General Employees Retirement Board

UNOFFICIAL MINUTES OF REGULAR MEETING OF THE STERLING HEIGHTS GENERAL EMPLOYEE’S RETIREMENT SYSTEM Thursday, July 18, 2013 ___________________________________________________________________ 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: Rich Weiler, Chairperson Brian Baker, Secretary Jennifer Varney, Treasurer Todd Marsh, Trustee Paul Henig, Trustee BOARD MEMBERS ABSENT: None. ALSO PRESENT: Thomas Michaud, Legal Counsel, VanOverbeke, Michaud & Timmony, P.C. APPROVAL OF AGENDA: Motion by Henig, supported by Marsh, to approve the agenda as amended to add invoices for money manager fees under Consent Agenda item I. D. 1. Ayes: All. Motion carried unanimously. APPROVAL OF MINUTES: Motion by Henig, supported by Marsh, to approve the minutes of the regular meeting held June 20, 2013. Ayes: All. Motion carried unanimously. APPROVAL OF TRUSTEE APPOINTMENT & ELECTION OF CHAIRPERSON / VICE CHAIR Motion by Varney, supported by Marsh, to receive and file the notice of appointment for Richard Weiler to a three-year term expiring June 30, 2016 as provided by the City Clerk and to elect Richard Weiler as Chairperson and Brian Baker as Vice Chairperson. Ayes: All. Motion carried unanimously. COMMUNICATION FROM CITIZENS: None REPORT FROM LEGAL COUNSEL – LEGISLATIVE UPDATE & QGEBA ADOPTION Michaud reviewed a legislative update memo on both enacted and pending legislation. Public Act 32 of 2013 amends the existing EDRO Act to allow for a 60-day correction window for otherwise disqualified EDRO documents. Motion by Varney, supported by Baker, to receive and file the legislative update memo. Ayes: All. Motion carried unanimously. Michaud then distributed a number of documents in regard to the Qualified Governmental Excess Benefit Arrangement. Discussion ensued and it was recommended by Michaud to adopt the Qualified Excess Benefit Arrangement so that the plan would stay in compliance with Internal Revenue Code Section 415 as noted in the following resolution: CITY OF STERLING HEIGHTS GENERAL EMPLOYEES RETIREMENT SYSTEM RESOLUTION 13-02 RE: Qualified Excess Benefit Arrangement Adopted: July 18, 2013 WHEREAS, the City of Sterling Heights General Employees Retirement System (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 Board of Trustees has a fiduciary duty to administer the Retirement System in accordance with Plan provisions and applicable laws, including applicable provisions of the IRC and related regulations, to maintain the qualified status of the Plan, and WHEREAS, the Board of Trustees has recently become aware that the payment of a portion of recently retired individuals' pension benefits would violate the benefit limitations of Section 415 of the IRC, and WHEREAS, the Board of Trustees is authorized pursuant to Section 6 of the Public Employee Retirement Benefit Protection Act (MCL 38.1686), and Section 41-56 of the Code of Ordinances of the City of Sterling Heights to adopt additional provisions to the Retirement System necessary to maintain compliance with the IRC and the Plan's qualified status, and WHEREAS, the Board is desirous of establishing a Qualified Excess Benefit Arrangement ("QEBA") to pay that portion of benefits in excess of the IRC Section 415 limitations, therefore be it RESOLVED, that the Retirement System is hereby amended to provide: Section 1. Qualified Excess Benefit Arrangement. (1) This section is enacted pursuant to section 415(m) of the Internal Revenue Code and 2002 PAl00, of the Michigan Public Employee Retirement Benefit Protection Act. (2) A Qualified Excess Benefit Arrangement ("QEBA") is established and shall be governed by a separate plan document and trust as established by the Board of Trustees of the City of Sterling Heights General Employees Retirement System (the "Board of Trustees"). (3) The amount of any retirement allowance that would exceed the limitations imposed by section 415 of the Internal Revenue Code, as set forth in the Retirement System, shall be paid from the QEBA in accordance with necessary and appropriate procedures established by the Board of Trustees for the administration of the QEBA. (4) The QEBA shall be a separate portion of the Plan. The QEBA is subject to the following requirements: (a) The QEBA shall be maintained solely for the purpose of providing to retirants and beneficiaries that part of the retirant's or beneficiary's retirement allowance otherwise payable under the terms of the Plan, but which exceed the limitations imposed by section 415 of the Internal Revenue Code; and (b) Retirants and beneficiaries do not have an election, directly or indirectly, to defer compensation to the QEBA. Section 2. If this amendment or any portion thereof is held to be invalid by any court of competent jurisdiction, said decision shall not affect the validity of the remaining provisions. Section 3. This Resolution shall take effect immediately upon passage by the Board of Trustees. Motion by Marsh, supported by Weiler, to adopt Resolution 13-02. Ayes: All. Motion carried unanimously. CONSENT AGENDA: Motion by Baker, supported by Marsh, to receive and file consent items I A through I D-1. Ayes: All. Motion carried unanimously. I. RECEIVE AND FILE: A. Benefit register listing for July 1, 2013 from Comerica Bank showing 334 active retirees with a payout for June 2013 of $782,322.64 and a year-to-date payout of $5,421,093.74.  B. Cash and Asset Statements as of June 30, 2013 from Comerica Bank and Merrill Lynch showing a total market value of $108,175,028.40 comprised as follows: Desired Actual Bank/Money Market Value Allocation Percentage Manager 0% 0.78% Comerica Bank $836,417.57 21.33% 19.20% PIMCO 20,773,720.45 10.67% 9.51% McDonnell 10,290,491.17 15% 13.35% Earnest Partners 14,440,460.59 8% 8.13% Herndon Capital 8,799,663.16 8% 8.59% MFS 9,293,675.85 5.33% 6.46% Victory 6,983,469.63 5.33% 6.89% Winslow 7,458,350.75 5.33% 6.97% Janus Capital 7,535,578.47 8.5% 7.20% Thornburg 7,787,598.76 8.5% 8.74% Allianz - NFJ 9,449,170.28 Cohen & Steers – 4% 4.18% 4,526,431.72 REIT C. Correspondence 1. May 31, 2013 Portfolio Monitoring Report – Class Actions. 2. Class Action Settlement Report dated June 4, 2013. 3. Wire confirmation dated June 7, 2013 from Merrill Lynch regarding the payment of money manager fees. 4. Email correspondence dated June 13, 2013 with Merrill Lynch regarding the authorization to pay corrected money manager fee amounts. 5. Email correspondence and letters dated June 13, 2013 regarding the notice of probationary status to both Victory Capital and Janus Capital. 6. Email correspondence and letter dated June 20, 2013 sent to Merrill Lynch regarding the transfer of funds for the payment of benefits. 7. Wire transfer notification dated June 27, 2013 from Merrill Lynch regarding the transfer of funds to pay benefits. 8. Email correspondence and letters dated June 28, 2013 to service providers regarding required disclosure compliance  mandated by Public Act 347. 9. Email response dated July 1, 2013 from VanOverbeke, Michaud & Timmony regarding disclosure compliance with Public Act 347. 10. “Pension & Investments” magazines dated June 24 and July 8, 2013. D. 1. Payable from System Assets for the quarterly service period ending September 30, 2013 through Merrill Lynch Consults: Quarterly management fees from Janus in the amount of $14,245.07; from Earnest Partners in the amount of $27,297.88; from PIMCO in the amount of $23,514.52; from MFS in the amount of $17,568.53; from Thornburg in the amount of $12,871.73; from Victory in the amount of $11,072.41; from Winslow in the amount of $11,989.95; from NFJ in the amount of $16,536.06; from Herndon in the amount of $13,968.00 and from McDonnell (SPA) in the amount of $2,061.83. REGULAR AGENDA: II. OLD BUSINESS: Annual Review of Adjustments to “Initial 70% AFC Limit” for Gross Monthly Pensions Motion by Henig, supported by Marsh, to acknowledge the increase of the “Initial 70% AFC Limit” effective July 1, 2013 and the increase of the gross monthly pensions payable August 1, 2013 as detailed in the following table: Name Revised 70% AFC Revised Gross Monthly Pension D. Mike Dickey $5,382.27 $5,083.68 Dino C. Ranella $6,328.49 $5,720.65 Dian Kotenko $6,251.78 $5,301.25 Frank Gorlitz $3,997.38 $3,803.49 William Colvin $3,794.98 $3,727.68 Phyllis Puskar $3,586.94 $3,554.25 Edward Piet $4,329.66 $4,329.66 Mefford Couch $6,211.20 $5,421.73 Gerald Tamm $4,136.70 $3,564.30 James Carpenter $5,807.91 $4,373.12 Robert Ervin $5,691.94 $4,606.15 Judith Kotulis $4,522.37 $4,063.46 Thomas Hlivka $4,885.00 $4,337.74 Dan Browning $5,045.97 $3,870.16  Theodore Boehmer $7,758.51 $6,313.70 Colleen Muraszewski $4,025.74 $3,514.99 Ayes: All. Motion carried unanimously. B. Retirement Information for Walter Blessed, Assistant City Manager / Human Resource Director, City Administration Motion by Marsh, supported by Henig, to approve the service retirement for Walter Blessed, Assistant City Manager / Human Resource Director, City Administration, effective June 8, 2013 with service credit of 25 years, eight months and the monthly pension amount of $6,830.41 under option A 100% with annuity withdrawal based on a monthly final average compensation of $13,770.46. Ayes: All. Motion carried unanimously. C. Retirement Information for Brian Baker, Finance & Budget Director, City Administration Motion by Varney, supported by Henig, to approve the service retirement for Brian Baker, Finance & Budget Director, City Administration, effective June 8, 2013 with service credit of 26 years, ten months and the monthly pension amount of $7,939.45 under Option A 100% with annuity withdrawal based upon a monthly final average compensation of $14,597.11 (subject to Internal Revenue Code (IRC) Section 415 (b)(a)(A) annual pension limitation of $89,674.00 which is the 2013 dollar limit for a public general employee retiring at age 50). Ayes: All. Motion carried unanimously (Baker abstained). III. NEW BUSINESS: A. Pension Administration Comments –Proposed August 21, 2013 Special Meeting Agenda Motion by Marsh, supported by Henig, to approve the Wednesday August 21, 2013 Special Meeting Agenda. Ayes: All. Motion carried unanimously. B. Trustee Comments – MAPERS 2013 Fall Conference .Motion by Marsh, supported by Henig, to approve attendance of Todd Marsh at the MAPERS 2013 Fall Conference on  September 22 –24, 2013 at the Amway Grand Plaza Hotel, Grand Rapids, Michigan subject to his availability to attend. Ayes: All. Motion carried unanimously. ADJOURN: Motion by Varney, supported by Weiler, to adjourn the meeting at 2:15 p.m. Ayes: All. Motion carried unanimously. Respectfully Submitted, ___________________________________ Brian Baker, Secretary