General Employees Retirement Board

OFFICIAL MINUTES OF REGULAR MEETING OF THE STERLING HEIGHTS GENERAL EMPLOYEE’S RETIREMENT SYSTEM Thursday, February 16, 2012 ___________________________________________________________________ __ _ __ _ Location: Room #201 40555 Utica Road, Sterling Heights, MI 48313 (586) 446-2331 Chairperson Weiler called the meeting to order at 1:30 p.m. BOARD MEMBERS PRESENT: Richard Weiler, Chairperson Brian Baker, Secretary Jennifer Varney, Treasurer Paul Henig, Trustee Todd Marsh, Trustee BOARD MEMBERS ABSENT: None. ALSO PRESENT: Walt Hessell, Pension Administrator; Thomas Michaud, Legal Counsel, VanOverbeke, Michaud & Timmony, P.C.; Mark Buis, FSA, EA, MAAA and Francois Pieterse, ASA, MAAA, Gabriel Roeder Smith & Company APPROVAL OF AGENDA: Motion by Baker, supported by Henig, to approve the agenda as presented. Ayes: All. Motion carried unanimously. APPROVAL OF MINUTES: Motion by Henig, supported by Marsh, to approve the minutes of the regular meeting held January 19, 2012. Ayes: All. Motion carried unanimously. COMMUNICATION FROM CITIZENS: None PRESENTATION OF 2011 ACTUARIAL REPORT BY GABRIEL ROEDER SMITH & CO Buis and Pieterse presented the December 31, 2011 (42nd Annual) actuarial valuation for the retirement system to the Board and reviewed the funding status of the closed plan. Mr. Pieterse stated that the revisions to the actuarial assumptions from the 2011 experience study had been incorporated into the valuation. Modifications were also included for the anticipated changes in the employee contribution percentage that is specific to each bargaining unit. Once again, due to the scheduled recognition of a portion of the 2008 market losses and the lackluster 2011 calendar year investment market returns, the actuarial experience was less favorable than the assumed. For the second consecutive year, the actuarial accrued liabilities exceeded the funding value of the assets. Buis suggested that the smoothing of the 2008 loss could be revisited in an attempt to lessen the volatility that is occurring in the required contributions. Hessell commented that a decision to do so would make most sense late in calendar year 2012 when any such revision could be viewed for appropriateness after evaluating the 2012 anticipated investment returns at that time. Pieterse reported that the City required contribution for fiscal 2012/2013 would be $1,790,556 under the entry-age normal cost valuation method. The unfunded actuarial liability was amortized over a declining period of 18 years and has been included in the City required contribution noted above. Buis pointed out that the year over year dollar increase for the City required contribution for fiscal 2013/2014 would approximate $800,000 provided that the net investment return of 8% is achieved in calendar year 2012. Hessell inquired about the required revision to the actuarial software that is used to produce both pension estimates and final calculations. Since the revised actuarial assumptions now include an updated mortality table for purposes of the annual valuation, consistency requires that the individual actuarial calculations follow the same. Buis stated that there internal software designer would follow up on the matter and that the target date for having the new software operational would be January 1, 2013. The Board thanked Mr. Buis and Mr. Pieterse for their report and efforts on behalf of the system, after which they departed the meeting. Motion by Baker, support by Varney to receive and file the 2011 actuarial valuation, approve the transfer of $11,506,060 to the Reserve for Retiree Benefit Payments from the Reserve for Employer Contributions and the funding of the City Dollar Contribution in the amount of $1,790,556 net of employee contributions. Ayes: All. Motion carried unanimously. REPORT FROM LEGAL COUNSEL: No formal report. Michaud commented on issues as they appeared on the agenda. CONSENT AGENDA: Motion by Baker, supported by Varney, to receive and file consent items I A through I D-10 and approve invoices under I E. 1, 2 and 3. Ayes: All. Motion carried unanimously. I. RECEIVE AND FILE: A. Benefit register listing for February 1, 2012 from Comerica Bank showing 302 active retirees with a payout for January 2012 of $672,214.16 and a year-to-date payout of $1,340,171.45. B. Cash and Asset Statements as of December 31, 2011 from Comerica Bank and Merrill Lynch showing a total market value of $102,133,015.33 comprised as follows: Desired Actual Bank/Money Market Value Allocation Percentage Manager 0% 0.70% Comerica Bank $ 747,158.33 16% 15.38% PIMCO 16,374,350.39 16% 15.53% McDonnell 16,534,371.87 15% 13.50% Earnest Partners 14,378,048.29 8% 7.98% M. D. Sass 8,493,667.92 8% 7.98% MFS 8,496,501.92 5.33% 5.77% Victory 6,141,517.24 5.33% 5.96% Winslow 6,351,533.17 5.33% 5.78% Janus Capital 6,150,949.23 8.5% 8.33% Thornburg 8,872,943.24 8.5% 8.41% Allianz - NFJ 8,958,962.30 Cohen & Steers – 4% 4.69% 4,991,556.99 REIT C. Securities Lending Income Summary showing $881.84 collected fiscal year-to-date as compared to $1,089.30 last fiscal year-to-date. D. Correspondence 1. Email correspondence and letter sent to Merrill Lynch dated January 18, 2012 regarding GERS portfolio rebalancing. 2. Email correspondence and letter sent to Merrill Lynch dated January 19, 2012 regarding the transfer of funds for the payment of benefits. 3. Email correspondence and authorization letter sent to Comerica Bank dated January 19, 2012 regarding the payment of money manager fees. 4. Email correspondence and authorization letters sent to Merrill Lynch dated January 19, 2012 regarding the payment of money manager fees. 5. Wire transfer confirmations received from Merrill Lynch dated January 23, 2012. 6. Class Action Settlements Claims Due March 2012. 7. Letter received from Gabriel Roeder Smith & Company dated February 3, 2012 regarding rate for member purchase of prior municipal service credit. 8. Notice of Pendency of Class Action – Medco / Express Scripts Merger Litigation. 9. “The Institutional Real Estate Letter” dated February 2012. 10. “Pension & Investments” magazines dated January 23 & February 6, 2012. E. Approve Invoices for Payment 1. Payable from System Assets for the quarterly service period ending March 31, 2012 Quarterly management fees from Merrill Lynch Consults – PIMCO in the amount of $17,943.05; from Merrill Lynch Consults – MFS in the amount of $15,269.44; from Merrill Lynch Consults – Earnest in the amount of $28,160.57 and from Merrill Lynch Consults – Janus in the amount of $9,759.58. 2. Payable from System Assets for the quarterly service period ending December 31, 2011 Quarterly management fees from McDonnell Investment in the amount of $8,104.31. 3. Payable from City Assets for the quarterly service period ending December 31, 2011 Custodial banking services from Comerica Bank in the amount of $4,117.41. Quarterly investment consultant fees from Merrill Lynch Consulting Services in the amount of $9,583.33. REGULAR AGENDA: II. OLD BUSINESS: A. Retirement Information for Judy Hottle, Administrative Assistant, Department of Public Works Motion by Marsh, supported by Henig, to approve the service retirement of Judy Hottle, Administrative Assistant, Department of Public Works, effective January 28, 2012 with service credit of 23 years, ten months and the monthly pension amount of $2,230.46 under option A 100% with annuity withdrawal, based upon a monthly final average compensation of $4,891.86. Ayes: All. Motion carried unanimously. III. NEW BUSINESS: A. Prior Municipal Time Buyback for Jan Mueller, Recreation Supervisor, Parks and Recreation Motion by Henig, supported by Varney, to approve the purchase of six months prior municipal time service credit buyback as provided for in Article 33 – Paragraph J of the UAW Professional and Technical Employees collective bargaining agreement, pursuant to the transfer of $4,327.46 from the member’s Section 457 Deferred Compensation Account. Ayes: All. Motion carried unanimously. B. Application for Service Retirement for Jan Mueller, Recreation Supervisor, Parks and Recreation Motion by Henig, supported by Marsh, to receive and file the application for service retirement for Jan Mueller, Recreation Supervisor, Parks and Recreation. Ayes: All. Motion carried unanimously. C. Comerica Bank Deceased Retirees Un-recovered Basis Report Motion by Henig, support by Weiler, to receive and file the Comerica Bank Deceased Retirees Un-recovered Basis Report. Ayes: All. Motion carried unanimously. D. Application for Service Retirement for Cari Blessed, Deputy Court Clerk, 41-A District Court Motion by Baker, supported by Varney, to receive and file the application for service retirement for Cari Blessed, Deputy Court Clerk, 41-A District Court. Ayes: All. Motion carried unanimously. E. Processing of Pop-Up Election for Ed Sterling Motion by Henig, supported by Marsh, to approve the processing of the pop-up election for retiree Ed Sterling, effective October 9, 2011 (spouse/beneficiary date of death) with a revised monthly benefit of $1,127.68. F. Application for Service Retirement, Don Mende, City Development Director / City Planner Motion by Varney, supported by Baker, to receive and file the application for service retirement, Don Mende, City Development Director City Planner. Ayes: All. Motion carried unanimously. G. Pension Administration Comments: None. . H. Trustee Comments: None. ADJOURN: Motion by Baker, supported by Weiler, to adjourn the meeting at 2:25 p.m. Ayes: All. Motion carried unanimously. Respectfully Submitted, ___________________________________ Brian Baker, Secretary