General Employees Retirement Board

UNOFFICIAL MINUTES OF REGULAR MEETING OF THE STERLING HEIGHTS GENERAL EMPLOYEE’S RETIREMENT SYSTEM Thursday, December 18, 2014 ___________________________________________________________________ __ _ __ _ Location: Room – City Conference Room #202 40555 Utica Road, Sterling Heights, MI 48313 Telephone: (586) 446-2331 Chairperson Weiler called the meeting to order at 11:39 a.m. BOARD MEMBERS PRESENT: Rich Weiler, Chairperson Jennifer Varney, Acting Secretary / Treasurer Todd Marsh, Trustee Paul Henig, Trustee BOARD MEMBERS ABSENT: Brian Baker, Secretary (Excused) ALSO PRESENT: Walt Hessell, Pension Administrator 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 Marsh, supported by Henig, to approve the minutes of the regular meeting held November 20, and the special quarterly meeting held December 3, 2014. Ayes: All. Motion carried unanimously. COMMUNICATION FROM CITIZENS: None REIT MANAGER STUDY PRESENTATION BY TIM BRICE GRAYSTONE CONSULTING Prior to the REIT manager study, Brice distributed an analysis of oil price declines and subsequent stock market returns which concluded that the stock market historically has average gains of 18% in the one year following a 50% oil price decline. Brice also discussed The GIC Weekly report which anticipates 2015 FED interest rate hikes as a positive for the economy and the stock market. Due to the change in custodian from Merrill Lynch to Morgan Stanley, the current REIT manager Cohen & Steers could not be retained from a cost effective fee schedule perspective. The REIT manager analysis compared the five top performers in the asset class with Principal Global Investors providing the most appeal to the Board. Discussion took place with regard to the best REIT manager to hire. Motion by Henig, supported by Marsh, to receive and file the Morgan Stanley Graystone Consulting REIT Manager Study. Ayes: All. Motion carried unanimously. Motion by Henig, supported by Marsh, to approve the hiring of Principal Global Investors as the system REIT manager and to authorize the transfer of funds from Cohen & Steers in conjunction with the custodial asset transfer from Merrill Lynch to Morgan Stanley Ayes: All. Motion carried unanimously. REPORT FROM LEGAL COUNSEL Michaud was not present due to an excused absence. CONSENT AGENDA: Motion by Marsh, supported by Henig, to receive and file consent items I A through I D-2. Ayes: All. Motion carried unanimously. I. RECEIVE AND FILE: A. Benefit register listing for December 1, 2014 from Comerica Bank showing 352 active retirees with a payout for November 2014 of $836,366.74 and a year-to-date payout of $10,277,015.11. B. Cash and Asset Statements as of November 30, 2014 from Comerica Bank and Merrill Lynch showing a total market value of $118,876,567.32 comprised as follows: Desired Actual Bank/Money Market Value Allocation Percentage Manager 0% 0.73% Comerica Bank $ 867,087.53 21.33% 15.45% PIMCO 18,365,417.97 10.67% 7.64% McDonnell 9,081,072.47 15% 16.20% Earnest Partners 19,263,254.71 8% 8.98% Herndon Capital 10,671,307.18 8% 10.07% MFS 11,969,865.78 5.33% 7.14% Victory 8,494,310.18 5.33% 7.31% Winslow 8,691,901.00 5.33% 7.39% Janus Capital 8,788,562.67 8.5% 7.34% INVESCO 8,719,645.17 8.5% 8.77% Allianz - NFJ 10,424,949.83 Cohen & Steers – 4% 2.98% 3,539,192.83 REIT C. Correspondence 1. FOIA letter response sent to PitchBook Data, Inc. dated November 13, 2014 regarding GERS portfolio REIT holdings. 2. Email correspondence and letter sent to Merrill Lynch and Comerica Bank dated November 20, 2014 regarding the transfer of funds for the payment of benefits. 3. Email correspondence and letter sent to Merrill Lynch dated November 20, 2014 regarding the authorization for the transfer of assets to Morgan Stanley – Graystone Consulting. 4. Form ADV Part 2B – Merrill Lynch dated November 24, 2014. 5. Wire transfer notifications received from Merrill Lynch dated November 26, 2014 confirming the transfer of funds for the payment of benefits. 6. McDonnell Investment notice of new headquarters location dated December 1, 2014. 7. “The Advocate for Institutional Investors” magazine dated Fall 2014. 8. “Pension & Investments” magazines dated November 10 & 24 and December 8, 2014. D. 1. Payable from City Assets for the 2015 Calendar Membership Year: MAPERS membership renewal invoice in the amount of $100.00. 2. Payable from City Assets for the service period ending November 30, 2014: Actuarial fees from Gabriel Roeder Smith & Company in the amount of $1,600.00 for the IRS Section 415 Limit Recalculations for 2015. REGULAR AGENDA: II. OLD BUSINESS A. Retirement Information for Lisa Stoen, Data Analyst, Police Department Motion by Varney, supported by Henig, to approve the service retirement for Lisa Stoen, Data Analyst, Police Department effective November 21, 2014 with service credit of 17 years and the monthly pension amount of $1,588.35 under straight life with annuity withdrawal based on a monthly final average compensation of $4,605.04. Ayes: All. Motion carried unanimously. B. Revised Retirement Information for Roy Palmeri, Emergency Dispatcher, Police Department Motion by Henig, supported by Marsh, to approve the revised service retirement benefit for Roy Palmeri, effective September 5, 2014 in the monthly amount of $2,851.13 under straight life without annuity withdrawal based upon a revised final average compensation of $6,976.73. Ayes: All. Motion carried unanimously. C. Approval of Payment Schedule for QEBA Participants Motion by Marsh, supported by Henig, to receive and adopt the 2015 payment schedule for the QEBA participants, as specified in Section Two of the Qualified Excess Benefit Arrangement Trust document. Ayes: All. Motion carried unanimously. III. NEW BUSINESS: A. Eligible Domestic Relations Order (EDRO) for Julie Trombley Motion by Varney, supported by Marsh, to receive and file the Divorce Action / Eligible Domestic Relations Order (EDRO) Julie Trombley vs. Stuart Trombley as approved by pension counsel and to forward a copy to the Custodian Bank Comerica. Ayes: All. Motion carried unanimously. B. Pension Administration Comments – Hessell stated the annual retiree / beneficiary verification process had been completed with 100% compliance on 345 confirmations received. C. Trustee Comments - None. ADJOURN: Motion by Varney, supported by Marsh, to adjourn the meeting at 12:15 p.m. Ayes: All. Motion carried unanimously. Respectfully Submitted, ___________________________________ Jennifer Varney, Acting Secretary / Treasurer