General Employees Retirement Board

UNOFFICIAL MINUTES OF REGULAR MEETING OF THE STERLING HEIGHTS GENERAL EMPLOYEE’S RETIREMENT SYSTEM Thursday, March 21, 2013 _____________________________________________________________________ Location: Room #205 40555 Utica Road, Sterling Heights, MI 48313 (586) 446-2331 Acting Chairperson Baker called the meeting to order at 1:30 p.m. BOARD MEMBERS PRESENT: Brian Baker, Acting Chairperson Jennifer Varney, Acting Secretary / Treasurer Todd Marsh, Trustee Paul Henig, Trustee BOARD MEMBERS ABSENT: Richard Weiler, Chairperson (excused) ALSO PRESENT: Walt Hessell, Pension Administrator; Thomas Michaud, Legal Counsel, VanOverbeke, Michaud & Timmony, P.C. APPROVAL OF AGENDA: Motion by Marsh, supported by Henig, to approve the agenda as presented. Ayes: All. Motion carried unanimously. APPROVAL OF MINUTES: Motion by Varney, supported by Marsh, to approve the minutes of the regular meeting and special meeting both held February 21, 2013. 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 Henig, supported by Marsh, to receive and file consent items I A through I C-12. Ayes: All. Motion carried unanimously. I. RECEIVE AND FILE: A. Benefit register listing for March 1, 2013 from Comerica Bank showing 332 active retirees with a payout for February 2013 of $770,674.08 and a year-to-date payout of $2,314,362.75. B. Cash and Asset Statements as of February 28, 2013 from Comerica Bank and Merrill Lynch showing a total market value of $109,598,552.94 comprised as follows: Desired Actual Bank/Money Allocation Percentage Manager Market Value 0% 0.74% Comerica Bank $805,660.01 16% 15.68% PIMCO 17,178,869.81 16% 14.86% McDonnell 16,287,392.11 15% 13.77% Earnest Partners 15,095,277.87 8% 7.72% Herndon Capital 8,462,873.03 8% 7.83% MFS 8,584,234.67 5.33% 6.26% Victory 6,861,729.94 5.33% 6.47% Winslow 7,094,272.43 5.33% 6.51% Janus Capital 7,134,712.12 8.5% 7.16% Thornburg 7,845,989.80 8.5% 8.92% Allianz - NFJ 9,773,375.31 Cohen & Steers – 4% 4.08% 4,474,165.84 REIT C. Correspondence 1. Email correspondence with Victory Capital dated February 21, 2013 regarding organizational announcement. 2. February 22, 2013 Litigation Monitoring Report. 3. Email correspondence with Merrill Lynch dated February 22, 2013 regarding the transfer of funds for the payment of benefits. 4. Email correspondence with Merrill Lynch dated February 22, 2013 regarding the payment of money manager fees. 5. Check request verification with Merrill Lynch dated February 22, 2013 regarding the payment of money manager fees. 6. Wire transfer confirmations with Merrill Lynch dated February 25, 2013.  7. Class Action Settlements Claims Due April 2013. 8. Email correspondence and letter with Merrill Lynch dated February 27, 2013 regarding the tactical rebalancing of the fixed income portfolio. 9. Email correspondence with Merrill Lynch dated March 12, 2013 regarding Victory Capital’s organizational change. 10. Email correspondence with Winslow Capital dated March 13, 2013 regarding personnel changes at the firm. 11. “Employee Benefit News” magazines dated February & March 2013. 12. “Pension & Investments” magazines dated February 18 & March 4, 2013. REGULAR AGENDA: II. OLD BUSINESS: A. Retirement Information for Anna Michalski, Deputy Court Clerk, 41-A District Court Motion by Henig, supported by Marsh, to approve the service retirement of Anna Michalski, Deputy Court Clerk, 41-A District Court, effective January 31, 2013 with service credit of 23 years, 11 months and the monthly pension amount of $2,010.76 under Option B pop-up without annuity withdrawal based on a monthly final average compensation of $3,899.23. Ayes: All. Motion carried unanimously. B. Public Act 347 – Service Provider Disclosure Policy Michaud discussed the compliance issue required with Public Act 347 –Service Provider Disclosure Policy and recommended the adoption of the following policy resolution: CITY OF STERLING HEIGHTS GENERAL EMPLOYEES RETIREMENT SYSTEM POLICY RESOLUTION – 13-01 Adopted: March 21, 2013 Re: Service Provider Disclosures WHEREAS, the Board of Trustees (“Board”) is vested with the authority and fiduciary responsibility for the administration, management and operation of the Retirement System, and WHEREAS, the Board recognizes that it is subject to the provisions of the Public Employee Retirement System Investment Act, (Michigan Public Act 314 of 1965, as amended), wherein the Board is required to act as a prudent investor in all transactions related to Retirement System funds and assets by discharging its duties solely in the interests of the participants and beneficiaries and shall act with the same care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a similar capacity and familiar with those matters would use in the conduct of a similar enterprise with similar aims; and with due regard for the management, reputation, and stability of the issuer and the character of the particular investments being considered, and WHEREAS, in light of its fiduciary responsibility, the Board recognizes that it is in the best interests of the Retirement System and its participants and beneficiaries to retain the services of qualified professional service providers, including, but not limited to: investment consultants, investment managers, investment banks/brokers, custodians, actuaries, auditors, attorneys, administrators, and physicians to assist in and oversee the investments and administration of the Retirement System, and WHEREAS, the term “investment service provider” is defined under Act 314 as “any individual, third-party agent or consultant, or other entity that received direct or indirect compensation for consulting, investment management, brokerage, or custody services related to the system’s assets”, and WHEREAS, several of the Retirement System’s professional service providers qualify as “investment service providers” as that term is defined under Act 314, and WHEREAS, the Board is aware of the various disclosure requirements and “pay-to-play” restrictions imposed on its current and prospective service providers under the provisions of Act 314 and applicable federal law, and WHEREAS, the Board is required to withhold payment from service providers who violate the “pay-to-play” provisions of Act 314 and applicable federal law, and WHEREAS, the Board is desirous of establishing a formal disclosure policy applicable to appropriate service providers in order to monitor said service providers’ compliance with Act 314 and other applicable laws, therefore be it RESOLVED, that every year in the month of June, the Board shall require each of its current “investment service providers” to disclose in writing all fees or other compensation associated with its relationship with the Retirement System for the previous [fiscal/calendar] year, as required under Section 13(7) of Act 314 [MCL 38.1133(7)], by submission of the attached Fee Disclosure Form and the investment service provider’s most recent disclosures, if any, required under Section 408(b)(2) of ERISA or similar regulations, and further RESOLVED, that prior to the transfer of any Retirement System assets to a prospective “investment service provider”, the prospective “investment service provider” shall be required to disclose all fees or other compensation to be associated with its relationship to the Retirement System through completion and submission of the Fee Disclosure Form to the Board, and further RESOLVED, that every year in the month of June, the Board shall require all of its professional service providers to acknowledge that they are in compliance with Section 13e of Act 314 [MCL 38.1133e] and/or Rule 206(4)-5 under the Investment Advisers Act of 1940, and further RESOLVED, that that any service provider’s failure or refusal to complete and submit either of the Retirement System’s disclosure forms shall be deemed a violation of the requirements of Act 314 and this Policy, and shall result in appropriate action by the Board, including the possible suspension of payment for services rendered and/or termination of the service provider’s relationship with the Retirement System, and further RESOLVED, that all professional services providers shall have an ongoing requirement to monitor all political contributions and immediately disclose to the Board any and all political contributions that violate the restrictions of Section 13e of Act 314 and/or Rule 206(4)-5 under the Investment Advisers Act of 1940, including the date of the contribution, the name of the contributor, the name of the recipient, and the amount of the contribution, and further RESOLVED, that copies of this Policy shall be provided to all Retirement System service providers who shall be required act in accordance with said Policy. Motion by Varney, supported by Baker, to receive and adopt Policy Resolution 13-01 regarding Public Act 347 – Service Provider Disclosure Policy applicable to the Retirement System’s service providers. Ayes: All. Motion carried unanimously. C. Public Act 347 – Model Summary Annual Report Michaud discussed the new format required for the Summary Annual Report. He stated that both the actuary and investment consultant were aware of the new format and would cooperate in producing suitable appendixes to be incorporated into the annual report which is due to be released in August 2013. Motion by Baker, supported by Marsh, to receive and approve the new format for the Summary Annual Report which includes all information required under Public Act 314, as amended by Public Act 347. Ayes: All. Motion carried unanimously. III. NEW BUSINESS: A. Application for Service Retirement for Tina Hotton Deputy Court Clerk, 41-A District Court Motion by Baker, supported by Henig, to receive and file the application for service retirement for Tina Hotton, Deputy Court Clerk, 41-A District Court. Ayes: All. Motion carried unanimously. B. Change in Retiree Status – Virginia Moore (Deceased) Motion by Henig, supported by Marsh, to approve termination of straight life option benefits for retiree, Virginia Moore, due to her death on February 22, 2013. Ayes: All. Motion carried unanimously. C. Change in Retiree Status – Louise Beith (Deceased) Motion by Baker, supported by Varney to approve termination of Option C benefits for retiree, Louise Beith, due to her death on March 10, 2013 and the expiration of the ten year certain period on September 1, 2008. Ayes: All. Motion carried unanimously. D. Pension Administration Comments – None E. Trustee Comments – MAPERS 2013 Spring Conference Motion by Baker, supported by Marsh, to approve attendance of Jennifer Varney, Treasurer and Walt Hessell, Pension Administrator at the MAPERS 2013 Spring Conference on June 2 – 4, 2013 in Bellaire, Michigan and to certify Jennifer Varney as the official delegate. Ayes: All. Motion carried unanimously. ADJOURN: Motion by Baker, supported by Varney, to adjourn the meeting at 2:15 p.m. Ayes: All. Motion carried unanimously. Respectfully Submitted, ___________________________________ Jennifer Varney, Acting Secretary / Treasurer