 4.806.744.94 Total Securities Total Portfolio m N_ 0 0 n w O O