General Employees Retirement Board

OFFICIAL MINUTES OF REGULAR MEETING OF THE STERLING HEIGHTS GENERAL EMPLOYEE’S RETIREMENT SYSTEM Thursday, November 17, 2016 ___________________________________________________________________ __ _ ___ Location: Room #202 40555 Utica Road, Sterling Heights, MI 48313 (586) 446-2331 Chairperson Weiler called the meeting to order at 1:31 p.m. BOARD MEMBERS PRESENT: Rich Weiler, Chairperson (via teleconference) Jennifer Varney, Acting Secretary / Treasurer Todd Marsh, Trustee Paul Henig, Trustee BOARD MEMBERS ABSENT: Brian Baker, Secretary (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 Marsh, supported by Varney, to approve the minutes of the regular meeting held October 20, 2016. Ayes: All. Motion carried unanimously. COMMUNICATION FROM CITIZENS: None REPORT FROM LEGAL COUNSEL – Required Minimum Distribution Rules Michaud reviewed the memo regarding IRC Section 401(a)(9) compliance. The IRS is placing more emphasis on required minimum distribution rules that are required when participants attain age 70 ½. Michaud recommended a review of vested and non-vested former members to identify potential compliance problems. Hessell commented that an informal policy has been in place for the deferred vested members who commence with a retirement benefit upon their 60th birthday. However, there are a number of non-vested members with employee contribution accounts which have yet to be refunded and / or have a potential complication under Act 88. Hessell was directed by the Board to provide an analysis of the separated non-vested members with employee contribution account balances for discussion at the next monthly Board meeting. Motion by Varney, supported by Marsh, to receive and file the memo from VanOverbeke Michaud & Timmony, P.C. regarding IRC Section 401(a)(9) compliance for required minimum distribution rules. Ayes: All. Motion carried unanimously. 1 Michaud briefed the Board about potential lame duck legislation at the State level that could impact public sector pension and / or retiree medical benefits. As of the meeting date, no legislation has been introduced however, it is Michaud’s belief that when the new State legislature convenes in 2017 there potentially will be proposed legislation looking to curtail and reduce public sector retiree benefits. Michaud also commented on items as they appeared on the agenda. CONSENT AGENDA: Motion by Varney, supported by Marsh, 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 November 1, 2016 from Comerica Bank showing 359 active retirees with a payout for October 2016 of $891,525.76 and a year-to-date payout of $9,968,599.75. B. Cash and Asset Statements as of October 31, 2016 from Comerica Bank and Morgan Stanley showing a total market value of $105,245,296.17 comprised as follows: Desired Asset Class / Percentage Allocation 0% Cash 0.25% Comerica Bank $ 258,802.79 16% Fixed Income 17.53% Boyd Watterson 18,445,848.14 8% Fixed Income 9.20% Western 9,687,717.99 15% Small Cap 16.39% Earnest Partners 17,245,004.89 5.8% Large Cap Value 5.33% Confluence 5,610,221.54 5.8% Large Cap Value 5.77% MFS 6,076,310.76 4% Large Cap Growth 4.06% AMI 4,275,397.04 4.5% Large Cap Growth 3.66% Winslow 3,850,075.71 2.9% Large Cap Growth 3.11% Janus Capital 3,271,298.56 7% Large Cap Core 6.86% London 7,223,223.40 5% Large Cap Core 4.12% S&P Index 4,334,060.58 8.5% Large Cap Global 8.25% INVESCO 8,678,842.39 8.5% Large Cap Global 8.21% Cambiar 8,644,892.68 4% REITS 2.22% Principal REIT 2,339,813.25 5% MLP’s 5.04% Cushing Asset Mgt 5,303,786.45 C. Correspondence 1. September 30 & October 28, 2016 Settlement Reports – securities litigation. 2. Notices received from Morgan Stanley dated October 4, 2016 regarding account updates – UMA program changes. 3. Confirmation received from Morgan Stanley dated October 8, 2016 regarding personal and account information. 2  4. Letter sent to Comerica Bank dated October 13, 2016 regarding deposit of securities litigation settlement – Tesco PLC. 5. Notice received from Morgan Stanley dated October 20, 2016 regarding fee schedule update. 6. Email correspondence and letters sent to Morgan Stanley and Comerica Bank dated October 20, 2016 regarding the transfer of funds for the payment of benefits. 7. Email correspondence sent to Comerica Bank dated October 24, 2016 regarding the stop dates schedule maintained by the bank. 8. Wire transfer notification received from Morgan Stanley dated October 26, 2016 regarding the transfer of funds for the payment of benefits. 9. Email correspondence and letters sent to Morgan Stanley dated October 26, 2016 regarding the asset allocation transfer to Cushing Asset Management. 10. Notice received from Morgan Stanley dated October 31, 2016 regarding bank deposit program. 11. “Pension & Investments” magazines dated October 17 & 31, 2016. D. 1. Payable from System Assets for the quarter period ending September 30, 2016 Quarterly management fees from Morgan Stanley in the amount of $158,252.64 and from Boyd Watterson in the amount of $6,979.00. 2. Payable from City Assets for the quarter ending September 30, 2016 Quarterly custodian banking fees from Comerica Bank in the amount of $4,787.66. MAPERS 2017 Membership Invoice / Renewal in the amount of $100.00. REGULAR AGENDA: II. NEW BUSINESS: A. Change in Retiree Status – Chester Nowicki (Deceased) Motion by Henig, supported by Marsh, to approve Patricia Nowicki (survivor/retiree) to receive Option A benefits equal to 100% that of the deceased retiree Chester Nowicki in the gross amount of $854.85. Ayes: All. Motion carried unanimously. B. Change in Retiree Status – Charles Jacobs (Deceased) Motion by Varney, supported by Henig, to approve Shirley Jacobs (survivor/retiree) to receive Option A benefits equal to 100% that of deceased retiree Charles Jacobs in the monthly gross amount of $318.91. Ayes: All. Motion carried unanimously. C. Application for Service Retirement for Brenda Ford, Library Assistant II, City Library Motion by Marsh, supported by Henig, to receive and file the application for service retirement for Brenda Ford, Library Assistant II, City Library. 3  Ayes: All. Motion carried unanimously. D. Processing of Pop-Up Election for Patricia Nowicki Motion by Varney, supported by Henig, to approve the processing of the pop-up election for retiree Patricia Nowicki, effective October 18, 2016 (spouse/beneficiary date of death) with a revised monthly benefit of $2,270.42 Ayes: All. Motion carried unanimously. E. Pension Administration Comments – None F. Trustee Comments – None ADJOURN: Motion by Varney, supported by Weiler, to adjourn the meeting at 2:07 p.m. Ayes: All. Motion carried unanimously. Respectfully Submitted, ___________________________________ Jennifer Varney, Acting Secretary / Treasurer 4