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HomeMy WebLinkAbout2009-02-25-RB-minMINUTES OF THE FEBRUARY 25, 2009 RETIREMENT MEETING Present: Robert Cunha, Joseph Foley, Rob Addelson, Michael McNabb, Marguerite Oliva Absent: Alan Fields Bob Cunha called the meeting to order at 8:00. The Board accepted and signed the 022709 warrant and the February payroll. The Board noted 5 new members: Lauren Whitcomb, Kayla Baglieri, Special Classroom Aides; Joseph Vieira, Elinor MacLellan, Custodians; Andrea Morrison, Admin. Asst. The Board noted one request for retirement: Joseph Lahiff, Detective, 1131109 John Haggerty and Brian Dana from Meketa attended the meeting. Brian deals with hedge funds at Meketa and will assist in the review for a hedge fund manager. PERAC regulations limit the investment to 5% of the retirement system to hedge funds. John Haggerty presented the February 28, 2009 interim update. Market value is $71.5. He also presented an asset allocation report showing two different alternative policy options. One included a 5% allocation to hedge funds, taken from domestic and foreign equities and the other adds 5% to high yield (credit opportunities) taken from domestic and foreign equities. Mike commented that this is clearly a unique time for investing. The hedge fund industry is a disaster right now with investors currently fleeing. Hedge fund financing should take place in the future. The current climate could last for two more years. Rob questioned if we could sacrifice the 8% assumption for the short term and move more conservatively in expectation that things will get better. Mike feels that when rational investors return, there will be a clearer picture of where to invest. Things could start flowing within six months. John Haggerty said that hedge fund fundings are on hold at Meketa and feels the Board should take it slow with the hedge fund search. Brian Dana has been evaluating the managers. There are ample amounts of opportunity, but investing in hedge fiends should be approached with caution. It will be possible to find sensible managers but it was noted that 2008 was a negative year for hedge funds. Mike feels that hedge funds offer a great opportunity going forward. There were 23 responders to the RFP for a hedge fund manager and Meketa has considerd 11 firms as semi - finalists. It was noted that all hedge funds have international exposure. John said he would make recommendations if the board wanted to make a quick decision. There was an update on the Asia PC ex -Japan manager search. John stated that Meketa is more comfortable with Aberdeen over Matthews. January review: Managers added value. January was --4.8% but lower then PRIT at year end. The PRIM decline will show in 2009 after they mark down private equity. Meketa annual asset review: • Keep exposure to equities — long -term returns + A lot of what Meketa likes is found in PIMCO and Wellington mangers ® Should be looking at high yield PIMCO High Yield Fund is part of the All Asset Fund in which the board has already invested. Wellington has exposure in the Opportunistic Fund. The manager is now working from Hawaii. Bob made a suggestion that the board should meet again in a couple of weeks due to the market volatility. Mike does not feel there is a need to meet prior to the next board meeting. ® Meketa knows where the conviction is today. 6 Bet on recovery ® Need agreement on asset allocation Board members agreed that Alan needs to be present at the next meeting. Rob discussed the 2011 budget process. The Town would like to see what the funding might be in 201 L He would like to look at extending the funding date to 2028 and would like to have Buck perform a study starting with investments of S77M and then three $5M decreases. Bob noted that we need to check the Buck contract to see if they will perform a yearly update, Bob would like to wait for another study until after the Town finds out the effect of the Municipal Relief Package. He noted that the legislators and PERAC will more then likely be adding years to the funding schedule. There was a general discussion about a letter received from Sara Arnold. Sara previously worked for the Town of Lexington from June 1979 -- January 1987 but was not a member of the retirement system. Sara now is an employee of MassPort. In 2000 she sought a buyback through MassPort of the years she worked in Lexington and Lexington Retirement accepted liability for her years of service. She is now requesting that Lexington Retirement forward a statement recognizing her start date as 1979. A motion was made, seconded and approved unanimously to deny her request. When she was employed in Lexington, she did not meet the requirements for membership in the Lexington Retirement System. Atty. Mike Sacco will be asked to respond to her letter. There was a general discussion about Buck's study on the future impact of the tutors and aides being members of the retirement system. The board agreed that representatives from the school department should be invited to attend a board meeting to be shown the report. The board suggested that School HR Director Bob Harris and Mary Ellen Dunne be invited to a future meeting to discuss the pension related issues. The board discussed the possibility of drawing up a new policy and creating a new supplementary regulation that would eliminate part -time employees from joining the retirement system. Mike indicated that there should be a year and a half of liquidity to cover the costs of the retirement system readily at hand. It was noted that the retiree payroll was in excess of $500,000 per month. There would have to be almost $10,000,000 just for the payroll for a year and a half and this amount does not include the accounts payable. Bob stated that we can withdraw funds from a number of our investments such as Fidelity Contrafund and Hartford on any given day. A motion was made, seconded and approved unanimously to adjourn the meeting at 10:30 AM. The next meeting will be held March 26, 2009 in the Town Hall. Robert W. Cunha, Chairman Robert Addelson, Ex Officio Member Michael McNabb, Appointed Member Joseph Foley, Elected Member Alan Fields, Appointed Member