Chairman Thomas Kelley called the meeting to order at 8:30 a.m. in the conference room of the Plymouth Retirement Office. Present Board members were Thomas Kelley, Lynne Barrett, Richard Manfredi and Shawn Duhamel. David Malaguti was absent. Also present were Debra Sullivan, Wendy Cherry, Anthony Tranghese from FIA. Attorney Michael Sacco arrived later in the meeting, at 10:05 a.m.
Section I: Regular Business – Regular Meeting
Minutes:
Minutes dated March 25, 2011: Regular Board Meeting
Minutes dated March 25, 2011: Executive Session
Board to review amended February 18, 2011 Executive session Minutes – necessary language omitted expanding on necessity of session. Board asked to take a vote of amended minutes.
Motion to approve meeting made by Mr. Manfredi; seconded by Ms. Barrett. Unanimously voted.
Warrants:
Warrant #2-2011, dated February 28, 2011: $3,725,345.68 (Partial)
Warrant #3-2011, dated March 31, 2011 $1,408,424.32 (Partial)
Warrant #4-2011, dated April 30, 2011 $ 121,277.86 (Partial)
Warrant #5-2011, dated May 31, 2011: $ 3,545.76 (Partial)
Motion to approve warrants made by Mr. Manfredi; seconded by Mr. Duhamel. Unanimously voted.
Public Comment:
None
Section II: Solicitation & Correspondence:
The Board received the following correspondence:
PERAC – Financial Bulletin – First Quarter 2011
PERAC Memo's:
PERAC Memo #16/2011: Taxation of a Lump Sum Distribution under Section 9
PERAC Memo #17/2011: Investment Regulation Hearings
PERAC Memo #18/2011: Investment Manager List
PERAC Memo #19/2011: Tobacco Company List
Educational Conferences:
Mass. Retirees Contributory Retirement System 2011 Annual Spring Conference to be held June 5-8, 2011.
Motion to approve attendance to the 2011 Annual Spring MACRS conference made by Mr. Duhamel; seconded by Mr. Manfredi. Unanimously voted.
Capital Markets Consortium Conference – OTC & Listed Derivatives under Dodd-Frank, April 27, 2011. The Board will not be attending this conference.
Investment Correspondence:
The following investment correspondence was received:
• O'Melveney & Myers LLP News Release: SEC Votes to Propose a New Rule & Rule
Amendments Regarding Compensation Committee Structure and Disclosure
• Paul Todisco of PRIM, has sent an email to notify the Board of the resignation of Karen
• Gershman, PRIM's Chief Operating Officer and Chief Financial Officer.
• SCOTT+SCOTT LLP – 2011 First Quarter Report
• Westfield Mgmt – conference Monday, June 6th, 2011, R.I.
• Templeton Investment First Quarter 2011 report
• RFP – FIA will present preliminary findings for RFP's: (1) High Yield Bonds, (2) Flouting Rate Bank Loan
• MacKay Shields has sent the First Qtr. 2011, Investment Summary Report, dated April 12, 2011
• FIA – Capital Markets Flash Report for March 2011
• Eaton Vance April 2011 Market Insight
• Westfield Capital Mgmt – First Qtr. Investment Commentary
Town of Plymouth Finance Committee Meeting
Finance Committee Chairman William Driscoll has asked that the retirement system provide the Finance Committee with a presentation on how the pension system is set up, funded and managed. The meeting is scheduled for Wednesday, May 18, 2011, to begin at 7:00. Chairman Kelley told the Board that he and Mr. Duhamel will be attending this meeting.
Audit
Ms. Sullivan told the Board that an independent 2010 financial audit with Powers and Sullivan is scheduled to begin 6/1/2011.
Actuarial Valuation:
Board to discuss preparation of new valuation study based on 2010 data.
Motion made to hold off another year to complete the next actuarial valuation; seconded by Ms. Barrett. Unanimously voted.
While discussing the upcoming actuarial valuation, Chairman Kelley asked the Board whether or not they would like to consider putting out an RFP for actuarial services.
Ms. Barrett told the Board that she thought it was a good idea to take a look at other options, to which Mr. Duhamel agreed. Ms. Barrett also told the Board that, as the Finance Director of the Town of Plymouth, she needs to find an actuary to conduct an OPEP valuation, so including that in the RFP would be helpful.
Ms. Sullivan told the Board that PERAC does actuarial valuation free of charge, if the Board was interested in pursuing that option. Ms. Barrett said that she would rather look into a private actuary, to which the rest of the Board agreed.
Motion to issue and RFP for an actuarial valuation & OPEB valuation, as of January 1, 2011, made by Ms. Barrett; seconded by Mr. Manfredi. Unanimously voted.
Legal:
The Board received the following legal correspondence:
• Letter dated April 7, 2011 from Attorney Sacco to the Board re: Plymouth Police Department-Policy on Taser Demonstration
• PERAC Findings and Recommendation on a prior audit regarding authorizations on retirement system bank accounts.
• Pension Governance Hearing – State House
• Joint Committee on Public Service Hearing on 4/7/2011. Summary of Bills effecting retirement, provided by MACRS. Mr. Duhamel told the Board that he expects to see some type of pension reform, which would affect new hires, go to the Senate in June 2011.
Third Party Portfolio Monitoring Correspondence:
Scott & Scott: Quarterly Review for period ended March 31, 2011. The Boards' custodial bank, State Street Corporation, is aware of this and has checked into this on behalf their clients.
Robbins Geller Rudman & Dowd: Class Action Settlements for Claims due June 2011
Investment Performance:
Tony Tranghese of FIA was present and did a preliminary review of the investment performance for 1st quarter 2011. At March 31, 2011, the total fund was up 4.4% (net of fees), to $113 million. He reminded the Board that MacKay Shields has continued to under-perform and remains on watch list. He also told the Board that Eaton Vance has continued to struggle, and recommended placing them on watch list too.
Motion to place Eaton Vance on watch list made by Ms. Barrett, seconded by Mr. Duhamel. Unanimously voted.
Investment Policy Statement
Mr. Tranghese gave the Board a draft copy of the Investment Policy Statement to review. After some discussion on the upcoming manager interviews, it was decided that Mr. Tranghese will hold off on completing the Investment Policy Statement, until the new managers are chosen.
Chairman Kelley told the Board that he would like to give the Finance Committee a draft copy, along with information on the Systems' investments & OPEB funding when he and Mr. Duhamel meet with them on May 18th, 2011. Mr. Tranghese will prepare a packet for the Finance Committee, which will also include a summary on the Boards' RFP process.
RFP Review:
RFP responses have been reviewed by FIA, and the respondents from each have been narrowed down to small groups for Board discussion.
Floating Bank Loan
Mr. Tranghese told the Board that the Floating Bank Loan is a new investment category and when reviewing the RFP's, they were looking for a conservative manager. Eleven total responses were received and narrowed down to five managers; Eaton Vance, Babson Capital Management, Invesco, OFI Institutional & SEIX Investment Advisors.
After some discussion, Mr. Tranghese told the Board that FIA ranked Babson Capital Management, Invesco & Eaton Vance as their top candidates, mainly for the size and stability of the companies, and their depth of exposure in this type of investment.
Ms. Barrett asked about Eaton Vance's performance in this investment, as they were just placed on watch list by the Board for continued under-performance in their Large Cap Value portfolio. Mr. Tranghese assured the Board that this product and its managers and completely separate from the Large Cap Value portfolio and team.
Motion to have Babson Capital Management, Invesco & Eaton Vance come in for an interview on Friday, May 13, 2011, for the Floating Bank Loan RFP, made by Ms. Barrett; motion seconded by Mr. Manfredi. Unanimously voted.
High Yield Fixed Income
Mr. Tranghese told the Board that there were twenty-one responses for High Yield Fixed Income, from twenty firms; Penn Capital sent in two different fund proposals. This RFP was put out to bid due to MacKay Shields continued under-performance. The twenty-one managers were narrowed down to six by FIA:
Total in Product Total Firm Assets
Allianz Global Investors Capital $1.6 Billion $49 Billion
Fort Washington Investment Adv. $3.5 Billion $36 Billion
Invesco $2.4 Billion $616 Billion
Loomis Sayles $8.6 Billion $151 Billion
Neurberger Berman $10.8 Billion $189 Billion
Penn Capital $840 Million $5.6 Billion
Mr. Tranghese pointed out that Penn Capital is a much smaller firm than the others, but has shown great returns in this investment.
Motion to have Neuberger Berman, Penn Capital & Invesco come in for an interview on Friday, May 13, 2011, for the High Yield Fixed Income RFP, made by Ms. Barrett; seconded by Mr. Manfredi. Unanimously voted.
Manager interviews will be held on Friday, May 13, 2011, and will be approximately twenty minutes each.
Section III: Membership:
Annual Membership Statement
Recommend Larry Stone produce annual statements to membership a.s.a.p. PTG not ready at this time to produce them as well as correct some problems. Ms. Sullivan told the Board that the annual statements in PTG had some problems and that she had contacted PTG. Mr. Duhamel asked Ms. Sullivan to call Brian Bowler of PTG and check on the status of the annual statement module, and that he would also call to check. Mr. Duhamel suggested that the Board hold off on making any decisions until the May meeting.
Note:
Chairman Kelley told the Board that he had to leave the meeting for an important appointment at 10:05 a.m., and asked Vice Chairman Manfredi to continue to conduct the meeting in his absence.
New Hires:
Town:
9% Morgan, Patricia, Group 1, Procurement Assistant
Perm. Full-time $816.80 weekly
Start Date: 04/11/2011
Motion made to approve new hires by Ms. Barrett; seconded by Mr. Duhamel. Unanimously voted.
Retirements:
School:
Hunnefeld, Rheda A, Group 1, Main Office Secretary
16 years, 4 months service (4/20/94 – 4/30/11)
Superannuation retirement, option b
Retirement date: April 30, 2011
Freitas, Nancy, Group 1, Cafeteria Worker
26 years, 1 month service (10/6/88 – 5/7/11 & buy back of 1 year, 9 months svc)
Superannuation retirement, option b
Retirement date: May 7, 2011
Motion made to approve retirements by Ms. Barrett; seconded by Mr. Duhamel. Unanimously voted.
Transfer:
School:
Transfer to MTRB
Egan, Bobbi S., Group 1, Paraprofessional
Prior Service: MTRB: 9/01/93-4/30/00-Six (6) Yrs. Eight (8) Mos.
Service: Town of Plymouth: 8/30/05-6/30/10 Four (4) Yrs. Ten (10) Mos.
Total Transfer: $23,483.72
Motion made to approve transfer by Ms. Barrett; seconded by Mr. Duhamel. Unanimously voted.
Member Pro-rated Service:
Patrick Ellis, Group 1, Airport employee, has been subject to the Board's creditable service regulation regarding a part-time employee that later goes on to full-time employment. Mr. Ellis worked part-time for the period of 9/25/94 through 4/19/07, at 16 hours per week. Based upon the Board's regulation, he was prorated at 43% of his total service for that period.
Mr. Ellis requested copy of e-mails between HR and this office under the Freedom of Information Law. For informational purposes only – no vote needed.
Proration of Service Regulation:
Board to discuss the current proration of part-time benefits for a member who has become a full-time employee. The current regulation uses an equivalency of 37.5 hours to prorate part-time service, however, DPW employees work 40 hours per week, and Fire employees are regularly scheduled 42 hours per week. Atty. Sacco told the Board that he could easily amend the current regulation regarding proration of service to be based upon the regular weekly schedule of the employee.
Motion made by Ms. Barrett to allow Atty. Sacco to amend the current Board regulation on prorated service to be based upon the regular weekly schedule of the employee; motion seconded by Mr. Duhamel. Unanimously voted.
Retiree Dependent Allowance Overpayment:
Dawn Spencer-Gammon, widow of Oscar Gammon, has received an overpayment of the dependent allowance on her monthly retirement checks from the period of July 2000 to present. Eric Gammon graduated high school at age 19, in June 2009, at which time the $90 monthly allowance should have stopped. Ms. Gammon has submitted a request to the regarding possible repayment options for Ms. Gammon and or, instituting Chapter 32, Section 20(5)(3), Needham Bill.
Motion made by Mr. Duhamel that the Board institute the Needham Law, since this overpayment was not caused by the retiree, and could cause a significant hardship to repay it; motion seconded by Ms. Barrett. Unanimously voted.
Retiree Stipend Issue:
Jeffrey McGinnis received stipend earnings through contractual agreement. It was determined that this stipend was subject to retirement contributions. The first time that it was discovered that contributions were not being taken was in 2004. Mr. McGinnis made up the deductions in 2004 to receive credit for these earnings. Town payroll was informed to begin taking contributions from these earnings in September 2004. It has been determined that the extra deductions were never implemented by payroll, and subsequently, Mr. McGinnis's retirement benefit did not include these earnings. Mr. McGinnis is requesting that the Board allow him to make up these additional contributions now, in order that his retirement allowance can be recalculated. Because Mr. McGinnis is a retiree, the Board will need to discuss what avenues it has available to it.
Mr. McGinnis was present with his counsel, Atty. Michael Akashian. Atty. Sacco stated that although it is recognized that these stipends should have been subject to retirement and therefore included in his high three-year average, it is unclear if the IRS Tax Code will allow re-payment of these deductions in a year in which no ordinary payroll deductions were taken. Atty. Akashian said that he understood the matter and would wait to hear back from Atty. Sacco on PERAC's response.
Motion made by Mr. Duhamel to have Atty. Sacco send a letter to PERAC for information on whether or not a repayment for prior stipends can be made after retirement; seconded by Ms. Barrett. Unanimously voted.
Section IV: Executive Session:
The Board shall convene in Executive Session pursuant to M.G.L. c 30A, s. 21(a)(3) and (5) to discuss pending litigation and results of medical panel correspondence for Deborah Silva.
Pursuant to MGL Chapter 30A, Section 21 (a)(3), and(5) the Board will enter into executive session to hold a disability evidentiary hearing for Jerry Vaughan, former Group 4 Fire Fighter.
Pursuant to MGL Chapter 30A, Section 21 (a)(3), and Section (5) to discus litigation strategy in Michael Daley matter.
Roll-call vote to enter into executive session at 10:40 a.m.:
Ms. Barrett yes
Mr. Manfredi yes
Mr. Duhamel yes
The Board will re-enter into the regular meeting immediately following executive session.
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Motion made to adjourn both Executive Session and the Board meeting at 11:10 a.m. by roll-call vote:
Ms. Barrett yes
Mr. Manfredi yes
Mr. Duhamel yes
The Board then re-entered into the regular meeting.
Section V: New Business:
Mrs. Sullivan told the Board that she was concerned with the administrative security levels on the Retirement Board's Rockland Trust accounts. Currently, the Treasurer, Assistant Treasurer and Cash Management Clerk can get in and make administrative changes in the accounts. After being locked out of the account recently on a Friday afternoon when Town Hall was closed, Ms. Sullivan was told by Rockland Trust that she was not listed as an "Authorized Administrator" on the account. She told the Board that she would like herself, as the Director, as well as Wendy Cherry, Assistant Director, to be listed as authorized administrators on these accounts, so that any problems with security or lock-out situations may be addressed immediately. In addition, she told the Board that she would like the Cash Management Clerk to be removed as an authorized administrator, and used only as an alternate check signer on the account.
Motion made by Ms. Barrett to add Debra Sullivan and Wendy Cherry as authorized administrators only (not as signers) on the Rockland Trust Retirement System accounts; motion seconded by Mr. Manfredi. Unanimously voted.
Adjournment:
Motion made to adjourn meeting at 11:20 a.m. by Mr. Duhamel; seconded by Ms. Barrett. Unanimously voted.
Next Meeting:
May 13, 2011, 8:30 a.m. - RFP Manager Interviews
May 27, 2011 8:30 a.m. - Annual COLA Vote
May 27, 2011, 8:35 a.m. - Regular Board Meeting
The Town of Plymouth Retirement Board unanimously voted to approve these minutes at their meeting on Friday, May 27, 2011. Original, signed minutes are available at the Retirement Office, 10 Cordage Park Circle, Suite 240, Plymouth, MA.
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