Retirement Board

CITY OF MIDDLETOWN MINUTES OF THE RETIREMENT BOARD Tuesday, February 18, 2020 at 9:00 am The Regular Meeting of the Retirement Board of the City of Middletown was held in room 208 of the Municipal Building Board Members Present: Steve Gomes, Carl Erlacher, John Milardo, Sandy Pasculano, Vinny Loffredo, Mayor Florsheim Board Members Absent: Linda Salafia, Joe Serra City Employees/Public/Others Present: Diana Doyle. Gerry Goldberg (GYL), Michael Lepore (GYL), Michael Agogliati (Local 1073), Michael Carta (Local 1073), David Ribnicky (Local 1073), Kevin Starbird (Local 1073); Linda Reed (UPSEU)  Meeting Called to Order at approximately 9:00 am  Public Comments on the Agenda o Kevin Starbird (Local 1073) thanked the Board for their responsibility as fiduciaries of Pension Plan; asked for clarification of comments made at November 2019 meeting regarding Fire being removed from Pension System o Councilman Loffredo explained the context of the comments and agreed to meet with Local 1073 Representatives to further discuss  Approval of November 25, 2019 Minutes  Sandy motioned to approve and was seconded by John  All in favor  GYL Review o The Pension Fund value at the end of the 4th quarter was $456,174,522; the return for 2019 was 22.5%, outperforming the benchmark; individual investments showed double digit returns in 2019 o Michael reviewed the performance; noted that Invesco Oppenheimer Developing Markets was top performer of 4th quarter and a top performer of 2019; strength came from the manager avoiding commodity-centric investments (that can be volatile); investment driven by consumer economic activity – focusing on consumer goods and financial & healthcare systems (wealthier population in emerging economies has demand for goods & services) o Noted REITS performance was above benchmark with 31.5% return for 2019; reminded Board that active strategy, rather than index in real estate space, was implemented to avoid underperforming real estate investments o Fixed Income return for 2019 was above benchmark; stated the importance of taking a long-term view with Fixed Income, due to the difficulty of predicting interest rates in the short-term o GYL advised a $10mm rebalance, taking (some) gains from Large Cap Domestic Equity & REIT exposure, investing into Fixed Income, restoring the 35.5% target o Discussion regarding the amount of the recommended rebalance; Gerry explained that the Fund is not quite at a 5% rebuttable presumption to require full rebalance; $10mm rebalance follows historically conservative orientation of Fund investment strategy  John motioned to rebalance $10mm, as recommended by GYL, and was seconded by Steve  All in favor o Discussion regarding the Library’s pension rights; question of why Library is not factored out like General Government, Police, and Fire; Carl stated that if a contribution is needed for the General Government, their inclusion (for the Library) would be reviewed o The OPEB Trust value at the end of the 4th quarter was $17,480,257; the return for 2019 was 20.75% o Michael reminded Board that Transamerica (value-oriented) is currently on watch list; performance has improved and is reviewed by GYL regularly; concluded that the strategy is currently out-of-favor where the market is; because of this, it’s complemented with Lazard (growth-oriented) and Index funds o Board was advised that Fixed Income separate account strategies (used in Pension Fund) not available because of small investment; mutual funds utilized in place of fixed income; Mainstay High Yield Bond (junk bond index) meeting expectations; manager on conservative side of lower quality bond portfolio; risk-return continuum performance is consistent with expectations; JP Morgan Core Plus Bond (investment grade high yield bonds) meeting expectations o GYL does not recommend a rebalance of OPEB Trust o Discussion regarding the annual contribution to OPEB; currently “pay-as-you-go”; reflected in Health Benefits budget o Michael distributed Risk Profile Questionnaire; GYL will use as tool for annual Asset Allocation Study; study to be updated by end of year   Reports: (informational) o Actuarial Valuation Report o Treasurer’s Report o Pension Management Fee Report  Carl discussed Actuary Report; noted that a new mortality table is used in Actuary Assumptions  Applications for Membership Start Date Department/Union Ben Florsheim 11/12/19 Mayor Michelle Hansen 11/4/19 Health/466 Sarah Hillman 10/10/20 Police/Police Nicholas Northcutt 2/3/20 Fire/Fire Barbara K. Peterson 11/12/19 Mayor’s Office/Non-barg Daniel T Pitsurenko 12/16/19 Water & Sewer/466 Stephen Randolph 12/16/19 Library/Library Jakub T Rzepecki 2/3/20 Fire/Fire O’Brian Devaun Sinclair 11/15/19 Police/Police Theresa Spalletta 1/6/20 Water & Sewer/UPSEU Philip Thomas 11/1/19 Police/Police Catherine Peters Tsahalis 2/10/20 Library/Library Shannon L Wild 12/30/19 Library/Library Paige Wade-Willoughby 11/15/19 Police/Police Ayanna Michelle Wright 11/4/19 Library/Library  Requests to Retire/Collect/Vest Yrs of Svc Department/Union Gregory Borent 26 yrs Fire/Fire Christine Bourne 22 yrs BOE/466 Mark Tine 28 yrs Fire/Fire  Refund/Rollover of Contribution Naveen Macherla Sara Mendillo  Deceased Pensioners Angela DiMauro (surviving spouse) Carmelina DiMauro (surviving spouse) Jane Pillarella Kathleen Tarpey Myron Thompson (surviving spouse)  Adjournment of Meeting  John motioned to adjourn and was seconded by Carl  All in favor Respectfully submitted: Carl Erlacher