Marco Island police and fire pensions exceed earnings expectations, assumptions remain on target

Scott Owens, left, and Charlie Mulfinger of Greystone Consulting explain market trends during a meeting of Marco Islandís Fire/Police Pension Board in February 2013. Cheryl Ferrara/Eagle Correspondent

Scott Owens, left, and Charlie Mulfinger of Greystone Consulting explain market trends during a meeting of Marco Islandís Fire/Police Pension Board in February 2013. Cheryl Ferrara/Eagle Correspondent

Tom Kirstein listens to a report on actuarial valuation Thursday at a meeting of Marco Islandís Fire/Police Pension Board. Seated beside Kirstein is Tricia Amrose of Gabriel, Roeder, Smith and Company. Cheryl Ferrara/Eagle Correspondent

Tom Kirstein listens to a report on actuarial valuation Thursday at a meeting of Marco Islandís Fire/Police Pension Board. Seated beside Kirstein is Tricia Amrose of Gabriel, Roeder, Smith and Company. Cheryl Ferrara/Eagle Correspondent

Police Officer Al Schettino of the Marco Island Fire/Police Pension Board reviews an actuarial report for the fire pension Thursday from Gabriel, Roeder, Smith and Company. Seated beside him is Laura Litzan, city clerk, and to her left is Mary Husted, secretary of the Fire-Rescue Department. Cheryl Ferrara/Eagle Correspondent

Police Officer Al Schettino of the Marco Island Fire/Police Pension Board reviews an actuarial report for the fire pension Thursday from Gabriel, Roeder, Smith and Company. Seated beside him is Laura Litzan, city clerk, and to her left is Mary Husted, secretary of the Fire-Rescue Department. Cheryl Ferrara/Eagle Correspondent

— Members of Marco Island's Fire/Police Pension Board were "high fiving" Thursday as they reviewed 2012 investment results.

Both pensions performed better than expected. That performance could affect the amount the city is required to contribute to meet Florida funding requirements. The pensions receive money from state, city and employee contributions.

Charles Mulfinger and Scott Owens of Graystone Consulting outlined current investments held by each pension fund. Although both plans hold separate portfolios, many fund managers reviewed by the consultants were common to both plans.

Owens outlined market drivers that negatively impacted growth including global volatility, the Fiscal Cliff, slowdown in Federal spending and continued long-term unemployment. But other factors drove investments higher such as manufacturing, the service sector, housing and household incomes.

The strength of international and emerging markets came as a surprise. Even with Europe's debt concerns, investments in the region were best performers.

At the end of 2012, assets in the police fund totaled $5.1 million. The firefighters' pension was a little more than $7.8 million.

Jeffrey Amrose of Gabriel, Roeder, Smith and Company presented actuarial information for the fire pension. The actuarial representative for the police pension was not present at the meeting.

Actuarial valuations measure funding progress to determine an employer's future contribution rate. The report mirrored the city's fiscal year with data through Sept. 30, 2012.

In fiscal 2012, the city and state contributed $483,397 to the fire pension, and is expected to contribute $550,390 in fiscal 2013. Similar calculations will be used to predict the city's contributions for fiscal 2014.

Since the city is fairly young, both plans have been in existence for a short time. As the plans mature and more employees retire, administration of their benefits will become increasingly cumbersome.

The board discussed hiring a third-party administrator to handle functions of both pensions including preparing reports for the city, processing claims, preparing agendas and minutes, filing claims and coordinating with service providers. Currently, many of the functions are handled by city staff and department employees. A new administrator would give funds' participants one contact person for most issues.

Several names for administrator were discussed, but Vickie Kelber, of the police pension board, said she was not comfortable making a choice without sending out a Request for Proposals. The board voted to send out the RFP and choose an administrator at a later date.

After hearing a case that resulted in a full-disability decision in 2012, the board decided to draft a formal process for disability determination and review. The formalization document passed unanimously.

Tom Kirstein asked the pension funds' attorney if the city's annual audit report was acceptable as an audit of pension funds. Funds receive review as part of the city's Comprehensive Annual Financial Report. The attorney said the audit met requirements and was accepted by the Division of Retirement, part of Florida's Department of Management Services.

Board members felt that as funds grew, it might be advisable to produce a formal independent audit. The board asked the city to include a Letter of Engagement and quote request for a piggyback but separate audit when the city seeks its auditor for fiscal 2013.

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Comments » 1

RayNetherwood writes:

Will we become CA or IL ... What controls are in place to keep Marco Island out of the proverbial fire? Are we defined benefit or defined contribution? Need to move to the latter if not already there. Employees and their pensions need to be like tax payers and benefit programs .... everyone needs to have some skin in the game ... healthcare benefits too.

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