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Edgewater General Employees Pension Board
Regular Meeting
Monday, July 17, 2000
1:03 p.m.
Minutes
CALL TO ORDER:
Chairman Lichter called the General Pension Board Regular Meeting to order on Monday,
July 17, 2000 at 1:03 p.m. in the City Hall Conference Room.
ROLL CALL:
Members present were: Chairman Judy Lichter, Eric Bosse, Jack Corder, Kathy Cornelius,
Lisa Miller and Mike Tenney. Jim Hoppe was absent. Also present was Jack Ascherl,
Consulting Agent of Record, Kara Koch, Principal Financial Group Representative,
Kenneth Hooper, City Manager, Lynne Plaskett, Planning Director, Debby Sigler,
Personnel Director and Donna Looney, Recording Secretary.
APPROVAL OF MINUTES:
Jack Corder moved to approve the January 19, 2000 minutes. Seconded by Eric Bosse.
Motion CARRIED 6 -0.
NEW BUSINESS:
Jack Ascherl reviewed the fund statement report of October 1, 1999 through June 30,
2000 by going over each investment account along with the expense statement for the
same period. He discussed the U.S. Stock account being discontinued and the monies
from that being moved 50% into Large Company Growth and 50% into Large Company
Value.
Eric Bosse asked about the actuarial valuation report of October 1, 1999. Mr. Ascherl
referred to the change section on page 2. Principal used the October 1998 figures for the
benefit change amount and the projected cost would have been about $363,000. In this
report, using the 1999 figures, the cost for the changes comes out to be $301,864. Which
is a difference of about $61,000 better. Jack Corders' question was would this reduce the
cost of the changes to the City. Mr. Ascherl answered yes, but Principal would still have
to run the actuarial using the 1999 numbers of employees and their salaries to have the
exact figures. He is checking with the State to see if they will accept the 1998 numbers so
they do not have to redo 1999 Actuarial. Mr. Ascherl explained people were taking
advantage of getting many actuarials so Principal is now charging about $500 for them
other than your yearly. There was a discussion as to whether or not to have a new
actuarial done.
Lisa Miller made a motion to redo the actuarial to include the 1999 numbers in order for
the valuation to be accurate. Seconded by Kathy Cornelius. Motion Carried 6 -0.
Mr. Ascherl referred back to the change section of the October 1999 actuarial valuation
report. One of the cost factors was the reduction of the assumed earning from 8% to
7.5 %. The major reason for this is that no new people will be coming into the plan. As
time goes on the investment range is getting shorter and shorter and they have to have the
cash to pay out retirement.
Principal also suggests we consider changing to a direct fund option and Mr. Ascherl
agrees. Under our current "benefit index" plan Principal guarantees our payment, which
is a positive thing. Under a "direct fund" option plan the City would be guaranteeing the
payments. Most accounts are on direct fund bases. New Smyrna has already voted to go
with this. Mr. Ascherl will get Principal to run a scenario so the board can see the
difference between the direct pay out and the benefit index. Ms. Koch made note to take
care of this.
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Ms. Plaskett asked Mr. Ascherl if he got the information regarding the defined benefit
employees stopping that plan and becoming part of the defined contribution plan. He
apologized for not having it but when Principal runs the two scenarios, one under the
benefit index and one under the direct fund, they will know what their options are as far
as closing this plan out and going into the defined contribution plan. After further
discussion it was the consensus of the members that they are not interested in changing
from this guaranteed -type plan.
Lisa Miller asked about the lump sum death benefit and how much is paid out to the
beneficiary. Mr. Ascherl explained it would be the accrued value as of the date of death.
That would be a discounted figure from what it would be at the normal retirement date.
There was further discussion about how the calculation works and that currently the plan
states that if you did not have a spouse your retirement monies go back into the plan.
Ms. Sigler reminded the board that one of the proposed changes is; if you do not have a
spouse, the lump sum payment will go to a named beneficiary or your estate. She also
stated, for the record, Plan I or Plan II changes do not include anything about freezing this
plan and moving into the defined contribution plan.
Ms. Plaskett stated she still wants the information so they can make a decision at the
membership meeting.
There was more discussion about this being a closed plan and Mr. Ascherl referred to
page 8 of the actuarial showing the schedule of Emerging Retirement Liability. The
number of employees that will be retiring between now and 2008 and the projected
monthly benefit and expected increase to `Benefit Index" that shows you the impact of
those retired on the fund at that time.
OLD BUSINESS:
Ms. Sigler wants to make sure there is a complete list of everything the board is
recommending to change in the plan. Mr. Ascherl told the board they need to go over
the proposed changes since we are getting the Actuarial redone. At this time the members
reviewed the proposed changes with Mr. Ascherl.
Jack Corder stated they talked before about going to Council with Plan I and what's the
actuarial cost for that. Mr. Ascherl said that is what they are going to do now, make sure
they have the right changes and redo it with the right numbers.
Mr. Ascherl explained the concept of a "drop plan" to the members. This type plan would
be good from the cities point of view because they are no longer making contributions but
better for the employee because a lot of the funding of plans are done in the later years.
Some people like having a lump sum and you can have the plan written to say you can
collect a lump sum up to a certain amount, with the balance being in monthly payments.
This is something that can be done at any time.
Mr. Ascherl stated that when we get the corrected actuarial we would know the precise
cost of the changes that are proposed. City Manager Hooper asked if the changes could
be prioritized and separate costs run on them. He also asked the timing for expecting this.
Mr. Ascherl agreed to ask for separation of the costs per changes and added that these
changes should be funded to go in effect October 2, 2001.
MISCELLANEOUS
None
ADJOURNMENT
Ms. Cornelius made a motion to adjourn, being seconded by Ms. Miller.
Meeting adjourned 2:15 p.m.
Minutes submitted by:
Personnel Department