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HomeMy WebLinkAbout2018 - Defined Contribution Plan Minutes -Z4 S z �1r FINANCE DEPARTMENT U G 124 W. Michigan Ave., 8"Floor Lansing, Michigan 48933 (517)483-4500 �ICHI � �� Virg Bernero, Mayor PUBLIC MEETING NOTICE Following is the schedule of meeting dates for calendar year 2018 for Defined Contributions Plan: February 1, 2018 May 3, 2018 August 2, 2018 November 1, 2018 These meetings are regularly held in the Finance Conference Room on the 8th Floor of City Hall at 9:00 a.m. "Equal Opportunity Employer" CITY OF LANSING DEFINED CONTRIBUTION PENSION PLAN/ VEBA PLAN MEETING OF November 1, 2018 The Administrative Board was called to order at 9:00 a.m. Present: Members: Bennett, Endsley, Good, Sanchez-Gazella—4. Absent: Cahill, Harkins Others: Anne Omiljan, Michael A. Johnshoy, Wells Fargo. It was moved by Ms. Good and supported by Ms. Sanchez-Gazella to approve the Administrative Board Committee Meeting Minutes for August 2, 2018. Adopted by the following vote: 4 -0. There were no public comments. Mr. Johnshoy provided the report of the VEBA Post Employment Health Care Plan and trust for the period ending September 30, 2018. Mr. Michael Johnshoy provided an update on the volatility of equity markets. He noted that equities have pulled back, and reviewed the asset class returns in October. Mr. Johnshoy discussed tariffs, the wage pressure on inflation and the rise of interest rates. Ms. Anne Omiljan provided an overall review of the Defined Contribution plan assets. Ms. Omiljan's report noted that the plan has 184 participants with a balance, 110 were new participants, and ten distributions were processed from the plan as of September 30, 2018. She discussed that the forfeiture account has been replenished to approximately $12,000, Ms. Omiljan discussed the fee schedule for the City of Lansing Defined Contribution Plan, Ms. Omiljan discussed moving from revenue-sharing funds to reduce fees to participants. She discussed moving from revenue-sharing funds to lowest share class fund. Mr. Johnshoy explained that with revenue sharing, the fee is collected from the participants' account and the revenue share is distributed sometimes two or three months later. Ms. Omiljan and M. Johnshoy provided a list of the current funds with recommended share class that had lower revenue sharing or with zero revenue share. They reviewed the options available and recommendations for each fund within the City of Lansing Defined Contribution plan(see attached). It was moved by Ms. Bennett and supported by Ms. Sanchez-Gazella to accept the recommendations provided by Ms. Omiljan and Ms. Johnshoy for each fund within the City of Lansing Defined Contribution plan. Adopted by the following vote: 4—0. City of Lansing Defined Contribution Plan November 1, 2018 Page 2 Mr. Johnshoy provided a fund search analysis for the funds that were on the watch list. He recommended that the committee maintain the American Century Inflation Fund and the Goldman Sachs Growth fund, but transition to the lower share class. Mr. Johnshoy recommended replacing Invesco International Growth Fund and Neuberger Berman International Fund with the MFS International Growth fund. It was moved by Ms. Bennett and supported by Ms. Sanchez-Gazella to accept all of the recommendations from Wells Fargo to remain with American Century Inflation Fund, and replace Invesco International Growth Fund and Neuberger Berman International Fund with the MFS International Growth Fund, and moving all funds to the cheapest share class. Adopted by the following vote: 4 - 0. There were no committee reports. There were no public comments. Ms. Williams reported that Ms. Cahill and Ms. Harkins would not be at the meeting and requested to be excused. It was moved by Ms. Good and supported by Ms. Bennett to excuse Ms. Cahill and Ms. Harkins from the November Defined Contribution Pension plan meeting. Adopted by the following vote: 4 - 0. The Defined Contribution agreed to hold off election of members, election of officers until the Mayor appoints a committee member and the membership has been re-constituted. Ms. Omiljan explained that Wells Fargo has requested an updated Authorized Signers form. Ms. Omiljan explained the different types of authorized signers, all plan activities, services and record-keeper. Mr. Endsley suggested waiting to make changes until the Mayor appoints a committee member and the membership has been re-constituted. Ms. Williams distributed the 2019 Meeting Dates: February7, May 2, August 1,November 7. It was moved by Ms. Good and supported by Ms. Sanchez-Gazella to approve the 2019 Meeting dates of the Defined Contribution pension plan/VEBA plan. Adopted by the following vote: 4— 0. Mr. Endsley had no updates on the default to City email for Wells Fargo Statements and asked that the item remain on pending. Ms. Williams explained that Mr. Barkyoumb had inquired about what happens with health care for adult children who are beneficiaries of a retiree pension. The information was provided to the City Attorney's Office. It was moved by Ms. Good and supported by Ms. Bennett to adjourn the November Defined Contribution Pension Plan meeting. Adopted by the following vote: 4 - 0. The meeting adjourned at 10:26 a.m. CITY OF LANSING DEFINED CONTRIBUTION PENSION PLAN/ VEBA PLAN MEETING OF August 2, 2018 The Administrative Board was called to order at 9:03 a.m. Present: Members: Bennett, Cahill, Endsley, Good, Harkins, Sanchez-Gazella—6. Absent: 0 Others: Anne Omiljan, Wells Fargo. It was moved by Ms. Good and supported by Ms. Sanchez-Gazella to approve the Administrative Board Committee Meeting Minutes for May 3, 2018 with corrections. Adopted by the following vote: 6 -0. There were no public comments. Ms. Anne Omiljan provided an update on the volatility of equity markets, international equities has pulled back and asset class returns. Ms. Omiljan provided her report of the VEBA Post Employment Health Care Plan and trust for the period ending June 30, 2018. Ms. Omiljan stated that the VEBA plan assets portfolio has growth of approximately 5 million since January 1, 2015. Ms. Omiljan provided an overall review of the Defined Contribution plan assets. Ms. Omiljan's report noted that the plan has 174 participants with a balance, 95 are new participants, and six distributions were processed from the plan. She discussed the fees charged to the plan from the forfeiture account, and provided a Wells Fargo Fee Summary. The forfeiture account has been replenished to approximately $8,000. Ms. Omiljan reviewed the City of Lansing Defined Contribution Plan performance. She discussed moving from revenue-sharing funds to reduce fees to participants. The Defined Contribution Plan committee requested that Mr. Johnshoy bring the lower cost investment funds for the committee to compare. With lower cost shares, in general the total fees are lowered. Ms. Omiljan noted that going to the lower cost investment would include fees on the participants' statement that they have not seen. Ms. Omiljan reviewed the City of Lansing Defined Contribution Plan performance. She reviewed participation by fund and discussed the cash flow increases since inception and the investment performance summary. Ms. Omiljan reviewed the performance and market values of the City of Lansing portfolio. She discussed the Target My Retirement plan for participants. Ms. Omiljan reviewed the funds on the watch list: Goldman Sachs Growth, Invesco International Growth, and the American Century Inflation Adjustment Bond. Ms. Omiljan stated that Mr. Johnshoy might bring alternative to the some of the watch list funds as the committee is considering moving to lower cost share funds. Ms. Omiljan also indicated the target-date funds would probably change. City of Lansing Defined Contribution Plan August 2, 2018 Page 2 Ms. Sanchez-Gazella recommended a presentation to communicate these changes to the participants. Ms. Sanchez-Gazella stressed that education is important. Ms. Omiljan explained a 30-day notice communicates the changes. Ms. Omiljan discussed topics that could be included in a presentation to City employee: asset allocation, diversification, investing. Ms. Omiljan also reported that the settlement reported in the news recently, dated back from 2005 to 2007 and all banks were included in the review, due to sub-prime mortgages. There were no committee reports. Ms. Bennett stated that she would contact the Mayor regarding the appointment of a member. The Defined Contribution agreed to hold off election of officers until the Mayor appoints a committee member and the membership has been re-constituted. Mr. Endsley had no updates on the default to City email for Wells Fargo Statements and asked that the item remain on pending. Ms. Williams explained that Mr. Barkyoumb had inquired about what happens with health care for adult children who are beneficiaries of a retiree pension. The information was provided to the City Attorney's Office. Mr. Endsley recognized the loss of Mr. Bill Barkyoumb who died May 19, 2018. Mr. Endsley stated that it was a great loss to the City of Lansing and its citizens. Mr. Barkyoumb gave fifty years of service to the State of Michigan and City of Lansing. It was moved by Ms. Cahill and supported by Ms. Bennett to adjourn the August Defined Contribution Pension Plan meeting. Adopted by the following vote: 5 - 0. The meeting adjourned at 9:58 a.m. CITY OF LANSING DEFINED CONTRIBUTION PENSION PLAN/ VEBA PLAN MEETING OF May 3, 2018 The Administrative Board was called to order at 9:04 a.m. Present: Members: Bennett, Cahill, Endsley, Good (9:18), Harkins, Sanchez-Gazella—6. Absent: Others: Anne Omiljan, Michael Johnshoy, Wells Fargo. It was moved by Ms. Harkins and supported by Ms. Sanchez-Gazella to approve the Administrative Board Committee Meeting Minutes for February 1, 2018. Adopted by the following vote: 6 -0. There were no public comments. Ms. Omiljan provided an overall review of the Defined Contribution plan assets. Ms. Omiljan noted that there were 91 new participants and 6 distributions from the plan. She discussed the fees charged to the plan from the forfeiture account, and provided a Wells Fargo Fee Summary. The forfeiture account has been replenished to approximately$7,000. Ms. Omiljan explained that plan contributions that are not vested for employees who separate go into the forfeiture account. Ms. Omiljan provided a Wells Fargo progress report in light of the bank's sanctions form the Office of the Comptroller of the Currency (OCC). Well Fargo performed a self-audit and hired a third party to conduct a detailed analysis and provided their discoveries to the OCC. These discoveries led to the settlement agreement with the OCC and Consumer Financial Protection Bureau (CFPB). Wells Fargo customers were made whole and procedures put in place to monitor going forward. A recent self-discovery shows rollovers being made into other Wells Fargo products in the Wealth Management area. Ms. Omiljan reviewed the last 5 quarters of the City of Lansing Defined Contribution Plan. There were 18 total distributions and there were no City of Lansing participants that rolled over to another Wells Fargo product. Ms. Omiljan discussed the Wells Fargo Community programs in the area. Mr. Michael Johnshoy provided an update on equity markets and the economy, asset class returns and wage pressure concerns. Mr. Michael Johnshoy provided his report of the VEBA Post Employment Health Care Plan and trust for the period ending December 31, 2017, Mr. Johnshoy stated that the VEBA plan assets portfolio is positioned well and performance has been strong. Mr. Johnshoy discussed the importance of asset diversification. Mr. Johnshoy reviewed the City of Lansing Defined Contribution Plan performance. He reviewed participation by fund and discussed the cash flow increases since inception and the investment performance summary. Mr. Johnshoy reviewed the performance and market values of the City of Lansing portfolio. He discussed the Target My Retirement plan for participants. Some plans are using the Target My Retirement as their default. City of Lansing Defined Contribution Plan May 3, 2018 Page 2 Mr. Johnshoy reviewed the Wells Fargo performance grading system for the investment funds. He reviewed funds that were showing a C rating: Invesco International Growth, Goldman Sachs Growth Opportunity, JP Morgan Mid Cap Value, and the Dodge and Cox International Stock fund. Mr. Johnshoy did not recommend any action at this time. The American Century Inflation Adjusted Bond is the only D rated fund and this sector is out of favor at this time. Should improve when rates start to rise. There were no reports. Ms. Williams reported that no person submitted a nominating petition. The Defined Contribution agreed to hold off election of officers and subcommittee membership until a member is appointed by the Mayor. Mr. Endsley requested that the default to City email for Wells Fargo Statements be placed on pending. Ms. Williams updated the pending item regarding health care of beneficiaries after retiree death. Ms. Williams explained that Mr. Barkyoumb had inquired about what happens with health care for adult children who are beneficiaries of a retiree pension. The information was provided to the City Attorney's Office. It was moved by Ms. Bennett and supported by Ms. Harkins to adjourn the May Defined Contribution Pension Plan meeting. Adopted by the following vote: 5 - 0. The meeting adjourned at 10:04 a.m. CITY OF LANSING DEFINED CONTRIBUTION PENSION PLAN/ VEBA PLAN MEETING OF February 1, 2018 The Administrative Board was called to order at 9:04 a.m. Present: Members: Bennett, Cahill, Endsley, Good, Harkins, Sanchez-Gazella—6. Absent: Others: Anne Omiljan, Michael Johnshoy, Wells Fargo. It was moved by Ms. Good and supported by Ms. Harkins to approve the Administrative Board Committee Meeting Minutes for November 3, 2017. Adopted by the following vote: 6 -0. There were no public comments. Ms. Omiljan provided an overall review of the Defined Contribution plan assets. Ms. Omiljan noted that there were 99 new members, and 13 distributions from the plan. She discussed the fees charged to the plan from the forfeiture account, and provided a Wells Fargo Fee Summary. The forfeiture account has been replenished to $8,016.57 through December 31, 2017. Ms. Omiljan explained that plan contributions that are not vested for employees who separate go into the forfeiture account. The total plan assets increased $410,081.04 over the past year. Ms. Omiljan also reviewed the Annual Executive Summary for the City of Lansing that include industry topics, key statistics of the Defined Contribution Plan, services provided and milestones. Ms. Omiljan reviewed the Target My Retirement, managed account. She discussed the service team and the channel summary report. Ms. Angela Bennett reviewed the employee groups that are members of the plan. Mr. Michael Johnshoy provided an update on equity markets and the economy, asset class returns and wage pressure concerns. Mr. Michael Johnshoy provided his report of the VEBA Post Employment Health Care Plan and trust for the period ending December 31, 2017. Mr. Johnshoy stated that the VEBA plan assets portfolio is positioned well and performance has been strong. Mr. Johnshoy discussed the importance of asset diversification. Mr. Johnshoy reviewed the City of Lansing Defined Contribution Plan performance. He reviewed participation by fund and discussed the cash flow increases since inception and the investment performance summary. Mr. Johnshoy reviewed the Wells Fargo performance grading system for the investment funds. Mr. Johnshoy reviewed the performance and market values of the City of Lansing portfolio. He reviewed funds that were on the watch list: Invesco International Growth, American Century Goldman Sachs. Mr. Johnshoy updated the Committee regarding the addition of TRowe Price Blue Chip Growth to replace William Blair. Plan participants will be mapped to TRowe Price and will receive notice from the City of Lansing Retirement Office, effective March 2, 2018. City of Lansing Defined Contribution Plan February 1, 2018 Page 2 Ms. Williams reported that Mr. Bill Barkyoumb submitted a letter of resignation from the Defined Contribution Plan Governing Committee due to his retirement, effective January 26, 2018. Karen Williams distributed the Defined Contribution Governing Committee rules for vacancy and elections. Ms. Williams reported that the Mayor could appoint a member to fill the vacancy for the unexpired term of Mr. Barkyoumb. Karen Williams indicated that Ms. Bennett and Mr. Barkyoumb were appointed to the committee to fill vacancies. These terms would expire in April 2018. The Defined Contribution Governing Committee will hold an election for the committee vacancy and election for the expiring term. The Defined Contribution Committee discussed requesting that the Mayor re-constitute the membership to include the Finance Director, It was moved by Ms. Good and supported by Ms. Sanchez-Gazella to request that the Mayor change the Defined Contribution CommitteeNeba Plan membership to include the following mayoral appointments: Finance Director, City Treasurer, Human Resource Director and the Executive Assistant to the Mayor. Adopted by the following vote: 5 -0. It was moved by Ms. Good and support Ms. Cahill to keep the Defined Contribution subcommittee membership until after the Mayor re-constitutes the Board membership and the election of new members. Adopted by the following vote: 5 —0. Mr. Endsley reported that he would check with the Information Technology department regarding rules to default to City email for Wells Fargo Statements. Ms. Bennett reported that the Board should establish administrative processes in place for retirees who do not receive pension from the City of Lansing for the payment of health care coverages. Mr. Endsley added the processes should be similar across the City's retirement plans. Ms. Bennett stated that she would check with the City Attorney's Office regarding administrative rules or providing a written process for health care. Ms. Williams also indicated that she will contact the City Attorney's Office to have an attorney assigned to the Defined Contribution Committee. Ms. Williams updated the pending item regarding health care of beneficiaries after retiree death. Ms. Williams explained that Mr. Barkyoumb had inquired about what happens with health care for adult children who are beneficiaries of a retiree pension. The Defined Contribution requested that the pending item be kept on the agenda for the City Attorney's Office to review and provide an opinion. The meeting adjourned at 10:13 a.m.