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HomeMy WebLinkAbout2012-10-25 MinutesBoard Members Mayor Jordan Chairman Sondra E. Smith Secretary Roy Cate Position I/Retired Pete Reagan Position 2/Retired Dennis Mullen Position 3/Retired Ronnie Wood Position 4/Retired Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2012 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2012 Page 1 of 6 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 p.m. on October 25, 2012 in Room 326 of the City Administration Building. Pete Reagan called the meeting to order and acted as Chairman until Mayor Jordan arrived at 3:04 p.m. Present: Mayor Jordan, Pete Reagan, Ronnie Wood, Roy Cate, Dennis Mullens, Kit Williams, City Attorney, Sondra Smith, City Clerk, Kerry Watkins and Glenn Atkins, Garrison Financial. Mayor Jordan was absent during the roll call and at the beginning of the meeting. He arrived at 3:04 p.m. Approval of the Minutes: July 26, 2012 meeting minutes. Dennis Mullens moved to approve the July 26, 2012 meeting minutes. Roy Cate seconded the motion. Upon roll call the motion passed 5-0. Mayor Jordan was absent during the vote. Pension List Changes: Madge Schader deceased September 20, 2012 Pete Reagan: In your packet is a notice of Madge Schader's obituary. That's Earvel Schader's widow. Approval of the Pension Lists: Re -approval of the October 2012 pension list (Madge Schader deceased) Ronnie Wood moved to re -approve the October pension list. Dennis Mullens seconded the motion. Upon roll call the motion passed 5-0. Mayor Jordan was absent during the vote. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2012 Page 2 of 6 Approval of the November and December 2012 and January 2013 pension lists Pete Reagan moved to approve the November and December 2012 and January 2013 pension lists. Roy Cate seconded the motion. Upon roll call the motion passed 6-0. New Business: Revenue and expense report A copy was given to the Board Sondra Smith: That is the report that Accounting completes for the board. Actuarial Valuation Report for December 31, 2011 A copy was given to the Board Sondra Smith: That is the actuarial report that you receive every two years. This one was completed for December 31, 2011 and we received it in July 2012. We need to be concerned about the unfunded liability on page 10. It shows a drop of your funded liability percent. This shows that you are 26% funded as of December 31, 2011. You have an unfunded liability of $14,915,285. Mayor Jordan: Any questions on that? Pete Reagan: No sir. Estimated 2013 Premium Tax Allocation A copy was given to the Board Sondra Smith: We received this from PRB (Pension Review Board). It shows the estimated amount for the premium tax. They think you are going to receive about $181,000 for 2013. If you are eligible for the 10% accrual you will get another $60,000. I'm sure you will be eligible for that extra amount because of the condition of our fund. These are just estimates. They like to send it out so you will be aware of what you might be receiving in 2013. Pete Reagan: Off the top of your head do know what we received this year? Paul Becker: I don't know off the top of my head but I think the estimate is larger than we got this year by about $30,000. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2012 Page 3 of 6 Sondra Smith: 2012 we received $229,129.75, which went back into your plan. The future supplement was $36,105. The extra supplement, this was the first year you received it, is $57,282.44. They are anticipating that to be a little bit more next year. Pete Reagan: About $3,000. Sondra Smith: Yes sir, if their estimates hold true. Pete Reagan: Thank you. Sondra Smith: Mr. Cate you probably know how this works. The big lump sum of $229,000 goes back into the plan to help fund your plan and the $36,105 is divided among the pensioners. The extra $57,252 goes back into the plan. This year you received a lump sum check for $725, if you were retired and volunteers received $145. They tell us how to divide it up. We do it exactly the way they tell us. The Voice of Public Pensions — Invoice Sondra Smith: That is for the NCPERS publication that you receive. It has gone up quite a bit. It is now $225 a year. Pete Reagan: It used to be $150, wasn't it? Sondra Smith: Yes. The board needs to decide whether they want to continue spending $225 a year for that information. Pete Reagan: Personally I think it's the best information we can get if we take the time to read what is going on with other pensions around the United States. This group is a conglomeration of municipal, state, and county pension funds in the United States. Sondra Smith: We send out every email that we receive. Pete Reagan: We use to just get one now seems like we get one a day. Sondra Smith: We forward those emails to everyone that has given us their email address and wishes to receive the information. Ronnie Wood: That is the pensioners too it's not just the board. Sondra Smith: That goes out to anyone on the pension plan that has told us they would like to receive information about the plan. There is not a lot that receive that information. If you choose to go ahead with that publication we need a motion and a second to pay the invoice. Pete Reagan moved to approve the NCPERS Invoice. Roy Cate seconded the motion. Upon roll call the motion passed 6-0. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2012 Page 4 of 6 National Conference on Public Employee Retirement Systems Letter A copy was given to the Board Sondra Smith: I bring everything before the board that we receive before we fill anything out. I was a little bit confused about it because it had the main contact as Pete Reagan and me. I don't know if we need to change that to the Mayor since he is the chairman of the board. Mayor Jordan: There has to be some reason Pete is on that. I don't know. Kit Williams: It says representatives so you can have as many there as you want. Sondra Smith: Before anyone signs this I just wanted everyone to be okay with it. Garrison Financial: 3rd Quarter reports A copy was given to the Board Monthly Report Kerry Watkins: The market changed a little bit the last week. I've brought an updated appraisal. We are down about 1% since the end of the quarter. Market is off about 2%, fixed market income is even down a little bit. Pete Reagan: That is normal for an election year. Kerry Watkins: It's not too bad. Glenn Atkins: Each of you should have in your packet a quarterly report that we sent out the first week in October. Couple of things to point out that has happened since we talked last is the fact that the Hershey Bond that we own has matured and since the end of the quarter we have been notified of about three quarter of the General Electric Capital 6 518 preferred has been called. It should generate about $35,000 in cash; depending upon your cash needs we will look to replace that back into fixed income. The portfolio is under performing slightly in that quarter largely due to the fact that it doesn't have much financial security exposure to it. If you look back to last year the financial sector of the market really got hurt because of the European crisis and the ongoing things in Greece and Germany. They have rebounded considerably this year and the portfolio is underweighted in that sector which is the primary cause of the under performance. Inception to date it's only a slight under performance. We talked about purchases back in July or prior to that we purchased a couple bond funds and several stock funds for the portfolio. The policy is 60% equity and 40% fixed, right now we are slightly overweight in equity. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2012 Page 5 of 6 Kerry Watkins: We have a 10% variance for market movement. Equities have done well this year so are a little bit heavy there. Glenn Atkins: Year to date about 10% of the portfolio has been taken in withdrawals. I believe there's another $100,000 or so scheduled in November. That would put it up around 12% to 13%. We do continue to generate as much income as we can and as much growth as we can. I don't think it is necessarily a bad thing but it's slightly overweight in equity right now with how low interest rates are. The risk is probably in favor of stocks and not in favor of bonds. I don't think that is a major concern but as things generate income and grow and be called we will seek to reinvest those assets in something that we can get the highest possible income and yield that we can for you. Kerry Watkins: I think on an upside the portfolio is worth about $4.8 million at the end of January. There have been $468,000 worth of withdrawals and fortunately with the market performing well the portfolio is only down $120,000 from where we started in January. Certainly made some nice capital gains and received $100,000 in income, again not quite enough to sustain the withdrawal rate. We are only eight months in from when we started and the portfolio is up 7.5%. On a balance account for eight months we've had a really good year in the market. Probably better than we were anticipating, that's not to say we are not going to give some it back before the end of the year. Certainly volatility could pick up around the election, the fiscal cliff coming, and those kinds of things. Kit Williams: You may be happier not in financials? Kerry Watkins: Yes. We are only relegated to mutual funds in this account. Our management style is such that we are not real heavy in financials. It's something that we are just not really comfortable with. We don't know what is on the books at Bank of America and Wells Fargo and thing's like that. Occasionally we will dip our tail when we think there's incredible value there but given the severity of European crisis and even what's going on in this country it's not an area we are hot on even though they have performed quite well this year. Glenn Atkins: A typical balance account, of this kind in the typical year, on average over long periods of time would probably generate in the range of 5.5% or 6% return per year. Up 7.5% on a balanced account is pretty good for eight months. You annualize that it's something in the 10% range give or take. Kerry Watkins: Even if volatility were to spike up or we see some profit taking going on in the market like we did the last week, we continue to hold on to the stocks that Longer had for you. We may have repositioned some of that if we were able to buy in the mutual stocks but since we are not we are comfortable with them. They are nice blue chip very heavy dividend type names. Those should hold up a little better. Pete Reagan: I have a question about the General Electric stock. Did they call both of those or just one? 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2012 Page 6 of 6 Glenn Atkins: I believe it was the first one on the list. The 6 5/8 due 6-28-32. They called 1649 shares which leaves you 351 shares out 2000. Kerry Watkins: That will happen on the 13`h of November. Pete Reagan: The reason they called those is? Kit Williams: They can get it cheaper. Glenn Atkins: They can refinance it cheaper. They did it on what they call a lottery system. It was a partial call but basically they draw names out of the hat. We had that happen to your account and also one other account that we have. Paul Becker: It's happening in the governmental bond market all the time. We get our bonds called left and right. They call and issue them at a lesser interest rate. Pete Reagan: It's all part of the business. Paul Becker: It is. Kerry Watkins: We have about $185,000 in cash right now. There is $100,000 slated to go out about the 8th of November. Given the call, we are a little over weight in equities, certainly we may go ahead and raise you a little more cash. I'm not sure. Trish is always real good to give me a heads up several weeks in advance. Given where the market is we may go ahead grant you a little more cash to get you through year end and maybe for the January withdrawal. Pete Reagan: Thank you all very much. Glenn Atkins: We appreciate you all coming in. If you need anything give us a call. You don't have to wait a quarter. Informational: 2013 meeting schedule A copy was given to the Board Sondra Smith: Your next meeting will be January 31, 2013. Pension Board member list A copy was given to the Board Meeting adjourned at 3:25 p.m. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316