HomeMy WebLinkAbout2011-06-17-RB-minLEXINGTON RETIREMENT BOARD AGENDA
CARY MEMORIAL LIBRARY, LEARNING CENTER
JUNE 17, 2011
Meeting to discuss pension issues
Sen. Ken Donnelly, Rep. Jay Kaufman and Peter Diamond
MINUTES OF THE JUNE 17, 2011 RETIREMENT MEETING
Present: Robert Cunha, Joseph Foley, Michael McNabb, Alan Fields, Marguerite Olive
Absent: Rob Addelson
Bob Cunha called the meeting to order at 8:30.
Bob began the meeting speaking of the funding aspects and the problems faced by
retirement systems. He mentioned the meeting was requested to bounce ideas back and
forth. Lexington Retirement is approximately 90% funded, far ahead of other systems.
The Town of Lexington had the foresight to put in money early on which has helped the
system. The concern of how to maintain an 8% assumption was discussed. Is it still
achievable?
Mike mentioned that even with the confines imposed on the retirement systems,
Lexington ha done very well.
Sen. Donnelly spoke about pension reform and mentioned that the proposals of
increasing the 3 year average calculation to a S year average plus increasing the age for
retirement should save the systems 10 %.
Peter Diamond asked if there was anything included in the proposals what would allow
deduction rates to be changed.
Actuarial studies for Lexington Retirement were done with and without smoothing and
the one accepted by the Board and Jim Lamenzo at PERAC incorporated the smoothing
method which softened the impact of the losses in 2008. The Board also asked Buck to
do studies using lower assumption rates. After reviewing the studies, the Board realized
that lowering the assumption to 7% would impact the amount the Town would need to
appropriate for the retirement system too greatly.
Peter mentioned the deficit should be made up slowly so not to impact the Town's tax
revenue and Town expenses. He felt there is a role for smoothing and not overreacting.
Accepting a range of assumption values should be OK The Board should determine the
percentage of earnings with which they would be comfortable and drop the idea that 8%
will be the goal. Ask the actuary to present a range of 4% - 8% to Town Meeting and
look at adjusting the normal costs.
If pension reform passes, all systems will be affected and will have to do new funding
schedules.
Sen. Donnelly mentioned that some states have fluctuating contribution rates that depend
on the investment returns. It was mentioned that rates that fluctuate, whether for
contribution rates or for assumptions would be a problem.
Peter mentioned the possibility of requesting the Town set up a reserve fund for benefits.
He feels there would be a strong case. In down markets such as 2008, the system could
use some of the reserve to help pay benefits.
There was a discussion of using excess earnings once 100% funding is achieved to help
fund post retirement health. Peter said health should be a separate issue. If 100%
funding is achieved, the excess earnings should remain with the pension fund and the
Town needs to continue with the appropriations. Due to fluctuations in the market, there
will be tinges the system will fall below 100 %. Bob mentioned the problems Wellesley
faced after becoming more than 100% funded and the decisions they made that caused
problems.
A motion was made, seconded and approved unanimously to adjourn the meeting at 9:40
AM.
The next meeting will be held June 23, 2011, 8:00 AM at Cary Memorial Library in the
Learning Center.
Robert W. Cunha, Chairman
Michael McNabb, Appointed Member
Robert Addelson, Ex Officio Member
Joseph Foley, Elected Member
Alan Fields, Appointed Member