Police & Fire Retirement Board

REGULAR MEETING MINUTES OF THE STERLING HEIGHTS POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 OCTOBER 18, 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 3:06 p.m. 2. Board Members present: Solak, Wellhausen, Nash, Lamerato, Varney. Also present: Tim Brice, representing Merrill Lynch Private Client Group; Tom Michaud, Legal Counsel; and Nancy Duyck, Pension Technician. 3. APPROVAL OF CONSENT AND REGULAR AGENDAS Motion by Wellhausen, supported by Nash, to approve the consent agenda as presented. Ayes: All. The motion carried. The following items were added to the regular agenda: 10 a 4 Paul Reno – DROP resolution and annuity withdrawal - discussion Motion by Wellhausen, supported by Solak, to approve the regular agenda as amended. Ayes: All. The motion carried. 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of September 20, 2012. Motion by Varney, supported by Lamerato, to approve the minutes as presented.  Ayes: All. The motion carried; the minutes of the regular meeting of September 20, 2012 are hereby approved. 5. CITIZEN PARTICIPATION There was no Citizen participation 6. REPORT FROM LEGAL COUNSEL No formal legal report was presented. Mr. Michaud commented on items of old business as they were considered. CONSENT AGENDA 7. CORRESPONDENCE a. Other correspondence received from: 1. Merrill Lynch – market value updates 2. Robbins Geller Rudman & Dowd LLP b. Magazines received: 1. Pensions & Investments for October 1, 2012. 2. Institutional Investor for October 2012 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 $6,563.59 9/01/12 Additions (1) 1. 9/26 $5,000.00 Subtractions (6) $3,000.35 1. 9/07 Check 1887 37.78 AT & T phone bill – 8/16/12 2. 9/27 Check 1888 37.27 AT & T phone bill – 9/16/12 3. 9/04 Check 5220 936.79 Contract Payment Nancy Duyck 4. 9/12 Check 5221 114.93 Contract fee – Gurin & Gurin 5. 9/14 Check 5222 936.79 Contract Payment Nancy Duyck 6. 9/28 Check 5223 936.79 Contract Payment Nancy Duyck Electronic withdrawals (4) $1,550.43 1. 9/05 348.96 IRS Fed. tax w/h 2. 9/17 692.31 IRA contribution 3. 9/19 348.96 IRS Fed. tax w/h 4. 9/20 160.20 Michigan St. tax w/h Ending Balance $7,012.81 9/30/12 d. Transmittal of Checks 1. $596.10 Check received from James Nash for the refund of travel expenses from the 2012 Fall MAPERS Conference. 2. $75.00 received from MAPERS for the refund of the registration fee for Kenneth Solak from the 2012 Fall MAPERS Conference. 9. FUNDS MANAGEMENT a. The current value of funds as of September 30, 2012 is detailed below: Clearing account $ 6,927,926.95 Intercontinental $ 8,317,821.22 McDonnell $ 16,060,045.76 Pimco $ 16,335,103.07 Wamco $ 16,381,219.91 Eagle $ 18,369,035.21 Herndon $ 18,913,511.67 Earnest Partners $ 9,907,992.15 NFJ/Allianz $ 14,321,409.78 AIM/Invesco $ 13,881,207.46 Janus $ 19,036,191.70 Winslow $ 18,099,847.41 Checking account $ 7,012.81 TOTAL FUNDS $ 176,558,325.10  b. The Board received a copy of the Summary of Employer Contributions to the Police and Fire Retirement System for the 2012 tax year as of 9/27/12. The System has received $7,499,884.97 of the 2012/13 budget of $8,815,031.00, leaving a $1,315,146.03 balance. c. A Securities Loan Statement Recap sheet as of 8/31/12 is enclosed showing the amounts received each month in the Securities Loan Program. Our earnings for the 2012/13 fiscal year through 8/31/12 are $97.02. d. Benefit Register Listing as of October 1, 2012 from Comerica Bank showing 292 retirees/beneficiaries with a payout for October of $1,155,257.51 and a year-to-date of $12,908,353.26. e. The current Merrill Lynch Bond index for September 2012 is 1.59%. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 1. Abel/Noser Reports for August 2012 Abel/Noser has supplied the August 2012 report. REGULAR AGENDA 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) 1. Disbursement to the City of Sterling Heights in the total amount of $6,867.22 for accounting services rendered for the quarter ended 9/30/12. 2. Disbursement to Rodwan Consulting Company in the amount of $3,000.00 for actuarial and consulting services rendered for the quarter ended 9/30/12 and the French EDRO calculation. 3. Disbursement to Merrill Lynch in the amount of $11,543.56 for quarterly SPA fee for the Eagle  account for the quarter ended 12/31/12. 4. Disbursement to Merrill Lynch in the amount of $26,169.89 for quarterly Consults fee for the AIM/Invesco account for the quarter ended 12/31/12. 5. Disbursement to Merrill Lynch in the amount of $35,888.46 for quarterly Consults fee for the Janus account for the quarter ended 12/31/12. Motion by Varney, supported by Lamerato, to approve the bills as presented. Ayes: All. The motion carried. 9. FUNDS MANAGEMENT f. Performance Report 1. Winslow Capital Management Due to a conflict, Matthew Boren of Winslow was not able to attend this meeting to give an update of their performance. 2. Asset allocation - discussion Tim Brice was in attendance to discuss the current asset allocation mix with the Board. Over the next few months, an asset allocation study will be conducted and the Board will receive additional information on alternative investments. He also discussed an article from Barron’s magazine. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 2. Michael Bauss – EDRO resolution – discussion The Board is in receipt of an Eligible Domestic Relation Order (EDRO) dated September 26, 2012 for active Fire Marshal Michael Bauss. Legal Counsel has approved the EDRO. The following EDRO resolution  was considered: L 12-10-18-1 Re: KATHRYN J. BAUSS v. MICHAEL C. BAUSS macomb County circuit Court Case No. 09-2809-DM WHEREAS, the Board of Trustees is in receipt of an Eligible Domestic Relations Order (EDRO), dated September 26, 2012, wherein Kathryn J. Bauss, the Alternate Payee, is awarded certain rights to the retirement benefits of Michael C. Bauss, the Participant, and WHEREAS, the Alternate Payee is entitled to claim a portion of the Participant’s retirement benefit from the Defined Benefit Plan which is subject to either the Participant or Alternate Payee filing an application for same, and WHEREAS, the Alternate Payee is entitled to claim a portion of the Participant’s retirement benefit from the Defined Contribution Account which is subject to either the Participant or Alternate Payee filing an application for same, and WHEREAS, the payments from the plan to the Alternate Payee shall begin when the Participant commences benefits from the Retirement System, unless the Alternate Payee elects to receive benefits at any time after the Participant reaches his earliest retirement date, and WHEREAS, the Board’s policy is to require that the cost for the actuary’s calculations are to be borne by the parties to the domestic relations proceedings, and the order provides that the Participant shall be responsible for any and all additional costs for actuarial services, and WHEREAS, said matter had been discussed with Legal Counsel who has opined that the applicable terms of said court order are consistent with the provisions of the Retirement System and applicable law including Public Act 46 of 1991 (MCLA 38.1701) as amended, therefore be it RESOLVED, that the Board of Trustees acknowledges receipt of said court order, will pay pension benefits consistent with said court order subject to an application being filed by either the Participant or the Alternate Payee seeking payment, and further RESOLVED, that upon application of either the Participant or the Alternate Payee, this file be forwarded to the Board’s actuary for calculation of the benefits, and further RESOLVED, that a copy of this resolution be immediately attached as the top sheet of the Participant’s pension file and other appropriate records be kept for the Retirement System relative to this matter, and further RESOLVED, that copies of this resolution be sent to Michael C. Bauss, the Participant; Paul S. Kowal, Esq., attorney for the Alternate Payee; and the Board’s actuary. Motion by Wellhausen, supported by Solak, to adopt the resolution as presented. Ayes: All. The motion carried; the resolution is hereby adopted. 3. Telephone – discussion The City has changed to new phones. The pension phone number would have to stay on the old phone (the Board pays for that line) and the City extension number is on the new phone, so there are two phones on the Pension Technician’s desk. Varney updated the Board. Motion by Solak, supported by Varney, to do nothing at this time. Ayes: All. The motion carried. 4. Paul Reno – DROP Resolution and annuity withdrawal – discussion Police Officer Paul Reno applied for the DROP from the Police Department effective September 5, 2012. All required paperwork is on file in the Pension Office. The following DROP retirement resolution was considered: R 12-10-18-2 WHEREAS, OFFICER PAUL RENO of the Police Department has voluntarily elected to participate in the DROP per application dated July 20, 2012, as submitted to the Police and Fire Retirement Board, and WHEREAS, OFFICER PAUL RENO has elected to DROP, effective September 5, 2012, per Appendix D, Section (A) of the applicable collective bargaining agreement and WHEREAS, OFFICER PAUL RENO has served the City of Sterling Heights Police Department for 20 years, as of the date of the DROP election, and WHEREAS, the Trustees of the Police and Fire Retirement Board, Act 345 have verified that OFFICER PAUL RENO meets all those requirements for participation in the DROP as established in both Act 345 and the applicable collective bargaining agreement, and WHEREAS, the Trustees have provided all the necessary personal and financial data to the Board’s Actuary as it relates to OFFICER PAUL RENO and his spouse, DIANA RENO, and the necessary reports have been reviewed and completed by the Actuary, which includes a copy of his marriage license and his spouse’s full name, documentation re: date of birth, and social security number, and WHEREAS, OFFICER PAUL RENO has reviewed this data and has elected to receive his service retirement benefit in the form of a regular retirement pension with a potential benefit of sixty (60%) percent of the regular retirement pension being paid to his surviving spouse, who must also be his spouse on the effective date of retirement, and WHEREAS, the forenamed member has requested an annuity withdrawal (total lump sum distribution from the defined contribution plan) under the provisions of the Retirement System and collective bargaining agreement, and WHEREAS, the Police and Fire Retirement Board is now in receipt of the necessary final average compensation amount. The Board of Trustees on receipt of this data forwarded it to the Board Actuary for the updated retirement data. The actuary has indicated to the Board, in writing, the retirement benefits due OFFICER PAUL RENO, as a result of this data, and THEREFORE, BE IT RESOLVED, that OFFICER PAUL RENO after having been credited with 20 years, as of the date of the DROP election, is hereby granted a service retirement in accordance with Act 345 and the collective bargaining agreement, effective September 5, 2012, and further RESOLVED, OFFICER PAUL RENO’s request for annuity withdrawal, authorizing a payment representing the total amount of his contribution plus interest to the date of his participation in the DROP, be granted, and further RESOLVED, that OFFICER PAUL RENO shall be paid an annuity withdrawal (total lump sum distribution from the defined contribution plan) of $88,488.32, and a yearly regular retirement pay in the amount of $55,884.72 or monthly benefits of $4,657.06, during DROP participation and after termination of employment, and further RESOLVED, that the Treasurer shall immediately calculate and pay OFFICER PAUL RENO the appropriate amounts. All amounts shall be paid into the DROP account until the date of termination, after which time distribution shall be made in accordance with the collective bargaining agreement. Motion by Solak, supported by Wellhausen, to adopt the resolution and approve the annuity withdrawal as presented. Ayes: All. The motion carried. 11. Trustee Comments Varney discussed the FOIA charges that were not being received by the Board. In the future, any FOIA charges will be placed into the pension fund. The Board also discussed Act 728 and receiving a cost study on any pension changes in new contracts. Wellhausen will check with the City Clerk about the cost study for the new MAP contract. 12. ADJOURNMENT Motion by Nash, supported by Wellhausen, to adjourn at 3:45 p.m. Ayes: All. The motion carried; the meeting is hereby adjourned. Mark Wellhausen Secretary