Volunteer Firefighter Relief Fund Committee

To: Members of the Volunteer Firefighter Relief Fund Committee From: Thomas Quinley, Chairman of the Volunteer Firefighters’ Relief Fund Subject: Regular Meeting #144 Meeting Date: Tuesday, November 19, 2019 Meeting Time: 5:00 p.m. Meeting Location: Room 213, City Hall Agenda Items: 1. Call to order 2. Roll call 3. Determination of quorum 4. Reports a. Review of September 30, 2019 investment results by Art Meizner from Hooker & Holcombe Investment Advisors (to be distributed) b. Treasurer’s report for the quarter ended September 30, 2019 (attached) 5. Approval of minutes of preceding meeting a. Review of minutes from the Regular Meeting on August 19, 2019 (available on the website) 6. Communications a. Charles Schwab Bank transferring its directed trust and custody business to its affiliate Charles Schwab Trust Bank effective January 1, 2020. 7. Unfinished business 8. New business a. Consideration of recommendations by Art Meizner for changes in investment policy statement, investment portfolio, if any. b. Approval of bills i. Consideration of investment fee audit services. c. New members i. None at this time d. New applications for benefits i. None at this time e. Refunds i. EGP: Beth McDowell – 7 years of credited service (2011-2017). Refund of $1,704 contributions plus $ 240.64 interest paid on August 29, 2019. ii. Occum: Jeffrey Desrosier – 2 years of credited service (2008-2009). Refund of $360 contributions plus $127.74 interest paid on November 7, 2019. f. Notification of Death i. None at this time g. Election of officers for 2020. h. Schedule of Regular Meetings for 2020. All meetings will take place at 5:00 p.m. in Room 213 of City Hall i. Tuesday, February 18, 2020 ii. Monday, May 18, 2020 iii. Monday, August 17, 2020 iv. Monday, November 16, 2020 i. Overview of January 1, 2020 actuarial valuation and discussion and consideration of possible changes in assumptions and cost estimates of plan changes. j. Discussion of Public Act No. 19-36 – “An act increasing the property tax abatement for certain first responders.”  9. Adjournment Please notify Thomas Quinley (rehsq@snet.net) or Brigid Marks (bmarks@cityofnorwich.org) if you are unable to attend the meeting. Next scheduled regular meetings: • To be determined Next participants vested to receive benefits: • Yantic: Robert Ladd – July 2023 • Yantic: Gregory Stott – July 2023 • Taftville: Eric Benoit – November 2023 • EGP: Patrick Daley – November 2023 • EGP: William Guile – November 2023 City of Norwich Volunteer Firefighters' Relief Fund Treasurer's Report For The Quarter Ended 9/30/2019 X:\Finance\Finance Public\Accounting\Audit & Fiscal YE files\YE 2020\G. Investments\[G-3 2020 VFFRF cash & investments.xlsx]1Q Hooker & Checking Holcombe Total Beginning Balance 2,416.24 3,003,601.06 3,006,017.30 Receipts: Annual City Appropriation 182,734.50 - 182,734.50 East Great Plain - - - Laurel Hill - - - Occum - - - Taftville - - - Yantic - - - Interest Income 522.18 106.97 629.15 Realized Gains/(Losses) - (3,646.57) (3,646.57) Unrealized Gains/(Losses) - 11,552.78 11,552.78 Dividends - 14,297.51 14,297.51 - Total Receipts 183,256.68 22,310.69 205,567.37 Transfers Between Accounts (4,000.00) 4,000.00 - Disbursements: Pension Payroll 84,378.66 - 84,378.66 Actuary Fees - - - Investment Management - - - Investment Consultant - 3,754.50 3,754.50 Investment Custodian - 493.03 493.03 Postage 1.90 - 1.90 Supplies - - - Refunds 2,754.26 - 2,754.26 Total Disbursements 87,134.82 4,247.53 91,382.35 Ending Balance 94,538.10 3,025,664.22 3,120,202.32 Refunds were for Scott Stanley and Beth McDowell  CHARLES SCHWAB BANK RETIREMENT BUSINESS SERVICES· 02-2F212 2423 E LINCOLN DR PHOENIXAZ 85016-9692 001691 ***********AUTO**MIXED ADC 640 CITY OF NORWICH ATTN: RICHARD BENOIT 100 BROADWAY NORWICH CT 06360-4431 September 23, 2019 lllllllllllnll•lulll••lll h11111•11111·1111•1111111•1•1•1111•11 lllllllllllllllllll ~l l l l l l *91100* 001691  Re: A change to the Trustee/Custodian for CITY OF NORWICH VOLUNTEER FF RELIEF 204608 ("Plan") Charles Schwab Bank ("Schwab Bank") currently serves as the trustee or custodian for your Plan . As previously communicated to you, Schwab Bank's Board of Directors will transfer its directed trust and custody business to its affiliate Charles Schwab Trust Bank ("Trust Bank") effective January 1, 2020. You will receive a 408(b)(2) Fee Disclosure notice in a follow-up mailing reflecting the change in covered service provider to your Plan. Schwab Bank Savings and Schwab Bank Sweep for Employee Benefit Plans If your Plan currently utilizes Schwab Bank Savings as a capital preservation feature, your Plan's deposit at Schwab Bank will be closed and a similar deposit at Trust Bank will be established effective on the date of the Plan's transfer to Trust Bank as trustee or custodian. Your signature below will constitute your direction to close Schwab Bank Savings at Schwab Bank and to establish a money market deposit account ("Schwab Bank Savings") at Trust Bank which has the same features and attributes as Schwab Bank Savings at Schwab Bank. Further, by your signature below, you instruct Trust Bank, effective January 1, 2020 or as soon as practicable thereafter, to establish a Schwab Bank Savings account for your Plan with Trust Bank as the depository institution. Further, you hereby acknowledge receipt of and agreement to the current terms and conditions governing Schwab Bank Savings, the disclosures containing information on Schwab Bank Savings, the manner in which interest rates on Schwab Bank Savings accounts will be determined, and terms governing the frequency of interest rate changes. If Schwab Bank Savings was added as a feature to your Plan prior to January 1, 2017, we have enclosed an amendment (the "Amendment") to the trust or custody agreement for your Plan's assets. If your Plan currently utilizes Schwab Bank Sweep for Employee Benefit Plans as an automatic feature for the short term investment of your Plan's cash, your Plan's account will retain Schwab Bank Sweep for Employee Benefit Plans as an automatic sweep feature at Trust Bank effective January 1, 2020. Trust Bank intends to pay interest on Schwab Bank Sweep for Employee Benefit Plans at a rate that is reasonable for purposes of applicable legal and regulatory requirements. The interest rate and annual percentage yield (APY) may change at any time at Trust Bank's discretion. Attached please find a copy of the Charles Schwab Trust Bank Disclosure Statement for Charles Schwab Trust Bank Sweep Program for Trust and Custody Accounts . If you have any questions, please contact your Plan's third-party administrator, recordkeeper, or advisor. Your next steps Trust Bank shall have all of the rights, responsibilities and obligations of Schwab Bank effective January 1, 2020 in accordance with the trust or custody agreement between you and Schwab Bank. If your Plan currently utilizes Schwab Bank Savings as a capital preservation feature, please sign below to provide your acknowledgment of and agreement to the instruction to establish Schwab Bank Savings at Trust *'U.i:!DD* DD1b91 Jb 734D  Bank effective January 1, 2020 or as soon as practicable thereafter, and return this in the envelope provided. Further, if your Plan added Schwab Bank Savings as a feature prior to January 1, 2017, your signature below constitutes your acknowledgment of and agreement to the amendment described above. Please keep a copy of this letter, the attached Amendment, the Schwab Bank Savings Terms and Conditions and other disclosures. If we do not receive your written instruction or otherwise hear from you by November 30, 2019, we will consider this your authorization and instruction to amend your Plan's trust or custody agreement, if applicable, and execute your directions and instructions as described above. In such case, you will be deemed to have accepted the terms of this letter, the terms of the Amendment if applicable, and Schwab Bank Savings terms and conditions, and to have instructed Schwab Bank and Trust Bank accordingly. For more information If you have any questions or concerns, please contact your service team member at your Plan's recordkeeper directly. Sincerely, Charles Schwab Bank Acknowledged and Agreed to: CITY OF NORWICH VOLUNTEER FF RELIEF 204608 Plan Name Signature Date Namemtre (Print) Trust, custody, deposit, and lending products and services are provided by Charles Schwab Bank and Charles Schwab Trust Bank, members of FDIC and separate but affiliated companies and subsidiaries of The Charles Schwab Corporation Q 2019 Charles Schwab Bank. Member FDIC. Equal Housing Lender. (0519-9GYM) 111111111111 ~1 1 1 1 1 1 1 1 1 1 1 *91310* DD1691 Jb734D  TRUST BANK AMENDMENT TO THE DIRECTED EMPLOYEE BENEFIT TRUST AGREEMENT DIRECTED EMPLOYEE BENEFIT CUSTODY AGREEMENT THIS AMENDMENT is made by and between the company identified on the Execution Page (the "Company'') and Charles Schwab Trust Bank (Trust Bank), effective as of January 1, 2020. WITNESSETH: WHEREAS, the Company and Trust Bank, as successor to Charles Schwab Bank, heretofore entered into a Directed Employee Benefit Trust Agreement or Directed Employee Benefit Custody Agreement (the "Agreement'') relating to a qualified employee benefit plan established by the Company identified on the Execution Page (the "Plan"); and WHEREAS, the Company and Trust Bank now find it desirable to amend the Agreement to facilitate the transfer of the Plan's Schwab Bank Savings deposit held by the Plan from Charles Schwab Bank to Charles Schwab Trust Bank effective January 1, 2020 or as soon as practicable thereafter. NOW THEREFORE, in consideration of the above premises, the Company and ~ Trust Bank hereby amend the Agreement in the following respects: • 1. ALL sections of the Agreement addressing Schwab Bank Savings are hereby amended in their entirety as follows: "The banking department of Trust Bank offers access to a money market deposit product described in 12 C.F.R. Section 204.2(d)(2) (referred to as "Schwab Bank Savings"). To the extent the Administrator or another authorized fiduciary, including an Investment Manager, desires to add Schwab Bank Savings as an option under the Plan, the Administrator or such other authorized fiduciary will instruct Trust Bank to establish a deposit account with the banking department of Charles Schwab Trust Bank to provide access to Schwab Bank Savings. In such event, the Administrator or other authorized fiduciary, shall instruct Trust Bank to establish a Schwab Bank Savings account for the Plan with Charles Schwab Trust Bank as the depository institution. If Schwab Bank Savings is added as an investment option under the Plan, the Administrator or other authorized fiduciary shall through its written instruction to Trust Bank acknowledge receipt of and agreement to the current terms and conditions governing Schwab Bank Savings, the disclosures containing 0 2020 Charles Schwab Trust Bank. Member FDIC. (091 9-9EGF) Page 1 of2 00236868  TRUST BANK information on Schwab Bank Savings, the manner in which interest rates on Schwab Bank Savings accounts will be determined, and terms governing the frequency of interest rate changes. The Administrator or other authorized fiduciary will independently determine that the interest rates offered under Schwab Bank Savings and Charles Schwab Trust Bank's interest rate determination and modification process is, in all respects, reasonable. The Administrator or other authorized fiduciary has the sole responsibility to determine that such interest rates are reasonable and also has the responsibility to determine that the use of Schwab Bank Savings is both prudent and proper in the context of its overall responsibility to establish investment options under the Plan. The Administrator or other authorized fiduciary has the sole responsibility to monitor the reasonableness of interest rates payable on Schwab Bank Savings, including all prospective interest rate changes. The Administrator or other authorized fiduciary shall notify Trust Bank if it determines that such rates are no longer reasonable." In aU other respects, the Agreement is unchanged and shall continue in full force and effect. Trust, custody, and deposit products and services are provided by Charles Schwab Trust Bank, member of FDIC and a separate but affiliated company and subsidiary of The Charles Schwab Corporation. C 2020 Charles Schwab Trust Bank. Member FDIC. (0919-9EQF) Page2 of2  80 Lamberton Road Windsor, CT 06095 USA Main +1 860 687 2110 Fax +1 860 687 2111 milliman.com October 9, 2019 PERSONAL & CONFIDENTIAL Mr. Joshua Pothier Comptroller City of Norwich 100 Broadway Norwich, CT 06360 Re: City of Norwich Volunteer Firefighters’ Pension Plan Proposed Increase in Benefit and Employee Contribution Rate Dear Josh: You asked us to evaluate the impact of increasing the benefit and employee contribution rate from the current rate of $22 per month to either $25 per month or $27 per month. You also asked if the Plan is near the IRS limits for length of service award programs. Impact of Proposed Benefit Increases When increasing the benefit rate, the City has two options: (1) increase the benefit rate for future accruals only (i.e. the benefit for all past years would remain at the $22 level) or (2) increase the benefit rate for both past and future years of service. Under either option, the cost of the higher benefit accruals would be partially offset by the increase in the employee contribution rate. However, under the second option, the increased past service cost would be entirely borne by the City. The following table summarizes the impact of the proposed changes under each option: Baseline $25 $27 current future future benefit years years $25 $27 level only only all years all years Benefit / Employee Contrib. - Past Years $22 $22 $22 $25 $27 - Future Years $22 $25 $27 $25 $27 Liability for Active Members* 1,745,000 1,745,000 1,745,000 1,984,000 2,144,000 Net Normal Cost 49,000 55,000 59,000 55,000 59,000 Change in Actuarially ------ 7,000 12,000 31,000 51,000 Determined Contribution * Note that if the liability for active members increases, the funded ratio will go down. Mr. Joshua Pothier October 9, 2019 Page 2 IRS Limits You emailed me an article which Tim Ryor had sent to you on December 5, 2014. The article discussed the IRS limits that are imposed on Length of Service Award Programs (LOSAPs) in order for them to be eligible for favorable tax treatment. The article describes this limit as “The aggregate amount of service awards accruing with the respect to any year of service credit earned by a volunteer in a LOSAP must not exceed $3,000.” Recasting this in familiar actuarial terms, this says that the net normal cost for an active member (that is, the present value of benefits accruing each year less the employee contributions) cannot be greater than $3,000. Since the time that article was published, the applicable section of the Internal Revenue Code [IRC 457(e)(11)] was amended to increase the annual limit on benefit accruals for LOSAPs from $3,000 to $6,000 and to further have this dollar amount increase over time with cost of living adjustments. To confirm that the Norwich Volunteer Firefighters plan is in compliance with the IRS limit, we determined the net normal cost for each active member at the current $22 benefit level as well as at the proposed $25 and $27 levels. As the graph below illustrates, the plan falls comfortably below both the old $3,000 limit and the new $6,000 limit: Mr. Joshua Pothier October 9, 2019 Page 3 Caveats Our calculations are based on the census data and actuarial methods and assumptions that were used in the January 1, 2018 valuation prepared by Hooker & Holcombe and on our understanding of the plan provisions and the related sections of the tax code. The figures presented above were determined based on our replication of Hooker & Holcombe’s valuation, which does not exactly match the figures in their valuation report. We make no representation as to the appropriateness of their assumptions. It is certain that actual experience will not conform exactly to the assumptions used in this analysis. To the extent future experience deviates from those assumptions, the results of this analysis could vary from the results presented here. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions, changes in economic or demographic assumptions, increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan’s funded status), and changes in plan provisions or applicable law. Due to the limited scope of our assignment, we did not perform an analysis of the potential range of such future measurements. We performed a limited review of the data used directly in our analysis for reasonableness and consistency and have not found material defects in the data. If there are material defects in the data, it is possible that they would be uncovered by a detailed, systematic review and comparison of the data to search for data values that are questionable or for relationships that are materially inconsistent. Such a review was beyond the scope of our assignment. If the underlying data or information is inaccurate or incomplete, the results of our analysis may likewise be inaccurate or incomplete and our calculations may need to be revised. Milliman’s work is prepared solely for the internal business use of the City of Norwich. To the extent that Milliman’s work is not subject to disclosure under applicable public records laws, Milliman’s work may not be provided to third parties without Milliman's prior written consent. Milliman does not intend to benefit or create a legal duty to any third party recipient of its work product, and Milliman may include a legend on its reports so stating. Milliman’s consent to release its work product to any third party may be conditioned on the third party signing a Release, subject to the following exceptions: (a) the City may provide a copy of Milliman’s work, in its entirety, to the City’s professional service advisors who are subject to a duty of confidentiality and who agree to not use Milliman’s work for any purpose other than to benefit the City; and (b) the City may provide a copy of Milliman’s work, in its entirety, to other governmental entities, as required by law. No third party recipient of Milliman’s work product should rely upon the City’s work product. Such recipients should engage qualified professionals for advice appropriate to their own specific needs. We have not explored any legal issues with respect to the proposed plan changes. We are not attorneys and cannot give legal advice on such issues. The consultants who worked on this assignment are pension actuaries. Milliman's advice is not intended to be a substitute for qualified legal or accounting counsel. Mr. Joshua Pothier October 9, 2019 Page 4 The signing actuary is independent of the plan sponsor. I am not aware of any relationship that would impair the objectivity of my work. I am a member of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. Sincerely, Rebecca A. Sielman, FSA Consulting Actuary RAS 47 NWF100919BenefitIncreaseLetter.docx  Substitute House Bill No. 5125 Public Act No. 19-36 AN ACT INCREASING THE PROPERTY TAX ABATEMENT FOR CERTAIN FIRST RESPONDERS. Be it enacted by the Senate and House of Representatives in General Assembly convened: Section 1. Section 12-81w of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2019): The legislative body of any municipality may establish, by ordinance, a program to provide property tax relief for a nonsalaried local emergency management director, any individual who volunteers his or her services as a firefighter, fire police officer, as defined in subsection (a) of section 7-308, emergency medical technician, paramedic, civil preparedness staff, active member of a volunteer canine search and rescue team, as defined in section 5-249, active member of a volunteer underwater search and rescue team, or ambulance driver in the municipality, or any individual who is a retired volunteer firefighter, fire police officer or emergency medical technician and has completed at least twenty-five years of service as a volunteer firefighter, fire police officer or emergency medical technician in the municipality. Such tax relief may provide either (1) (A) for the period commencing July 1, 2019, and ending June 30, 2021, an abatement of up to one thousand five hundred dollars in property taxes due for any fiscal year, and (B) on and after July 1, 2021, an  Substitute House Bill No. 5125 abatement of up to two thousand dollars in property taxes due for any fiscal year, or (2) an exemption applicable to the assessed value of real or personal property up to an amount equal to the quotient of one million dollars divided by the mill rate, in effect at the time of assessment, expressed as a whole number of dollars per one thousand dollars of assessed value. Any ordinance may authorize interlocal agreements for the purpose of providing property tax relief to such volunteers who live in one municipality but volunteer or volunteered their services in another municipality. Approved June 28, 2019 Public Act No. 19-36 2 of 2