Old Saybrook Pension and Benefits Board January 23, 2014 Meeting: Minutes
Members Present: Suzanne Taylor, Eileen Torrenti, Ray Muratori, Gary Lehrman,
Absent: Carl Fortuna, Steven Sheehan and Carol Voigt
Others: Tom Forma, Kevin Nichols of Merrill Lynch, Chris Kerwin of Lord Abbett, Steve Lemanski, Lisa Carver, Sharon Migliaccio, Joe Johnson, Maureen Reilley
The meeting was called to order at 7:08 p.m. introductions were made around the room and guests welcomed.
Chair’s Report
A request was made by Suzanne to revisit the November 21, 2013 meeting minutes to discuss two items.
First, she welcomed Ray Muratori to his being reappointed. He confirmed that he had been sworn in officially. Suzanne noted that the entire board had requested his reappointment at the November meeting and noted the Nov. minutes reaffirmation of the Board vote.
Secondly, she revisited the Actuarial Matters portion of the minutes pertaining to the volunteers of the subcommittee, Ray Muratori, Eileen Torrenti and Lisa Carver to meet and discuss the 4 different scenarios identified in Steve Lemanski’s proposal for changes to the Town Employees Retirement plan. Ray stated that he still agrees with an approach to study alternatives without extensive reviews of other town plans. Gary asked about the feasibility of seeking other actuarial evaluations and their costs in comparison to Milliman. A discussion of the pros and cons of this approach ensued. During the discussion Steve Lemanski said that they would lay out all the options but would not make a recommendation as they prefer to stay neutral. Gary would like Carl Fortuna’s
blessing on choosing how to approach the study. It was agreed that the subcommittee take 30 minutes to sit with Carl and explore various study options. Therefore the sub- committee hopes to meet prior to our February meeting.
A discussion on our next year’s budget recommendations ensued. Added to the already submitted budget request was an additional $2000 for administration expenses. Lisa will bring it to Carl’s attention. In addition, an increase to Milliman was noted from $21,000 to $25,000 and a benefit increase by $3,000.
Benefit statements for members of the Fire Department have been distributed as well as those for town employees. Suzanne was hoping to explain them but JT had distributed them already. Joe Johnson confirmed that there were no changes since Suzanne spoke to them a year ago. Lisa, noted that they do get questions once people have looked at their statements. A suggestion was made by Suzanne to have a discussion / workshop in the spring and that we should send a note to the major Union leadership requesting their interest in having such.
Suzanne is looking for a board member to attend the Freedom of Information Act Workshop presented by Thomas Hennick on Thursday, January 30th at 6pm, at the Pasbeshauke Pavilion. Ray Muratori volunteered to attend and we will have a report from Ray on the agenda in February.
Old Business
The 457 Plan
Gary’s report about ICMA shows that we finished the year just under 13%. The number of new members in 2013 equaled 10. Gary asked Tom Forma and Steve Lemanski to scan the report and comment on the performance. Tom said it looks pretty typical for a DCP, lots of great choices including federally insured CDs. They offer a big choice in Mutual Funds and they did a good job selecting them. Steve added that the members are picking good funds with comparable returns to the DB plan. For next steps, Gary thinks it would be helpful if every plan member sat down for 15-30 minutes with an ICMA advisor. Suzanne reminded the board that at the CFFP conference, Laura said she would like to come and speak. Gary indicated that his preference would be more 1x1 approach with the individual
members. Suggested that Laura could send a letter to each one informing them of a representative’s availability. Suzanne asked about the list of Companies which was attached to Gary’s report. Gary agreed to improve the details on the last page. A copy of the report is attached.
Financial Reports
Chris Kerwin from Lord Abbett gave a brief introduction on their firm. Lord Abbett was founded in 1929. They are an independent, privately held money management firm. As of September 30, 2013, Lord Abbett has $136 billion in assets under management with 34% in equity assets and 66% in fixed income assets. The investment approach is model-informed sector allocation, research-driven security selection and rigorous quantitative risk management. A copy of their report is enclosed. All in all the bond performance is improving.
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 17.86% and 11% for the 2013-14 fiscal year for the Pension Funds. As of January 21, 2014 there is $18,964,775 in the Pension funds and $1,008,419 in the Health Care Reserve fund. Tom mentioned that the Economy is reinventing and stocks are in a better place than bonds. Suzanne asked about the London Company. Tom reported they are -1.74% as of January 21st and up 6% for the fiscal year. Kevin reported that he still feels there is a lot of opportunity in International.
Suzanne asked Steve Lemanski how we are doing with our investment returns compared to other towns. Steve thinks ours is the strongest he’s seen. Tom pointed out that we took less risks and did better.
Actuarial Matters
Suzanne handed over copies of the Benefit Statements for the Fire Department to Sharon Migliaccio to keep in the office.
Steve began with the Town of Old Saybrook Retirement Plan. Reminded the Board that the snapshot on the cover is as of June 30, 2013. Assets grew from 15 million to 17 million. Steve explained that the smoothed asset value helps dampen swings in the market. Under the Executive Summary Steve mentioned that membership increased 37% in five years. The funded ratio is 82.6%. The Town contribution increased by $45,000. Steve noted that because the annual contribution has not been fully funded, the unfunded portion caused the increase. Normal cost is about 8.3% of payroll. Unfunded liability about 8.1% of payroll. Steve stated that 83% is a healthy ratio, to get to 100%. Steve’s recommendation is 15.70% for fiscal year 2013-2014 and 16.38% for fiscal year
2014-2015.
A discussion began over the recommendation that if the employees put in an extra 1% contribution, it would reduce the Town’s. Suzanne mentioned that Steve Sheehan would not be comfortable with anything less than 10%. Ray asked what last years was. Suzanne confirmed that it was 10% last year as well as the year before and the year before that. Suzanne pointed out that the recommendation of 10% is now 6% away from what our Actuary recommends.
Ray Muratori made a motion to the Board to recommend 10% contribution for funding the Towns Defined Benefit Plan. Eileen Torrenti seconded it. All in favor. Gary Lehrman made a motion on requesting in negotiations that the Selectman increase the employee contribution. Ray Muratori seconded the motion. All in favor.
Steve Lemanski presented the Fire Department Retirement Plan. Beginning with membership trends he noted that there were 58 eligible members which has increased to 72 as of December, 2012. He notes that there was also growth in the inactive membership. Effective July 1, 2014, the benefit will change to $270 per year of years of service up to 30 years. Steve pointed out that the effect of this change was an increase in the Unfunded Actuarial Liability of $226,900 and an increase in the ARC of $30,900. Another change was a new mortality table to calculate life expectancy. Moving on to the Funded Status, Steve noted that the fund ratio was at 57% but is now at 45%. Suzanne reminded everyone that this is a younger plan than the Town plan. The annual required contribution for fiscal
year 2013 was $68,716.
Ray made a motion for the Old Saybrook Fire Department Plan annual required contribution for current year $117,695 and for 2015/2016 to $127,111. Gary Lehrman seconded the motion. All in favor. It should be noted that the fire department plan valuation is done every other year and usually by projecting calendar year data to a fiscal year basis.
Suzanne reported one bill, totaling $18,893.75 was submitted by Milliman for Actuarial Services on the Fire Company Retirement Plan and Old Saybrook Retirement Plan and Benefit Assistance. Gary Lehrman moved to approve payment and seconded by Ray Muratori. All were in favor. The bill was hand delivered to Sharon Migliaccio for payment in accounting. A copy of the bill is attached.
There being no further business Eileen Torrenti made a motion to adjourn, which was seconded by Ray Muratori. The meeting ended at 9:17p.m.
Minutes submitted by Maureen Reilley
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