General Employees Retirement Board

UNOFFICIAL MINUTES OF REGULAR MEETING OF THE STERLING HEIGHTS GENERAL EMPLOYEE’S RETIREMENT SYSTEM Thursday, November 15, 2012 Location: Room #201 40555 Utica Road, Sterling Heights, MI 48313 (586) 446-2331 Chairperson Weiler called the meeting to order at 11:40 a.m. BOARD MEMBERS PRESENT: Richard Weiler, Chairperson Brian Baker, Secretary Jennifer Varney, Treasurer Paul Henig, Trustee BOARD MEMBERS ABSENT: Todd Marsh, Trustee (excused) ALSO PRESENT: Walt Hessell, Pension Administrator; Thomas Michaud, Legal Counsel, VanOverbeke, Michaud & Timmony, P.C. APPROVAL OF AGENDA: Motion by Baker, supported by Weiler, to approve the agenda as amended for the addition of money manager fees for payment under Consent Agenda Item I. E. 1, 2 and 3. Ayes: All. Motion carried unanimously. APPROVAL OF MINUTES: Motion by Varney, supported by Henig, to approve the minutes of the regular meeting held October 18, 2012. Ayes: All. Motion carried unanimously. COMMUNICATION FROM CITIZENS: None REPORT FROM LEGAL COUNSEL: No formal report. Michaud commented on issues as they appeared on the agenda. CONSENT AGENDA: Motion by Baker, supported by Henig, to receive and file consent items I A through I E-3. Ayes: All. Motion carried unanimously. I. RECEIVE AND FILE: A. Benefit register listing for November 1, 2012 from Comerica Bank showing 369 active retirees with a payout for October 2012 of $774,164.26 and a year-to-date payout of $9,485,191.22. B. Cash and Asset Statements as of October 31, 2012 from Comerica Bank and Merrill Lynch showing a total market value of $105,894,974.21 comprised as follows: Desired Actual Bank/Money Market Value Allocation Percentage Manager 0% 0.80% Comerica Bank $847,458.69 16% 16.16% PIMCO 17,110,808.63 16% 15.43% McDonnell 16,341,127.32 15% 13.04% Earnest Partners 13,805,377.65 8% 7.40% Herndon Capital 7,839,171.72 8% 7.39% MFS 7,825,103.33 5.33% 5.99% Victory 6,339,445.05 5.33% 6.20% Winslow 6,567,342.61 5.33% 6.46% Janus Capital 6,837,304.28 8.5% 8.67% Thornburg 9,185,695.36 8.5% 8.55% Allianz - NFJ 9,053,708.94 Cohen & Steers – 4% 3.91% 4,142,430.63 REIT C. Securities Lending Income Summary showing $72.39 collected fiscal year-to-date as compared to $653.56 last fiscal year-to-date. D. Correspondence 1. Portfolio Monitoring Report quarter ended June 30, 2012. 2. Email correspondence and letter sent to Merrill Lynch and Comerica Bank dated October 18, 2012 regarding the transfer of funds for the payment of benefits. 3. Email correspondence sent to Merrill Lynch dated October 18, 2012 regarding the authorization of payment of money manager fees.  4. Merrill Lynch Form ADV Part 2B, brochure supplement dated October 22, 2012. 5. Email correspondence and letter sent to Comerica Bank dated October 22, 2012 authorizing the payment of money manager fee. 6. Interoffice memo dated October 23, 2012 analyzing Comerica Bank custodian fees. 7. Letter received from Comerica Bank dated October 24, 2012 verifying list of authorized signers. 8. Wire transfer notification received from Merrill Lynch dated October 26, 2012 confirming the transfer of funds for the payment of benefits. 9. Email correspondence sent to Community Relations dated October 30, 2012 regarding tentative GERS meeting dates for calendar year 2013. 10. Class Action Settlements Claims Due December 2012 dated October 31, 2012. 11. Email correspondence and interoffice memorandum dated November 5, 2012 regarding Ted Fell (GERS Active) request for clarification in regard to prior purchase of military service time and impact of change in pension multipliers. 12. Notice of Pendency of Class Action – Nationwide Health Properties, Inc Shareholder Litigation. 13. "Employee Benefit News" magazine dated October 2012. 14. "Pension & Investments" magazines dated October 15 & 29, 2012. 15. "The Institutional Real Estate Letter" dated November 2012. E. Approve Invoices for Payment 1. Payable from City Assets for the service period ending September 30, 2012:  Quarterly investment consultant fees from Merrill Lynch in the amount of $8,208.33; custodian banking service fees from Comerica Bank in the amount of $4,142.63 and legal service fees from VanOverbeke, Michaud & Timmony, P.C. in the amount of $4,467.37 2. Payable from System Assets for the service period ending September 30, 2012 Quarterly management fees from McDonnell Investment in the amount of $8,050.35 3. Payable from System Assets for the quarterly service period ending December 31, 2012: Quarterly management fees from Merrill Lynch Consults – Herndon in the amount of $15,049.00 REGULAR AGENDA: II. OLD BUSINESS: A. Policy Resolution 12-02 Regarding HEART Act – Internal Revenue Code Compliance Michaud discussed the compliance issue required with the HEART Act and recommended that the Board adopt the following resolution: RESOLUTION 12-02 Adopted: November 15, 2012 RE: Adoption of HEART Act – Internal Revenue Code Compliance WHEREAS, the Board of Trustees is vested with the fiduciary responsibility for the administration, management and operation of the Retirement System and had the authority to make rules and regulations necessary for the proper conduct of the Plan, and WHEREAS, the Retirement System is a governmental pension plan as defined in Internal Revenue Code ("IRC") Section 414(d), and is a qualified plan and trust pursuant to IRC Sections 401(a) and 501(a), and WHEREAS, the Heroes Earnings Assistance and Relief Tax Act of 2008, amended Sections 401(a) and 414(u) of the IRC with regard to benefits payable to qualified Retirement System members entering active military service, and WHEREAS, the Board of Trustees has a fiduciary duty to administer the Retirement System consistent with plan provisions and applicable law, including applicable provisions of the IRC and related authority to maintain the qualified status of the Plan, therefore be it RESOLVED, that the Retirement System shall continue to be administered in accordance with Sections 401(a) and 414(u) of the IRC, as amended, and is hereby amended to incorporate the death benefits required by Section 104(a) of the HEART Act as follows: Death benefits. In the case of a death occurring on or after January 1, 2007, if a Member dies while performing qualified military service (as defined in Code ß 414(u)), the survivors of the Member are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan as if the Member had resumed and then terminated employment on account of death. For these purposes, the Member shall be entitled to service credit under the Plan for the period of qualifying military service. and be it further RESOLVED, that a copy of this Resolution shall be provided to all appropriate parties. Motion by Varney, supported by Baker, to receive and adopt Policy Resolution 12-02 regarding HEART Act – Internal Revenue Code Compliance Ayes: All. Motion carried unanimously. III. NEW BUSINESS: A. Application for Service Retirement for Anna Lorene Michalski, Deputy Court Clerk, 41-A District Court Motion by Baker, supported by Henig, to receive and file the application for service retirement for Anna Lorene Michalski, Deputy Court Clerk, 41-A District Court. Ayes: All. Motion carried unanimously. B. McDonnell Investment – Natixis Global Agreement Motion by Baker, supported by Henig, to approve and execute the assignment of the GERS investment advisory agreement with McDonnell Investment Management, LLC to Natixis Global Asset Management (NGAM) Midway Acquisition, LLC. Ayes: All. Motion carried unanimously. B. Pension Administration Comments – Conclusion of 2012 RFP Discussion ensued regarding the status of the request for proposals – service providers that was initiated in May 2012. Hessell commented that only the investment consultant position was up for review this year. Pursuant to Resolution 00-2 the Board will periodically review the costs and services of each of its advisors. Historically the Board has waived the formal five- year RFP process where the service provider continues to deliver exceptional service at or near the original contract price terms in the interest of minimizing administrative costs. By Board consensus, it was agreed that the Brice Group – Merrill Lynch has met this criteria and will be retained as investment consultant. The Board then discussed the proposed rate increase received from Comerica Bank for custodian services while noting that the next regularly scheduled RFP for custodial banking services is due in May 2013.  Motion by Baker, supported by Varney to authorize Pension Administrator Hessell to prepare a study for the Board with regard to custodial banking services. Ayes: All. Motion carried unanimously. C. Trustee Comments - None ADJOURN: Motion by Baker, supported by Varney, to adjourn the meeting at 11:59 a.m. Ayes: All. Motion carried unanimously. Respectfully Submitted, Brian Baker, Secretary