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HomeMy WebLinkAbout2013-09-26-RB-minMinutes of the September 26, 2013 Retirement Board Meeting Present: Robert Cunha, Joe Foley, Rob Addelson, Alan Fields, Mike McNabb, Marguerite Oliva Bob Cunha called the meeting to order at 8:00 AM. The Board accepted and signed the 092713 Warrant and September payroll. The August minutes were reviewed and approved as well as the casbbooks for July 2013. New Members: (30) Raymond Barnabei, Indira Bhupatiraju, Maureen Picariello, Sarah Torilli, Laura McLain, IA; Lotoya Robinson, Rebecca Malouf, Colleen Magee, Paul Doherty, Efe Igho - Osagie, Patrick Parhiala, Elizabeth Roberts, Michael Zerdelian, Nicholas Seymourian, Kate Desjardins, Abigail Gorman, SPED IA; Colleen Mulcahy, Kyle Benson, Kelli Rich, Katherine Bloom, SSI; Matthew McGee, Barbara Dove, SCTA; Kristin Merta, SSP; Kristen McGrath, Secretary; Maureen Bamberry, Asst. Database Admin., Victoria Crowley, Katelyn Tierney, ASA; Bruce Morgan, Senior Assessor; Ronaldo DeFreitas, Custodian; David Amicangiol.i, HVAC Technician Retirements: Joanne Arsenault, Municipal Clerk, 11/8/13 Paul Todesco, Mike Trotsky and Eric Nierenberg presented the PRIT Fund Hedge Funds Portfolio Overview. Eric Nierenberg, Sr. Investment Officer — Hedge Funds and Low Volatility Strategies, was hired to oversee the PRIT Hedge Funds. He is overseeing the transition to direct hedge funds, seeking to improve precision of hedge fund performance attribution, identifying potential new direct hedge fund investments and exploring methods to lower management fees. The report states that fund returns can be separated into two pieces through quantitative analysis, beta, which are market exposures, both traditional and alternative and Alpha, which is viewed as a measure of managerial skill. PRIM looks to divide their hedge fund investments into passive and active capital allocations. PRIM already split allocations into passive and active investments in most of their other asset classes. They are looking to focus the active investments on managers who can deliver consistent, uncorrelated alpha. As of 8/31/13 the market value or the PRIT Hedge Funds was $4.8 billion, 9% of the total PRIT assets. The current long -term target is 10 %. The hedge fund portfolio consists of 1 fund -of -fund manager, I transition manager and 21 direct hedge fund managers. On October l ", Lexington Retirement Board is investing $6mm with PRIT Hedge Funds. Henry Jaung and LouAnn Eisenhut presented a quarterly review as of 6/30/13 with an interim update as of 8/31/13. The market value as of 8/31 was $119.9m, a decrease of $3.3m from 7/31. The Board noted there is too much exposure to emerging markets. Matthews, Wellington Enduring and PIMCO Global Multi -Asset were the major contributors to the loss in August. Alan noted since 2008, it was better to be invested in U.S. markets. The Board chooses mangers by their ability to make tactical decisions and asked Henry to have a discussion with PIMCO about their expectation going forward since it appears the managers have not made the correct investment decisions. Is GTAA working or should the Board look to replace this asset allocation? 40% of the total investment is with GTTA's. The Meketa report included an underlying asset allocation that includes the 5% allocations to Monroe and PRIT Hedge Funds and noted using Meketa's 2013 Annual Asset Study, the system would have a 20 year expected return of 8.2% and standard deviation of 14.5 %. There was a discussion of increasing the COLA base from $12,000. Rob asked that David Driscoll at Buck Consultants be asked to see what the impact would be by increasing the base by $1,000 increments up to $16,000. It was noted this report was done in the past and that report will be sent to the Board. The PERAC Auditors completed the 2010 — 2012 audit and the preliminary draft findings were presented to the Board. Because the first finding was the number of missed meetings by Mike in 2010 and 2011, Bob asked if both Mike and Alan would be willing to partake in conference calls if they are unable to attend a meeting. The PERAC memo concerning conference calls will be reviewed and information will be presented to the Board. The second finding referred to a member who was never changed from OBRA to Town Retirement when her hours or employment increased in 2000. A calculation has been prepared of the amount due to the retirement system and Denise Casey, HR Director, will notify the member of the issue. A third finding of a mistake in the calculation of Annuity Reserve Fund interest at year end 2011 was caused by a problem with the PTG software and this finding was removed. The Board decided to withhold any further discussion until the final draft is received. The Board reviewed Mike Sacco's response on the question of Group 2 creditable service for the dispatchers who were granted Group 2 status from May 1999 --- Oct. 2007, at which time they were placed back in Group 1. Mike's response was that putting them back into Group I was to correct an error of placing them in Group 2 and therefore they cannot be given credit under Group 2 classification for the years in question. The other Group 2 question was from Karen Simmons who had worked at Fernald School before being hired in Lexington. Mike's response was that it will be up to her to prove that she worked in a Group 2 position there and it will have to be satisfactory so the State Retirement can be billed pursuant to section 3(8)( c ) for that position of her retirement at the Group 2 rate. The 2012 excess earnings report for James Weston was received and the total due the Lexington Retirement System is now $80,470. A motion was made by Bob, seconded by Joe and voted unanimously that he will be allowed to pay off the note over a 10 -year period with no interest charged. Mike Sacco will be notified to draft a letter to be reviewed by the Board. Final Approval was received from PERAC for Daniel Griffith's Ordinary Disability. The RFP notice has been posted on the PERAC and Town of Lexington websites and to the Secretary of State Goods & Services Bulletin. The RFP is due 10/17/13 and will be opened on 10/21/13. Results will be presented at the October 24a' meeting. DPW has requested the Retirement Board invite Francine Kollias to attend a meeting in Lexington to discuss Social Security offsets. The Board is in agreement to see if we can set up a couple of meetings. The Board was reminded it was time to complete the Ethics test again. The administrator's review was put on hold to the October meeting. A motion was made, seconded and approved unanimously to adjourn the meeting at 10:45. The next meeting will be held October 24, 2013, &:00 AM at Cary Memorial Library in the Learning Center. Bladen Burns from FMI will be attending. Robert W. Cunha, Chairman Robert Addelson, Ex Officio Member Alan Fields, Appointed Member Michael McNabb, Appointed Member Joseph Foley, Elected Member