Loading...
HomeMy WebLinkAbout2014-07-31 MinutesLioneld Jordan Chairman Sondra E. Smith Secretary Roy Cate Position 1 Retired Firemen's Pension and Relief Fund Board of Trustees Meeting Agenda July 31, 2014 Special Firemen's Pension and Relief Fund Board of Trustees Meeting Minmes July 31, 2014 Page 1 of 7 Pete Reagan Position 2 Retired Dennis Mullens Position 3 Retired Ron Wood Position 4 Retired A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 p.m. on July 31, 2014 in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Roy Cate, Pete Reagan, Mayor Jordan, Dennis Mullens, Sondra Smith, City Clerk, Kit Williams, City Attorney, Dee McCoy, City Clerk office, Trish Leach, Accounting, Glenn Atkins and Kerry Watkins -Bradley of Garrison Financial. Absent: Ron Wood Garrison Financial: Monthly Report: Kerry Bradley: Thanks for allowing us to come. Good news again to report, outside of today; today the markets are not behaving very well. Second quarter was good. We are really close to policy, which we have a 60% equity 40% fixed income policy. We are very close to that. We are a little over allocated equity because equities have performed so well. Year to date through June, the account is up 6.39%. We started the year at about $4.52 million. At the end of June we were at $4.347 million and about $444,000 has been withdrawn. We are down a little less than $200,000 but we've taken out $444,000 in withdrawals for pensioners. Equities were strong. Equities were up about 7.68% for the six months, for the quarter we were up 5%. July had been a good month up until the 24th or 25th, then we started to see a little bit of pull back there. We are back down to even. Today the markets are getting hit pretty hard from some news in Argentina and some earnings that have not been stellar. I think the market is off about 1.5% so the portfolio may be down another .5% after the close today. I ran performance through yesterday and the account was still up 5.79% through yesterday. All in all a very strong market. The fixed income market is behaving, equity markets are behaving. We have gone almost three years without a 10% correction in the equity market. Given that, we don't get too worried if we see a little sell off. I think it would be healthy for the market's longer term. We had some good economic news yesterday, second quarter GDP came up 4%. I don't necessarily think that the third quarter will be that strong. We had a lot of pent up demand from the first quarter from all the bad weather we had across the US. If we can hit anywhere between 3% to 4% that's really good for the equity market, and it'll be good for interest rates over the next few years. The economy is still on track and improving in spite of the very weak first quarter we had. We have raised some capital in this quarter to fund distributions and we do that by selling off the equity Special Firemen's Pension and Relief Fund Board of Trustces Meeting Minutes July 31, 2014 Page 2 of 7 side. With this portfolio being under the $5 million mark and we can't buy individual stocks, we've been peeling off some of the stocks and there will be a point in time when the portfolio is reduced enough that we will need to probably sell all of those stocks and put it in mutual funds. For now, we are still holding several of the stocks that Ms. Longer purchased, very good, blue chip, solid companies that we're still comfortable holding. We still have a mix of mutual funds and individual names in here even though we technically can't buy anymore. As far as the stock side goes, we are very comfortable. Valuations have moved up a little bit given the run in the equity market. A 4% GDP growth that is good for the stock market and bond market. I don't think the market is that over -valued, we're right on target to a little bit overweight on equities and we're still very comfortable there. Glenn Atkins: I'll echo what Kerry said and thank you for having us. We appreciate your business and your confidence in us. Through June the bond portion of your portfolio was up 4.89% versus the index up 2.25%. Through yesterday year to date, bonds were up 4.73% in your portfolio and the index was up 2.02%. The quarter from the fixed income side can be best described as steady as she goes. There was no activity really. We think we are in a very well position, the portfolio is performing quite well. The duration or average maturity on the bond portion of your portfolio is a little over six years. It's long to the index but I think given the situation that we're in that's the right place to be. We're good with where we are and the securities and funds that we have in there are performing quite well. As always, this is the chart of the ten year treasury yield that we use as the proxy for the market. For the last year through today you can see rates are still very near all- time lows. There continues to be a lot of volatility. For some other clients that are different than you, I've been shortening maturities a little bit but I don't think it's prudent to do that here. We need as much income as we can get and we take a little bit of price volatility along the way. The normal package of the little Monte Carlo for the record, hasn't really changed. You guys can look through that at your leisure. Our bias is still for rates to be up over the next 18 to 36 months. If that happens quickly, we'll see some hits to the market value of the portfolio. If we were to shorten it up now we wouldn't be getting a whole lot of yield. I think we are good right where we are. Kerry Bradley: The fixed income, we're a little bit light to policy because we are about 6% cash in the portfolio. We have some distributions coming up in the next few months, we have two to three months' worth of distributions sitting in cash. We are a little over allocated on the equity side. We only have about 30% in fixed income right now so we are a little bit light to policy. I don't know if the stuff you sent me this morning Trish is going to be mentioned but certainly we can help with all this. It's some new accounting standards Trish sent us. Trish Leach: There's some new reporting standards that GASB is implementing. Marsha has been pulling together some of the information so I sent it to Kerry. There's some things that Garrison being your investment broker, will help us with. The report you are mostly concerned with is what goes to PRB, so that doesn't change. Kerry Bradley: We can certainly help gather the information and give that back to you monthly or quarterly, however you need it. They mentioned a money weighted return which I'm not familiar with. They said it is different than our time weighted return that we are required to report. We will get up to date on that. Trish Leach: If you want to have a meeting, we can talk about it. Special Firemen's Pension and Relief Fund Board of Trustces Meeting Minutes July 31, 2014 Page 3 of 7 Glenn Atkins: There's also a mention in there of using longer term expected returns and that managers typically use shorter expected returns. We can certainly get the long term data, in terms of how the markets performed historically and what it might be going forward. We can provide pretty much everything that's in this expect for the actuarial number crunching aspect of it. Approval of the Minutes: Approval of the April 24, 2014 meeting minutes and the June 2, 2014 special meeting minutes: Roy Cate moved to approve the April 24, 2014 meeting minutes. Dennis Mullens seconded the motion. Upon roll call the motion passed 5-0. Ron Wood was absent. Pete Reagan moved to approve the June 2, 2014 special meeting minutes. Roy Cate seconded the motion. Upon roll call the motion passed 5-0. Ron Wood was absent. Pension List Changes: Joseph Fraley deceased May 5, 2014. His spouse Lora Dean Fraley will receive his benefit beginning June, 2014. James E. Harris deceased May 16, 2014. Spouse not eligible to receive benefit. Melva June Harris deceased June 18, 2014 (James Harris widow). Sondra Smith: Mr. Fraley passed away and Lora Dean his spouse will receive his benefit. Mr. Harris, which was a volunteer passed away. His spouse wasn't eligible and within a month she passed away also. You've lost three from the pension plan but one of the pension benefits went to the spouse. We double check everything with the City Attorney's office when someone deceases to make sure the spouse is eligible. That's the reason we ask for a marriage license to make sure they are eligible according to the current state law. Pete Reagan: Dean Harris' wife was not eligible, is that what you said? Sondra Smith: Melva Harris was not eligible. Pete Reagan: Melva was Dean Harris' wife? Sondra Smith: Yes. We had the City Attorney's office check the state law. We involved Trish in the conversation between the Assistant City Attorney and myself. They deemed her ineligible to draw because of the time frame they were married or the length of time they'd been married. I think it was the time frame they married. Special Firemen's Pension and Relief Fund Board of Trustces Meeting Minutes July 31, 2014 Page 4 of 7 Kit Williams: We do not have a benefit that has been approved, to allow a marriage after retirement to receive spousal benefits. Sondra Smith: You have to be actuarially sound to allow that anyway and we are not sound. Kit Williams: We just have to follow the law. Sondra Smith: I wanted to give you the list of changes before we approve the pension lists. That's the reason we are having to re -approve the June and July pension lists because you had already approved those. The second approval will be for the August, September and October pension lists. Approval of the Pension List: Re -approval of the June and July, 2014 pension lists: Pete Reagan moved to re -approve the June and July, 2014 pension lists. Roy Cate seconded the motion. Upon roll call the motion passed 5-0. Ron Wood was absent. Approval of the August, September and October, 2014 pension lists: Roy Cate moved to approve the August, September and October, 2014 pension lists. Pete Reagan seconded the motion. Upon roll call the motion passed 5-0. Ron Wood was absent. New Business: Revenue and Expense Report 06/30/14: Sondra Smith: The Revenue and Expense report is a quarterly report that is completed by the Accounting. It's just an informational item. It tells you where your plan is. Turn back funds: Sondra Smith: The turn back money are funds that you receive from the state. We received $578,771.66 that is for the LOPFI plan. The old plan received $182,589.75. The additional allocation that started in 2012, this year was $48,691 which was a little bit more than last year. Then your supplement was $56,563. A copy of those checks are attached. The Pension Review Board (PRB) tells us how to allocate that money, so if you were a regular retiree you received $1,235 in additional funds on your check. If you were a volunteer you received $247 additional funds on your check. Pete Reagan: That's out of the future supplement? Trish Leach: Yes. That money was on your July checks. Sondra Smith: The spreadsheet shows the historical data of how much you've received in the past. Special Firemen's Pension and Relief Fund Board of Trustces Meeting Minutes July 31, 2014 Page 5 of 7 Pete Reagan: So the $182,589.75 and the $48,691, is that kept locally or does that go to Garrison Financial? Trish Leach: The way it works, when it came in we used that money to pay benefits. If there's any leftover it would either go to Garrison or we keep it and the next month and use it for benefits. Kerry and I talk each month and if we've got money in the bank account we just use that instead of getting money from Garrison. Pete Reagan: Kerry said she had $400,000 in cash? Trish Leach: Yes. Pete Reagan: Was this part of the $400,000? Trish Leach: I don't think we sent anything to her. The last two months I told her we are getting money from the state so we are okay. Pension Review Board Evaluating Local Plan Investments Memo: Sondra Smith: We receive that letter every year. The Pension Review Board (PRB) wants you to look at your plan. There's not really much we can do with our plan. A copy of the letter is in your agenda. They want you to make sure you are following state law. It's just for you to look at and make sure you're aware of how you're plan is supposed to be structured. Pete Reagan: Can I back up just a minute? How much went to full paid and how much went to retirees on the supplemental? Sondra Smith: $247 was the volunteers and $1,235 was the plan participants. City Attorney letter regarding Ms. Jenkins: Sondra Smith: We've received numerous correspondence from Ms. Jenkins about if she can marry and if she marries if she'll lose her benefits. Kit Williams: Her benefits are controlled by her QDRO, her Qualified Domestic Relations Order. She has no independent benefits from the pension because she was divorced from Mr. Jenkins. Therefore, she is not entitled to any pension rights from him. However, state law will say that in a divorce the wife is entitled to half of the person's pension rights, as long as the pensioner is alive and drawing benefits half the pension benefits, according to the QDRO if it meets all the QDRO requirements, will go to the wife. She asks whether she would lose those benefits if she gets married. That's an issue that has nothing to do with us, it has to do with how the Qualified Domestic Relations Order was drafted and what it says. I would imagine she won't lose any benefits but she's not my client. The City is my client, you all are my client. She's not my client so I don't feel like it's proper for me to give her legal advice, especially when she had a lawyer that did the divorce for her and did the QDRO. If she has questions about how the Qualified Domestic Relations Order acts then she needs to ask the lawyer Special Firemen's Pension and Relief Fund Board of Trustces Meeting Minutes July 31, 2014 Page 6 of 7 that represented her and drew up the order. That's what I've told her. I've said your pension benefits are totally dependent on two things, whether your ex-husband is still alive and drawing benefits because once he deceases she gets nothing. I had a case where Judge Smith agreed with me that the law was crystal clear and they couldn't get any benefits no matter what their QDRO said because there was no benefits to split once the pensioner was dead. Secondly is how her particular order of support was stated, adopted by the judge, drafted by her attorney and Mr. Jenkins' attorney. That's not for me to say. I've told her that many times, she still wants a different answer. I can't give her a different answer. I have not heard anything since June the 4rh Pete Reagan: I've got two questions for you. Did you try a case in front of Judge Smith? Kit Williams: It was not her case. It was a similar case. It wasn't tried, I filed motions and he granted my motion for summary judgment. We were sued and we responded and we prevailed. It was so clear, he didn't need to have a trial. Pete Reagan: Do you remember when that was? Kit Williams: It was before 2007, that's when I wrote this other letter to her and cited the case. I think it was fairly early in my time as City Attorney. Sondra Smith: Those benefits went to the children. Kit Williams: The children still get theirs up until a certain age. Sondra Smith: They received them as long as they were enrolled in college. Pete Reagan: 18 or four years in college. Sondra Smith: 23 is the age limit. Kit Williams: If a child would be wholly disabled, it might continue. Sondra Smith: The benefits were split between two children until the one child became too old and the second child received the entire amount. We had to receive information and get receipts that showed they were in enrolled college. Pete Reagan: The other question I have is if a judge wrote in a QDRO that a spouse would receive that benefit for the rest of her life, then we would have to go to court because there's not a surviving spouse? Kit Williams: I would just say, we're not paying because the judge was wrong. If they want to sue us to get us to pay then they can go to court. I don't think we have to go to court. The judge did not understand the law, not that that would ever happen. The state statute is going to control and it is crystal clear. My instructions to our Accounting Department would be we can't pay, I don't care what that QDRO says. I don't think we would have to go to court, I feel like it's just too clear. Pete Reagan: I agree and that's why I wanted it in the record. Special Firemen's Pension and Relief Fund Board of Trustces Meeting Minutes July 31, 2014 Page 7 of 7 Sondra Smith: Our office and Kit's office does a lot of research when we have an issue like that to make sure we're following state law. Kit Williams: And when it comes up again I look back and make sure they have not changed the law. They have not changed the law since I tried that case. Election results: Pete Reagan and Roy Cate have been re-elected Informational: 2014 meeting schedule. A copy was included in the packet. Adiourn Time: 3:30 p.m.