MARCO ISLAND — Trustees of Marco Island’s Fire and Police Pension Boards held a joint meeting Thursday to review pension investment performance for the city fiscal year 2012 beginning Oct. 1, 2011. Local fire and police departments hold separate investment portfolios with the same firm, Graystone Consulting, the institutional division of Morgan Stanley Smith Barney.
For the city’s firefighters, a valuation and performance statement on Jan. 27, 2012, showed dollar-weighted blended investments gains of 11.1 percent since Sept. 30, 2011. Ending balance on Jan. 27, 2012, for the fire pension fund was $6,559,890.
For police, the same period returned dollar-weighted blended investments gains of 10.4 percent with an ending balance on Jan. 27, 2012, of $3,978,868. Differences in funds’ gains were due to variances in cash deposits and risk allocation.
As Charlie Mulfinger of Graystone Consulting reported, both funds performed well in the first fiscal quarter, but issues were still causing uncertainty in the market. Europe’s worries, for the moment, have been quelled, but European countries with financial problems remain in the news.
On the upside, Mulfinger reported unemployment numbers were improving and manufacturing was slowly showing gains. The Federal Reserve Board has agreed to extend low rates through 2014, so short-term rates are expected to remain low.
A positive change for the two pension programs was renegotiated fee structures. To date, fees were set at a fixed 1 percent with tiered breakpoints for larger investment amounts.
The new plan allows negotiations with stock managers to reduce fees and pass on those benefits to fire and police pension funds. The new fee amount would become .96 percent, saving the funds .04 percent. Both boards voted to accept the new fee structure that will start next quarter.
Steve Palmquist, of Gabriel, Roeder, Smith and Company, discussed actuarial standards and practices with firefighter trustees. Pension assumptions are currently based on the 1983 Group Annuity Mortality table. Palmquist suggested the plan be revised to reflect increases in longevity and to include a mechanism for future assumption improvements.
Laura Litzan, Marco Island’s city clerk, said it would be best to get the issue on the table so city council can look at it. The change would not impact firefighters currently in the pension plan, but would make costs increase. It would be up to the city council to make a recommendation to change.
Palmquist agreed to create a letter for review including costs associated with assumption changes and present it to pension trustees for discussion at their May meeting. Currently, 22 firefighters participate in the pension plan. Of those, only one has 15-19 years of service and is older than 50 years of age.
Both fire and police trustees discussed setting the funded ratio for fiscal year 2013 beginning Oct. 1, 2012. Fire pension trustees approved an actual set rate of 7.5 percent. Police trustees discussed their current rate of 8 percent. General consensus felt that 8 percent was at the high end of expectations with less than a 50 percent chance of possibility. Trustees will look at moving it lower for future fiscal years.
Funds attorney Robert Sugarman reported that annual benefits statements were mailed to fire and police personnel the last week of January. Tax returns have been submitted and mailed for both plans.
The Police and Fire Pension Board’s next meeting is scheduled for 1 p.m. on Thursday, May 3. Place will be determined closer to the date.