Police & Fire Retirement Board

REGULAR MEETING MINUTES OF THE STERLING HEIGHTS POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 MARCH 21, 2013 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 3:04 p.m. 2. Board Members present: Solak, Wellhausen, Lamerato, Varney. Absent: Nash (excused). Also present: Robert Kovalcik, Jason Bisdorf, Denise Jones representing Rodwan Consulting Company; Tom Michaud, Legal Counsel; and Nancy Duyck, Pension Technician. 3. APPROVAL OF CONSENT AND REGULAR AGENDAS Motion by Wellhausen, supported by Lamerato, to approve the consent agenda as presented. Ayes: Wellhausen, Lamerato, Solak, Varney. Absent: Nash. The motion carried. Motion by Wellhausen, supported by Lamerato, to approve the regular agenda as presented. Ayes: Wellhausen, Lamerato, Solak, Varney. Absent: Nash. The motion carried. 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of February 21, 2013. Motion by Varney, supported by Lamerato, to approve the minutes as presented. Ayes: Varney, Lamerato, Solak, Wellhausen. Absent: Nash. The motion carried; the minutes of the regular meeting of February 21, 2013 are hereby approved. 5. CITIZEN PARTICIPATION Robert Kovalcik and Jason Bisdorf were in attendance to observe the meeting. 6. REPORT FROM LEGAL COUNSEL No formal legal report was presented. Mr. Michaud commented on items of old business as they were considered. PRESENTATION ANNUAL ACTUARIAL VALUATION REPORT BY RODWAN CONSULTING COMPANY Denise Jones from Rowan Consulting Company was in attendance to present the 44th annual actuarial report dated December 31, 2012. The report was discussed at length. Due to not having copies of the two new contracts, it was determined that changes needed to be made to the report, which reflect the pension contractual changes. Ms. Jones was given a copy of the contracts and will revise the report for the April 18, 2013 meeting. CONSENT AGENDA 7. CORRESPONDENCE a. Correspondence from Winslow Capital dated March 12, 2013 re: change in personnel. b. Correspondence from Intercontinental received February 22, 2013 re: distribution from Real Estate Investment Fund III. c. Other correspondence received from: 1. Merrill Lynch – market value updates 2. NCPERS 3. Robbins Geller Rudman & Dowd LLP 4. University Conference Services d. Magazines received: 1. Pensions & Investments for Mach 4 and 18, 2013. 2. Institutional Investor for March 2013 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 $7,456.57 2/01/13  Subtractions (4) $2,018.61 1. 2/28 Check 1897 40.26 AT & T phone bill – 2/16/13 2. 2/01 Check 5237 909.58 Contract Payment Nancy Duyck 3. 2/15 Check 5239 909.57 Contract Payment Nancy Duyck 4. 2/27 Check 5241 159.20 Contract fee – Gurin & Gurin Electronic withdrawals (4) $1,320.69 1. 2/04 461.54 IRA contribution 2. 2/06 377.40 IRS Fed. tax w/h 3. 2/20 104.34 Michigan St. tax w/h 4. 2/21 377.41 IRS Fed. tax w/h Ending Balance $4,117.27 2/28/13 d. Transmittal of Checks There were no checks transmitted this month. 9. FUNDS MANAGEMENT a. The current value of funds as of February 28, 2013 is detailed below: Clearing account $ 1,287,295.91 Intercontinental $ 9,089,678.54 McDonnell $ 16,041,463.80 Pimco $ 16,384,411.94 Wamco $ 16,463,233.36 Winslow $ 18,768,896.95 Janus $ 19,191,510.65 Eagle $ 20,089,793.08 Herndon $ 19,988,272.21 Earnest Partners $ 10,906,069.19 NFJ/Allianz $ 15,532,779.25 AIM/Invesco $ 14,805,169.38 Checking account $ 4,117.27 TOTAL FUNDS $ 178,552,691.53  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 2/28/13. The System has received $8,428,508.10 of the 2012/13 budget of $8,815,031.00, leaving a $386,522.90 balance. c. Benefit Register Listing as of March 1, 2013 from Comerica Bank showing 293 retirees/beneficiaries with a payout for March of $1,117,932.07 and a year-to-date of $3,685,765.66. d. The current Merrill Lynch Bond index for February 2013 is 1.64%. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 1. Abel/Noser Reports for January 2013 Abel/Noser has supplied the January 2013 report. REGULAR AGENDA 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) No bills have been received for payment this month. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 2. Service Provider Disclosure Policy resolution and forms - discussion Legal Counsel had supplied a draft resolution and forms for the Board’s consideration regarding the Act 314 Amendments (PA 347). Mr. Michaud stated they are waiting for any concerns from the service providers so that all concerns can be incorporated. Motion by Wellhausen, supported by Solak, to postpone this item until the April 18, 2013 meeting. Ayes: Wellhausen, Solak, Lamerato, Varney.  Absent: Nash. The motion carried. 3. Michael Babisch – Income Withholding for Support - discussion The Board is in receipt of an Income Withholding for Support for Michael Babisch dated March 18, 2013 from the Friend of the Court which provides that the total amount of $963.50 per month should be deducted from Michael Babisch’s monthly pension check and sent to Michigan State Disbursement Fund (MISDU). After discussion, the following resolution was considered: L 13-3-21-3 Re: Michael R. Babisch – Income Withholding For Support WHEREAS, the Board of Trustees approved the service retirement of Michael R. Babisch on May 20, 2011 wherein Mr. Babisch receives a monthly benefit in the amount of $7,697.97 and WHEREAS, the Board of Trustees is in receipt of an Income Withholding For Support issued on March 18, 2013 by the Macomb County Friend of the Court, with regards to Mr. Babisch, and WHEREAS, the Income Withholding For Support provides that the Board of Trustees of the City of Sterling Heights Police and Fire Retirement System is to begin immediately to deduct the total amount of $963.50 per month from Mr. Babisch’s retirement check and to continue such deduction until further notice, and WHEREAS, the Board has discussed this matter and has reviewed the Income Withholding For Support with its Legal Counsel, therefore be it RESOLVED, that the Board of Trustees acknowledges receipt of the Income Withholding For Support, dated March 18, 2013 re: Michael R. Babisch, and further RESOLVED, that the Board, in accordance with the Income Withholding For Support directs that the amount withheld from Michael R. Babisch’s pension benefit shall be $963.50 per month, and further RESOLVED, that the Board directs that the amount of $963.50 per month withheld from Mr. Babisch’s pension benefit be paid to MiSDU commencing with the April 1, 2013 payment, and further RESOLVED, that copies of this resolution be forwarded to Michael R. Babisch, the Friend of the Court and the Board’s Custodial Bank. Motion by Wellhausen, supported by Solak, to adopt the resolution as presented. Ayes: Wellhausen, Solak, Lamerato, Varney. Absent: Nash. The motion carried. 4. 2013 MAPERS Spring Conference – discussion The Board received registration information for the 2013 MAPERS Spring Conference. It is scheduled for June 2-4, 2013 at the Shanty Creek Resort in Bellaire, MI. Three members are budgeted to attend this conference. Motion by Solak, supported by Wellhausen, to register three trustees to attend the 2013 MAPERS Spring Conference, based upon individual availability. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. 5. Thomas Fett - DROP resolution and annuity withdrawal – discussion Captain Thomas Fett applied for the DROP from the Police Department effective January 23, 2013. All required paperwork is on file in the Pension Office. The following DROP resolution was considered: R 13-3-21-1 WHEREAS, CAPTAIN THOMAS FETT of the Police Department has voluntarily elected to participate in the DROP per application dated November 30, 2012, as submitted to the Police and Fire Retirement Board, and WHEREAS, CAPTAIN THOMAS FETT has elected to DROP, effective January 23, 2013, per Appendix A of the applicable collective bargaining agreement, and WHEREAS, CAPTAIN THOMAS FETT has served the City of Sterling Heights Police Department for 24 years, 4 months and 25 days, which includes 3 years, 4 months and 25 days of municipal service credit, and 1 year of college service credit, as of the date of the DROP Election, and WHEREAS, the Trustees of the Police and Fire Retirement Board, Act 345 have verified that CAPTAIN THOMAS FETT 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 CAPTAIN THOMAS FETT and his spouse, ANTOINETTE FETT, 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, CAPTAIN THOMAS FETT has reviewed this data and has elected to receive his DROP participation 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 death, 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 CAPTAIN THOMAS FETT, as a result of this data, therefore be it RESOLVED, that CAPTAIN THOMAS FETT, after having been credited with 24 years, 4 months and 25 days, as of the date of the DROP Election, is hereby granted DROP participation in accordance with Act 345 and the collective bargaining agreement, effective January 23, 2013, and further RESOLVED, that CAPTAIN THOMAS FETT 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 CAPTAIN THOMAS FETT shall be paid an annuity withdrawal (total lump sum distribution from the defined contribution plan) of $102,273.64, and a yearly regular retirement pay in the amount of $86,887.56 or monthly benefits of $7,240.63, during DROP participation and after termination of employment, and further RESOLVED, that the Treasurer shall immediately calculate and pay CAPTAIN THOMAS FETT 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: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. 6. Ronald Gotowicki - DROP resolution – discussion Sergeant Ronald Gotowicki applied for the DROP from the Police Department effective January 27, 2013. All required paperwork is on file in the Pension Office. The following DROP resolution was considered: R 13-3-21-2 WHEREAS, SERGEANT RONALD GOTOWICKI JR. of the Police Department has voluntarily elected to participate in the DROP per application dated November 2, 2012, as submitted to the Police and Fire Retirement Board, and WHEREAS, SERGEANT RONALD GOTOWICKI JR. has elected to DROP, effective January 27, 2013, per Appendix A of the applicable collective bargaining agreement, and WHEREAS, SERGEANT RONALD GOTOWICKI JR. has served the City of Sterling Heights Police Department for 20 years, which includes 3 years of college service credit, as of the date of the DROP Election, and WHEREAS, the Trustees of the Police and Fire Retirement Board, Act 345 have verified that SERGEANT RONALD GOTOWICKI JR. 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 SERGEANT RONALD GOTOWICKI JR. and his spouse, Gayanne Gotowicki 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, SERGEANT RONALD GOTOWICKI JR. has reviewed this data and has elected to receive his DROP participation 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 death, 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 SERGEANT RONALD GOTOWICKI JR. as a result of this data, therefore be it RESOLVED, that SERGEANT RONALD GOTOWICKI JR., after having been credited with 20 years, as of the date of the DROP Election, is hereby granted DROP participation in accordance with Act 345 and the collective bargaining agreement, effective January 27, 2013, and further RESOLVED, that SERGEANT RONALD GOTOWICKI JR.’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 SERGEANT RONALD GOTOWICKI JR. shall be paid an annuity withdrawal (total lump sum distribution from the defined contribution plan) of $76,511.20, and a yearly regular retirement pay in the amount of $62,422.32 or monthly benefits of $5,201.86, after DROP participation and termination of employment, and further RESOLVED, that SERGEANT RONALD GOTOWICKI JR. shall be credited $5,424.96 monthly during the period of DROP participation because distribution of the annuity withdrawal was deferred until termination of employment, and further RESOLVED, that the Treasurer shall immediately calculate and pay SERGEANT RONALD GOTOWICKI JR. 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 as presented. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. 7. Aaron Burgess - DROP resolution – discussion Sergeant Aaron Burgess applied for the DROP from the Police Department effective January 29, 2013. All required paperwork is on file in the Pension Office. The following DROP resolution was considered: R 13-3-21-3 WHEREAS, SERGEANT AARON BURGESS of the Police Department has voluntarily elected to participate in the DROP per application dated December 27, 2012, as submitted to the Police and Fire Retirement Board, and WHEREAS, SERGEANT AARON BURGESS has elected to DROP, effective January 29, 2013, per Appendix A of the applicable collective bargaining agreement, and WHEREAS, SERGEANT AARON BURGESS has served the City of Sterling Heights Police Department for 20 years, which includes 2 years, 10 months and 8 days of municipal service credit, as of the date of the DROP Election, and WHEREAS, the Trustees of the Police and Fire Retirement Board, Act 345 have verified that SERGEANT AARON BURGESS meets all those requirements for participation in the DROP as established in both Act 345 and the applicable collective bargaining agreement, and Regular Meeting Minutes – March 21, 2013 Page Twelve WHEREAS, the Trustees have provided all the necessary personal and financial data to the Board’s Actuary as it relates to SERGEANT AARON BURGESS and his spouse, Stephanie Burgess 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, SERGEANT AARON BURGESS has reviewed this data and has elected to receive his DROP participation 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 death, 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 SERGEANT AARON BURGESS as a result of this data, therefore be it RESOLVED, that SERGEANT AARON BURGESS after having been credited with 20 years, as of the date of the DROP Election, and is hereby granted DROP participation in accordance with Act 345 and the collective bargaining agreement, effective January 29, 2013, and further RESOLVED, that SERGEANT AARON BURGESS’ 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 SERGEANT AARON BURGESS shall be paid an annuity withdrawal (total lump sum distribution from the defined contribution plan) of $75,805.78, and a yearly regular retirement pay in the amount of $62,970.48 or monthly benefits of $5,247.54, after DROP participation and termination of employment, and further Regular Meeting Minutes – March 21, 2013 Page Thirteen RESOLVED, that SERGEANT AARON BURGESS shall be credited $5,468.94 monthly during the period of DROP participation because distribution of the annuity withdrawal was deferred until termination of employment, and further RESOLVED, that the Treasurer shall immediately calculate and pay SERGEANT AARON BURGESS 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 as presented. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. 8. Account transfer for April 2013 benefit payments – discussion As of March 18, 2013, the Clearing Account had a balance of $223,508.55. An additional $1,091,000.00 is needed for the April 1, 2013 pension benefit payments and bills from the Clearing Account. Merrill Lynch has forwarded an e-mail that the additional amount needed should be taken from the Eagle and Herndon accounts equally ($545,500.00), based on the asset allocation targets. Motion by Solak, supported by Wellhausen, to approve the transfer of the appropriate amount of funds from the Eagle and Herdon accounts equally, based on the asset allocation targets, to provide for pension benefit payments and other disbursements on April 1, 2013. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. 11. Trustee Comments Mr. Lamerato inquired how the information for the actuarial report is reviewed. 12. ADJOURNMENT Motion by Lamerato, supported by Wellhausen, to adjourn at 4:19 p.m. Ayes: Lamerato, Wellhausen, Solak, Varney. Absent: Nash. The motion carried; the meeting is hereby adjourned. Mark Wellhausen Secretary