MINUTES
SPECIAL JOINT MEETING OF THE BOARD OF TRUSTEES OF THE POLICE AND FIREMEN’S
PENSION FUND AND THE BOARD OF TRUSTEES OF THE CITY EMPLOYEES’ RETIREMENT FUND
February 17, 2015
A SPECIAL JOINT MEETING of the Board of Trustees of the Police & Firemen Pension Fund and the Board of Trustees of the City Employees Retirement Fund was held on Tuesday, February 17, 2015 in the City Hall Auditorium.
Those in attendance included Mayor Elinor Carbone, Corporation Counsel Raymond Rigat, members of the Board of Trustees of the City Employees Retirement Fund Gregg Cogswell, Paul Cavagnero, Anne Ruwet, Christopher Anderson, Drake Waldron, Raymond Drew, John Schnyer, and Mark Kugler,and Members of the Police & Firemen’s Pension Fund Douglas Benedetto, Robert Conforti, Glenn McLeod, Darlene Battle, Edward Delisle, and Stephen Krzanowski and Officer Oscar Segui. City Treasurer Arthur Mattiello and Comptroller Alice Proulx were also present along with Gene Kalwarski and Kathy Yeh of Cheiron, Inc.
Members Paul Samele, Nancy Michna, Sheryl Lewis, Robert Lizotte, Mark Zordan, Craig Audia, Alex Rehnberg, Angelo LaMonica and Richard Zaharek were absent.
Mayor Carbone called the meeting to order at 6:30 p.m. beginning with the Pledge of Allegiance.
PRESENTATION: CHEIRON, INC.
Mr. Gene Kalwarski and Kathy Yeh of Cheiron, Inc. presented Preliminary Actuarial Valuation Results. Ms. Yeh showed the Boards charts comparing contributions into the plan, benefits and expenses coming out of the plan, investment returns for the year, net cash flows coming out of the plan, the number of active participants, the number of vested participants, the number of retirees, the plan’s liability, the plan’s actuarial value of assets, and the plan’s market value of assets. She said the Police and Firemen’s Pension Fund liability has increased but the funded ratio has gone from 54.7% to 60%, driven by the great asset returns that the plan has seen. She said this ratio is at least 64%, when based on market value. Ms. Yeh said the City Employees’ Retirement Fund contributions are also not enough to cover
benefits and expenses, so it too must rely on the investment return. She said the funded ratio has increased from 69.3% to 76.9% with a market value ratio at 80%.
Mr. Kalwarski explained that the Government Accounting Standards Board (GASB 67 and 68) are now requiring plans to use a funding method called the Entry Age Normal, whereas Torrington has been using something called the Unit Credit. He said if we continue to use the Unit Credit for accounting, two sets of books will be required. Mr. Kalwarski said the reason GASB prefers Entry Age Normal is that over the lifetime of each participant, it tries to produce a level cost as a percentage of the participant’s payroll, whereas the Unit Credit pays the benefits earned each year, which increases the costs, as participants get older. Both methods result in the same amount of money at the end, he said, and assets are not changed by the funding method but the liability is.
Mr. Kalwarski recommended a switch to Entry Age Normal because it will have a more level cost. He said this is a good year to do this because costs have declined and any extra money put in the fund will only serve to lower the contributions in the future.
Councilor Cavagnero asked what other municipalities are doing. Mr. Kalwarski replied that about 75 to 80% of public plans use Entry Age Normal and noted that the Unit Credit works great if you do not have a closed system where costs will definitely spike up. He said that with an open system, even though a person’s costs go up, the new hires come in and they bring the costs down. Torrington does not have those new hires coming in, he said.
Councilor Ruwet asked the Comptroller if this would increase the need for resources in her Department. Ms. Proulx said it would be the Actuaries that are affected.
Mr. Kalwarski noted that switching to Entry Age Normal would not increase any city employees’ contributions. This year it will increase City contributions, creating more predictable, level and lower contributions in the future.
Mayor Carbone said she is looking for a consensus from the Boards of Trustees for the switch to Entry Age Normal’s level funding that will prevent funding spikes from budget year to budget year. She said this is a good year to do this because while it looks like a slight increase in the funding strategy, over the 2014 budget year, it actually is a little bit of a reduction. She said it will create a level playing field where we will know what we need to budget year to year.
Mr. Kalwarski said the switch will put more money in now, so there would not have to be as much put in later. The only argument in favor of the Unit Credit funding would be if the City could not afford the $200,000 extra contribution, he said.
Councilor Cavagnero asked how the Board of Trustees of the Police & Firemen’s Pension Fund felt. Commissioner Benedetto said the switch to Entry Age Normal made sense.
City Employees’ Retirement Fund
On a motion by Councilor Anderson, seconded by Councilor Cavagnero, the Board of Trustees of the City Employees’ Retirement Fund voted unanimously to accept the minutes of the regular meeting held October 6, 2014.
On a motion by Councilor Waldron, seconded by Councilor Cogswell, the Board of Trustees of the City Employees’ Retirement Fund voted unanimously to accept the minutes of the regular meeting held November 10, 2014.
On a motion by Councilor Waldron, seconded by Councilor Anderson, the Board of Trustees of the City Employees’ Retirement Fund/Local 1579 Public Works voted unanimously to accept the pension computation for Leonard LaRosa, Caretaker II for the Torrington Parks Department, effective December 13, 2014, after completing 26.21 years of service, including .58 years of military buy-back time.
Police & Firemen’s Pension Fund
On a motion by Commissioner Benedetto, seconded by Commissioner McLeod, the Board of Trustees of the Police and Firemen’s Pension Fund voted unanimously to accept the minutes of the regular meeting held October 1, 2014.
On a motion by Commissioner Benedetto, seconded by Commissioner Conforti, the Board of Trustees of the Police and Firemen’s Pension Fund voted unanimously to accept the minutes of the regular meeting held November 10, 2014.
On a motion by Commissioner Benedetto, seconded by Commissioner Battle, the Board of Trustees of the
Police & Firemen’s Pension Fund/IAFF Local 1567 voted unanimously to accept the pension computation for Joseph McElroy, Captain for the Torrington Fire Department, effective September 28, 2014, after completing
26.04 years of service.
On a motion by Commissioner Benedetto, seconded by Commissioner McLeod, the Board of Trustees of the
Police & Firemen’s Pension Fund/IAFF Local 1567 voted unanimously to accept the pension computation for Timothy Tharau, Fire Marshal for the Torrington Fire Department, effective January 4, 2015, after completing
25.06 years of service.
On a motion by Commissioner Benedetto, seconded by Commissioner Conforti, the Board of Trustees of the
Police & Firemen’s Pension Fund/IAFF Local 1567 voted unanimously to accept the pension computation for Michael Soliani, Captain for the Torrington Fire Department, effective January 11, 2015, after completing 25.02 years of service.
On a motion by Commissioner Benedetto, seconded by Commissioner McLeod, the Board of Trustees of the
Police & Firemen’s Pension Fund/IAFF Local 1567 voted unanimously to accept the pension computation for
Scott Hutson, Captain for the Torrington Fire Department, effective January 25, 2015, after completing 26.54
years of service.
ADJOURNMENT
On a motion by Commissioner Benedetto, seconded by Commissioner Conforti, the meeting was adjourned at
7:17 p.m.
ATTEST: Joseph L. Quartiero, CMC
City Clerk
Carol L. Anderson, CMC
Asst. City Clerk
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