Old Saybrook Pension and Benefits Board November 21, 2013 Meeting: Minutes
Members Present: Suzanne Taylor, Eileen Torrenti, Ray Muratori, Gary Lehrman, Carol Voigt, Steven Sheehan, Absent: Carl Fortuna
Others: Tom Forma, Kevin Nichols of Merrill Lynch, Chris Quinson of Invesco, Steve Lemanski via speaker phone, Chief Michael Spera, Tim McDonald, Lisa Carver, Barbara Maynard, Kathy Marshall, Maureen Reilley
The meeting was called to order at 7:02 p.m. introductions were made around the room and guests welcomed.
A request was made by Suzanne to adjust October, 24, 2013 meeting minutes to include the salary, (which was previously approved) for the new secretary is $20/hour. A motion was made by Carol to approve the adjustment to the minutes and Ray seconded, motion approved.
Chair’s Report
Suzanne and Carol recently attended the CPPF (Connecticut Public Pension Forum). During the conference they met with Laura Hancock our representative for our 457 plan. She indicated that she would be willing to do whatever it takes to be available to counsel our employees, even providing free lunch if necessary. Carol and Suzanne also met with the Financial Directors from North Branford and Newington. The latter is the main trustee of their pension plan. They heard three interesting talks relating to first defined benefit plans, second, an idea to Invest in Connecticut and thirdly a discussion of Emerging Markets. Carol mentioned that she got the most out of the meet and greets of others at the conference as well as the sharing of ideas. The next forum will be offered in spring, 2014
Carol Voigt expressed her satisfaction with the chair and made a motion to nominate her to continue acting as Chairperson for the Pension and Benefits Board. All approved. Suzanne noted that Ray Muratori’s term on the board is up at the end of this year and asked the board to confirm their satisfaction with Ray and in turn ask he be reappointed. The Board concurred and Suzanne asked if Lisa Carver would take this up with our First Selectman and follow up with the board.
An Executive Session was requested by Suzanne Taylor to discuss the School Resource Officer Assignment. Motion so made at 7:13 p.m., by Steve Sheehan, seconded by Ray Muratori and all approved.
The Board came out of executive session at 7:27 p.m. A motion was made by Steven Sheehan and seconded by Gary Lehrman to accept the legal opinion of Atty McHale and approve continuation of Lt. McDonald’s retirement so long as his current temporary assignment as a School Resource Officer is less than 10 months. All were in favor and the motion carried.
Financial Reports
Chris Quinson from Invesco gave a quick review of the status of Invesco’s foreign investments, beginning with the fund managers and highlighting the three ways Invesco looks at a Company, through earnings, quality and value. It was noted that International investments are doing well and up for the quarter. Kevin Nichols wanted to mention that Merrill Lynch is also hearing a lot about Europe’s continued improvement. A summary of Invesco is attached.
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Merrill Lynch Report: Tom Forma and Kevin Nichols presented the board with an overview of all our investments. Two spiral bound books detailed monthly and yearly results showing an overall result for the calendar year up 15.36% and 7.16% for the 2013-14 fiscal year for the Pension Funds. As of November 19th there is $18,534,321.00 in the Pension funds and $989,436.00 in the Health Care Reserve fund. The asset allocation in the Pension funds are 70% Equities, 27% Fixed Income and 3% Cash. Ray asked about the percentage of the
International fund allocation, which is 11% in the Pension funds and 4% in the Health Care Reserve fund.
Suzanne asked Tom about Invest in Connecticut, which she mentioned hearing about during the Pension Forum she attended. She summarized that it is an alternative investing program in such things as highways, toll roads and the like. The concept simply put allows you to get a percentage of the profits by loaning them the money. It was mentioned that the state of Florida is currently involved in this type of alternative investing as well as some countries (Canada) are also doing it. Tom’s point of view on the subject is that it is a wonderful idea but questions how you are making money and what the likelihood is. Steven is open to it if a situation came up like investing in a local business.
The discussion of Future Needs and Oversight by the Committee due to the fact that the Board does not meet again for 2 months was discussed. When Tom sends Suzanne the December report, she will determine if a special meeting would be desirable due to any potential financial issues.
Status of The Blue Cross funds in the town’s sweep account at Liberty Bank were mentioned and our Finance Director, Lisa Carver noted that there had been a slight improvement in the interest paid by Liberty bank.
Old Business
The 457 Plan
Gary’s report about ICMA indicated that there was an overall improvement yield of 11.3% for the funds as a whole. Gary was asked if we could determine how individuals were doing and he was tasked with reaching out to Laura Hancock, from ICMA to get that information. Also he suggested that Laura meet with the board on a quarterly basis. Gary mentioned a webinar and the possibility of converting to ROTH IRAs. A copy of the report is attached.
Suzanne noted that it has only been since July of 1998 that employee contributions to the Pension Fund are not taxed until they are received as payout in retirement, i.e. they are pretax dollars. Just how to report these earnings in retirement is complex due to some years of taxable contributions and some pre tax. But there are charts available from IRS that our actuary can calculate or one’s tax accountant can also do this.
Actuarial Matters
Suzanne reported one bill, totaling $825.00 was submitted by Milliman for the GASB response to the Fire Department Plan for 2013. Steven Sheehan moved to approve payment and seconded by Carol Voigt. All were in favor. The bill was hand delivered to Lisa Carver for payment in accounting.
As a preliminary Suzanne reviewed some of the September 15th proposal for the actuarial study of potential change in the town pension plan just prior to the conference call with Actuary Steve Lemanski. Two committee members, Eileen Torrenti and Ray Muratori volunteered to meet with Steve Lemanski to develop what sorts of parameters we can use for the study. Lisa Carver also volunteered to become involved with the subcommittee. Suzanne also suggested that representatives from the three groups of employees, police, town and fire be included to look at it from their perspective. This will be considered subsequently.
The conference call with Steve Lemanski commenced. Steve proceeded to give his perspective reviewing the details of the proposal, which were basically in two stages. The first being a review of other comparable towns, which would cost between 3 and 5k. It was noted that an important part of the analysis is to stabilize costs. Part Two will forecast costs for at least 4 different scenarios, which includes a component for calculating post retirement income along with pension, health benefits and social security at a replacement ratio of 80-85% of the plan for career employees.
Suzanne asked if the Board is in agreement with her recommendation not to study peer groups and just look at models. Carol Voigt and Steve Sheehan are in agreement and the subcommittee agreed to meet with Steve to discuss the approach before any final decisions on the type of study are made. Such a preliminary meeting will be held sometime in January. Doing just part two will cost about 7 to 10,000 dollars. Further analysis of how to fund such a study must also correlate with the Board’s Budget and other possible allowable funding.
Fire Department Plan Update and Valuation was postponed until the next meeting as was the town valuation.
An unusual application for retirement is pending. The retiree would like to retire as of February 27, 2014 but wants to have the application approved by Dec. 20th. It is underway and should be completed in about two weeks with our actuary’s help. The Conference call ended at 8:50 p.m.
Other matters
A discussion began re the use of employees’ sick leave pay and vacation pay to pay for their retiree health insurance premiums. . Lisa Carver noted that it is a courtesy that it is held after retirement to pay premiums. Steven Sheehan made a motion, seconded by Ray Muratori that approves allowing unused, earned sick time/vacation for the purpose of paying retirement Health Insurance premiums during the first stages of retirement. All were in favor.
Suzanne also noted that a letter should have been sent to former Officer James Stone to inform him of the Board’s approval of continuing his disability for another year or until such time as he is no longer disabled. The letter should also indicate that pending no subsequent health changes a yearly review should occur and so it might do so next September (2014). It
was noted that we are setting a precedent by allowing Officer Stone’s future wife to receive health insurance. Lisa stated that she was told by Brown and Brown that we are required to do it. Lisa will follow up with Brown and Brown for the rationale behind this.
Carol asked, Will someone write a letter to former Officer Stone. Suzanne responded that Sharon was asked to do this at the September meeting and perhaps it has already been done. The matter will be explored further.
New Business
Suzanne told the Board than not only are there some updates needed for the fire department plan description, but the town pension plan also does not correspond correctly with updates to the police contract re pension benefits. Further work needs to be done here.
A request was made for the second Executive Session to discuss the appointment of a Retirement Plan Administrator. Motion so made at 9:07 p.m.
There being no further business after the close of the Executive Session at 9:46 p.m., Steven Sheehan made a motion to adjourn, which was seconded by Ray Muratori. The meeting ended at 9:47 p.m.
Minutes submitted by Maureen Reilley
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