Police & Fire Retirement Board

REGULAR MEETING MINUTES OF THE STERLING HEIGHTS POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 MARCH 15, 2012 FIRE DEPARTMENT CONFERENCE ROOM 41625 RYAN ROAD STERLING HEIGHTS, MI 48313 1. The regular meeting of the Police and Fire Retirement System was called to order by President Solak at 4:04 p.m. 2. Board Members present: Solak, Wellhausen (arrived at 4:20 p.m.), Padovini, Nash, Varney. Also present: Denise Jones, representing Rodwan Consulting Company; Tom Michaud, Legal Counsel; and Nancy Duyck, Pension Technician. 3. APPROVAL OF CONSENT AND REGULAR AGENDAS Motion by Varney, supported by Padovini, to approve the consent agenda as presented. Ayes: Varney, Padovini, Solak, Nash. Absent: Wellhausen. The motion carried. The following items were added to the regular agenda: 10 a 14 Stephen Kovalcik – partial DROP distribution – discussion 15 Rollover Notice resolution - discussion Motion by Nash, supported by Padovini, to approve the regular agenda as amended. 3. APPROVAL OF REGULAR AGENDA – cont. Ayes: Nash, Padovini, Solak, Varney. Absent: Wellhausen. The motion carried. 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of February 16, 2012. Motion by Varney, supported by Nash, to approve the minutes as presented. Ayes: Varney, Nash, Solak, Padovini. Absent: Wellhausen. The motion carried; the minutes of the regular meeting of February 16, 2012 are hereby approved. 5. CITIZEN PARTICIPATION There was no Citizen participation. CONSENT AGENDA 7. CORRESPONDENCE a. Correspondence to City Treasurer dated February 22, 2012 re: Fire pension information. b. Correspondence from Intercontinental dated March 1, 2012 re: US REIF distribution. c. Other correspondence received from: 1. ING Investment Management 2. Merrill Lynch – market value updates 3. NCPERS 4. Robbins Geller Rudman & Dowd LLP d. Magazines received: 1. Pensions & Investments for February 20 and March 5, 2012. 2. Institutional Investor for March 2012 3. Plan Sponsor for March 2012 CONSENT AGENDA 8. BILLS AND EXPENDITURES b. Disbursements to retirees/members other than monthly benefit payments There were no disbursements to retirees/members other than monthly benefit payments this month. c. Checking Account Summary Beginning Balance $5,565.09 2/01/12 Additions (1) 1. 2/28 $5,000.00 Subtractions (5) $2,252.09  1. 2/16 Check 1872 144.60 ND – postage reimbursement 2. 2/23 Check 1873 14.57 AT & T phone bill – 2/16/12 3. 2/03 Check 5195 938.04 Contract Payment Nancy Duyck 4. 2/03 Check 5196 160.60 Contract fee – Gurin & Gurin 5. 2/17 Check 5197 994.28 Contract Payment Nancy Duyck Electronic withdrawals (4) $1,288.57 1. 2/03 349.43 IRS Fed. tax w/h 2. 2/03 106.94 Michigan St. tax w/h 3. 2/03 461.54 IRA contribution 4. 2/17 370.66 IRS Fed. tax w/h Ending Balance $7,024.43 2/29/12 d. Transmittal of Checks 1. $35,464.51 received from Douglas Batty through payroll deduction for the purchase of 3 years of eligible municipal service credit and 1 year of eligible EMS service credit. This was the final payment for the purchase, which started on March 6, 2008. 2. $3,899.41 received from NovaGold Resources Inc. as a share in a settlement of a securities litigation. 3. $52,838.68 received from Brandon Flynn for the purchase of 2 years of eligible municipal service credit. CONSENT AGENDA 9. FUNDS MANAGEMENT a. The current value of funds as of February 29, 2012 is detailed below: Clearing account $ 1,141,144.63 Intercontinental $ 7,720,930.01 McDonnell $ 16,086,185.21 Pimco $ 15,844,156.00 Wamco $ 15,830,762.83 MD Sass $ 19,284,015.14 Horizon $ 18,741,717.19 Earnest Partners $ 10,485,054.79 NFJ/Allianz $ 14,338,442.46 AIM/Invesco $ 13,977,398.01 Janus $ 19,522,635.39 Atalanta $ 18,614,546.70 Checking account $ 7,024.43 TOTAL FUNDS $ 171,594,012.79 b. The Board received a copy of the Summary of Employer Contributions to the Police and Fire Retirement System for the 2011 tax year as of 2/14/12. The System has received $7,268,873.72 of the 2011/12 budget of $7,368,876.00, leaving a $100,002.28 balance. c. A Securities Loan Statement Recap sheet as of 1/31/12 is enclosed showing the amounts received each month in the Securities Loan Program. Our earnings for the 2011/12 fiscal year through 1/31/12 are $1,079.20. ? d. Benefit Register Listing as of March 1, 2012 from Comerica Bank showing 288 retirees/beneficiaries with a payout for March of $1,106,279.21 and a year-to-date of $3,613,341.76. e. The current Merrill Lynch Bond index for February 2012 is 1.91%. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 1. Abel/Noser Reports for January 2012 Abel/Noser has supplied the January 2012 report. CONSENT AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. Old Business – cont. 2. Michael Schrettner – Application for DROP retirement Fire Lieutenant Michael Schrettner has submitted an application for DROP retirement effective March 31, 2012. All required paperwork is on file in the Pension Office. 3. Daniel Media – Application for DROP retirement Interim Assistant Fire Chief Daniel Media has submitted an application for DROP retirement effective April 27, 2012. All required paperwork is on file in the Pension Office. 4. Jeffrey Cline – buyback application - municipal – 2 years, 1 month and 6 days The above named individual has submitted an application for buyback of municipal time as noted. All required paperwork is on file in the Pension Office. 5. Mark Schmidt – buyback application - college – 5 months and 21 days The above named individual has submitted an application for buyback of college time as noted. All required paperwork is on file in the Pension Office. 6. Douglas Batty – adjusted hire (retirement) date The adjusted hire (retirement) date for Douglas Batty is March 17, 1993 after the purchase of 3 years of eligible municipal service credit and 1 year of eligible EMS service credit through payroll deduction. 7. Brandon Flynn – adjusted hire (retirement) date The adjusted hire (retirement) date for Brandon Flynn is June 12, 1990 after the purchase of 2 years of eligible municipal service credit. Mark Wellhausen arrived at 4:20 p.m. The following item was taken out of order of the published agenda: REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 8. 2011 Actuarial report presentation – discussion Denise Jones was in attendance to present the 43rd annual actuarial report dated December 31, 2011. The report was discussed at length. The Board reviewed the comments by the actuary. After discussion, the following resolution was considered: L 12-3-15-1 RE: APPROVAL OF 43RD ANNUAL ACTUARIAL VALUATION WHEREAS, the Board is in receipt of the 42nd Annual Actuarial Valuation, dated December 31, 2011, which has been submitted by the actuary to the Board of Trustees for consideration and approval, and WHEREAS, representatives of the Board’s actuary have appeared before the Board at its March 15, 2012 meeting and presented and reviewed the valuation report with the Board, and WHEREAS, the Board of Trustees has the legal and fiduciary obligation to assure that employer contributions are in accordance with Article 9, Section 24 of the State of Michigan Constitution, and WHEREAS, Michigan Public Act 345 of 1937, as amended, requires the Board of Trustees to certify to the governing body the amount to be contributed by the employer, and WHEREAS, the Board has the duty to (1) to approve or disapprove the Actuarial Valuation dated December 31, 2011, and (2) to certify to the employer-City the amount of employer contribution required for the fiscal year beginning July 1, 2012 (as reflected by the December 31, 2011 Actuarial Valuation), and WHEREAS, the Board notes that the Sterling Heights Police and Fire Retirement System is 66.5% funded as of the December 31, 2011 valuation, and THEREFORE BE IT RESOLVED, that the Board hereby approves the 43rd Annual Actuarial Valuation, dated December 31, 2011, and further REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 8. 2011 Actuarial report presentation – discussion – cont. RESOLVED, the Board hereby certifies to the employer-City the employer contribution required for the fiscal year beginning July 1, 2012 (as reflected by the December 31, 2011 Actuarial Valuation) in the amount of $8,815,031.00, consisting of the City contribution and the 3% contained in the Memorandum of Understanding with the Police Officers Association, and the 4% contained in the Memorandum of Understanding with the Fire Fighters Association, and further RESOLVED, that the recommended transfer in the amount of $25,044,743.00 to the Reserve for Retired Benefit Payments from the Reserve for Employer Contributions be made, and further RESOLVED, that a copy of this resolution and the 43rd Annual Actuarial Report, dated December 31, 2011, be forwarded to the employer-City. Motion by Padovini, supported by Wellhausen, to approve the resolution as presented. Ayes: All. The motion carried; the resolution is hereby adopted. The Board returned to the published agenda. 6. REPORT FROM LEGAL COUNSEL No formal legal report was presented. Mr. Michaud requested that the Board go into closed session to discuss securities litigation. Motion by Solak, supported by Varney, to go into Closed Session to discuss securities litigation. Ayes: Solak, Varney, Wellhausen, Padovini, Nash. The motion carried. Motion by Solak, supported by Varney, to exit Closed Session. Ayes: All. 6. REPORT FROM LEGAL COUNSEL – cont. The motion carried. The following motion was then considered: Motion by Solak, supported by Varney, to authorize Legal Counsel to proceed as discussed in the Prudential litigation. Ayes: All. The motion carried. Mr. Michaud commented on items of old business as they were considered. REGULAR AGENDA 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) 1. Disbursement to Rodwan Consulting Company in the amount of $300.00 for actuarial services rendered for an actuarial calculation for the James Spence EDRO. Motion by Wellhausen, supported by Padovini, to approve the bill as presented. Ayes: All. The motion carried. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business – cont. 9. Antoinette Fett – Workers’ Compensation Compromise - discussion Police Officer Antoinette Fett was on the 2010 STD report. She challenged the report stating that the disability was work-related. A compromise ruling has now been signed and was received by the Board. Motion by Nash, supported by Wellhausen, to table this item until the next regular meeting. Ayes: All. The motion carried. REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 9. Antoinette Fett – Workers’ Compensation Compromise – cont. Mr. Solak will request a letter of clarification from the City. 10. James Hack – DROP retirement termination - discussion Captain James Hack of the Police Department terminated his DROP retirement as of March 2, 2012. He requested a distribution of his total DROP account. All required paperwork is on file in the Pension Office. Motion by Solak, supported by Wellhausen, to approve the disbursement for the regular pension and DROP account and process the retirement certificate as presented. Ayes: All. The motion carried. 11. Norman Wieske – DROP retirement termination - discussion Captain Norman Wieske of the Fire Department will terminate his DROP retirement as of March 20, 2012. All required paperwork is on file in the Pension Office. Motion by Wellhausen, supported by Solak, to approve the disbursement for the regular pension and annuity withdrawal and process the retirement certificate as presented. Ayes: All. The motion carried. 12. 2012 MAPERS Spring Conference - discussion The Board received registration information for the 2012 MAPERS Spring Conference. It is scheduled for May 20-22, 2012 at the Soaring Eagle Resort in Mt. Pleasant. Three trustees are budgeted to attend this conference. Motion by Padovini, supported by Wellhausen, to register three trustees to attend the 2012 MAPERS Spring Conference, based upon individual availability. REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. Old Business – cont. 12. 2012 MAPERS Spring Conference – discussion – cont. Ayes: All. The motion carried. Mr. Padovini and Ms. Varney will not be attending the conference. 13. Account transfer for April benefit payments – discussion The Board reviewed its mechanism for the transfer of funds to ensure funding for monthly benefits for April 1, 2012. Merrill Lynch has reported that based on the asset allocation targets, the additional funding should come from the Janus, Horizon and MD Sass accounts. Motion by Solak, supported by Wellhausen, to approve the transfer of the appropriate amount of funds from the Janus, Horizon and MD Sass accounts, based on the asset allocation targets, to provide for pension benefit payments and other disbursements on April 1, 2012. Ayes: All. The motion carried. 14. Stephen Kovalcik – partial DROP distribution - discussion Chief Stephen Kovalcik of the Fire Department terminated his DROP retirement as of July 29, 2011. He requested a partial DROP distribution from his DROP account. Motion by Wellhausen, supported by Solak, to approve the partial DROP distribution as presented. Ayes: All. The motion carried. 15. Lump Sum distributions resolution and form (Rollover Notice) discussion Legal Counsel presented the Board with a notice regarding lump sum distributions (Rollover Notice) with a draft resolution and new form. After discussion, the following resolution was considered. REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 15. Lump Sum distributions resolution and form (Rollover Notice) discussion - cont. RESOLUTION 59 L12-3-15-2 Amended: March 15, 2012 L09-11-19-2 Amended: November 19, 2009 L07-1-30-1 Amended: January 30, 2007 L02-2-27-4 Adopted: February 27, 2002 RE: NOTICE TO RECIPIENTS OF LUMP SUM DISTRIBUTIONS FROM THE RETIREMENT SYSTEM WHEREAS, the Board of Trustees of the City of Sterling Heights Police and Fire Retirement System is vested with the authority and fiduciary responsibility for the administration, management and operation of the Retirement System, and WHEREAS, the Board of Trustees acknowledges that Section 402 of the Internal Revenue Code requires the Board to provide notice to recipients of lump sum distributions from the Plan, and WHEREAS, applicable tax law and regulations require said notice to be provided at least thirty (30) days in advance of such distributions, and WHEREAS, Legal Counsel has prepared a distribution notice and form consistent with IRC Section 402, and WHEREAS, the Board of Trustees has discussed this matter, therefore be it RESOLVED, that the Retirement System is hereby amended to comply with and shall be administered in accordance with the requirements of the Economic Growth and Tax Relief Act of 2001; the Pension Protection Act of 2006; the Worker, Retiree, and the Employer Recovery Act of 2008 to (1) allow participants to roll over amounts from an eligible employer plan to a Roth IRA, (2) allow non-spouse beneficiaries to roll over distributions to an IRA, and (3) provide relief from the 10% early withdrawal penalty for distributions from governmental defined benefit plans made to qualified public safety employees after separation from service after attainment of age 50, and further REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. Old Business  15. Lump Sum distributions resolution and form (Rollover Notice) discussion - cont. RESOLVED, that the Retirement System is hereby amended to comply with and shall be administered in accordance with the requirements of IRC Section 401(a)(9) and Treasury Regulations establishing the required minimum distribution rules for the Retirement System, and further RESOLVED, that the Board of Trustees hereby adopts the distribution notice and form, and further RESOLVED, that the Retirement System shall be administered consistent with said notice and IRS Notice 2009-68, and further RESOLVED, that the distribution notice and form be provided to recipients of lump sum distributions from the Retirement System consistent with the Internal Revenue Code, and further RESOLVED, that a copy of this resolution shall be provided to all appropriate parties. Motion by Solak, supported by Varney, to approve the resolution and form as presented. Ayes: All. The motion carried; the resolution is hereby adopted. Resolution 59 adopted November 19, 2009 is hereby amended. 11. TRUSTEE COMMENTS Ms. Varney supplied the Board with a comparison of annual returns for the two pension funds and OPEB for the Board’s review. Mr. Wellhausen stated that he has gone through 76 boxes for review of adherence to the Retention Policy. He also asked the Board about the possibility of utilizing IT to help the Board control the amount of paper used by the Board. 12. ADJOURNMENT Motion by Padovini, supported by Varney, to adjourn at 5:15 p.m. Ayes: All. The motion carried; the meeting is hereby adjourned. Mark Wellhausen Secretary