May 2009

This month we welcomed our two new members, Scott Bayne elected by the Fire department and Jim Naugle appointed by the mayor. Both new members wear sworn in and began their fiduciary duties. In May's meeting we also met with our consultant and two fund managers to update us on our portfolio. The board contiunes to work with our advisors to monitor the finincail markets to try to postion the fund for maximum performance.

Congratulations and Farewell

Since the last updated, the board has lost two members. Congratulations to Romney Rogers who left to take a position on the city commission. We are currently waiting for the new city administration to appoint his replacement. Farewell to Battalion Chief John San Angelo who besides serving with the Fire Department is an officer in the Naval Reserve and has been called away for training. We currently are awaiting the results of the election to fill his position. Also congratulations are in order for board member Dennis Hole who was elected by the board to fill the position of Secretary. During this time of transition the remaining members of the board continue to uphold our fiduciary responsibilities and work with our advisers to benefit all stakeholders in our plan.

January 2009

Over the last two months the board has been wrapping up one year and preparing for the next. We said goodbye to one of our trustees, and patiently await the appointment of his replacement. We are all glad to have 2008 behind us. The board is working with our advisers and managers to position the portfolio to recover when the economy turns and try to protect it if the economy doesn't turn. As of this writing the prevailing thought in the institutional investing community is that by the second half of this year the economy and financial markets should start to improve. However there is still a large group that believe it will be several years before the economy recovers and the expectations of large gains in the stock market are premature. The board is committed to remain educated and informed on all current market, economic and political issues related to pension fund administration and to communicate with peers in the public pension arena in order to keep abreast of any ideas that can be used to enhance our fund.

Pension Board Update November

Pension Board Update November

At the last board meeting the results of our customer survey where discusesd. Thank you to everyone who answered the survey, the data received was very useful and we voted to do another survey again in the future. One of the issues identified in the survey was timely posting of the meeting minutes. The minutes cannot be posted until they are approved hence they are always one month behind. We will try to send out notification when the minutes are posted. Two other items discussed were the “Me Too Two” et al. calculations and the Fire department’s 175 share plan statements. Both issues are still being worked on, the “Me Too Two” calculations require extensive calculations, and we do not want to release them until we are certain they are correct. The 175 statements should be out before the end of the year. The balances in the 175 accounts have suffered the same fate as our pension plan. As most of you are probably aware of the world wide financial markets have suffered a total collapse and we have experienced unprecedented deprecation across all asset classes. The Board is in constant contact with our financial advisors and is continually monitoring the funds performance. Several members of the fire department have asked me about the V.E.B.A. Local 765 is conducting the implementation of the V.E.B.A and at this time the Pension Board is not involved. For those wanting more information about V.E.B.A I suggest you Google, OPEB and GASB 45, I particuly like the writing of Girard Miller.

October 2008

“ Oh My God”, this was my response last week when I read my latest IRA and 457 statements. Financial reporters talk about the lost decade in Japan, that concept was unfathomable to me until I read the number on the statement under 10 year annualized return and it was .86%. I am a passive investor I put my bi-weekly contribution in every paycheck and I chose the model portfolio for my investment strategy. After 10 years of contributing the balance was the same as it was when I transferred from Broward County.
Amongst many other papers on my desk that day was one titled “Estimated Retirement Benefits,” I received it while attending the retirement seminar in September. My estimated retirement benefits calculated at my current time on the job and salary are approx $5,000 a month or $60, 000 a year. I am eligible to retire at age 50, god willing I live to 80, which means I would collect $1,800,000 from my pension. Those numbers started to make my feelings about the lost generation fade away, but it did get me thinking of how much I would have to save if my 457 was my only retirement venue. To help me with those calculations I asked a seasoned investment professional serving on our pension board, here is the answer I got:
-- The answer to your question could have many answers as it all depends on many factors but to keep it
simple:

We'll assume:
A. no COLA
B. no survivor(hence no survivor benefits)
C. you live exactly 30 years.

If the pension plan is going to pay you $5024/mo or $60,288/yr and we assume one retires at 50 and lives exactly 30 years the question becomes, "how much money would one need to accumulate by retirement to produce $60,288/yr for 30 years?"
Let's look at two possibilities:

1) 30-year US Treasury Bond is currently yielding approximately 4%. You would need $1,507,200 of 30-year Treasury Bonds paying 4% to give you $60,288/yr for 30 years. However, the comparison is not exactly fair in that, when you die at 80 your designated beneficiary would be entitled to the $1.5mil of Treasuries. *

2) If we are going to assume no survivor and no survivor benefit then an Immediate Lifetime Annuity which pays for 30 years might be an alternative solution. You would need $909,986 to pay $5,024/mo or $60,288/yr. for 30 years. *

* Some plans and distribution from such may be subject to the 59 1/2 age rule taxing distributions prior to reaching 59 1/2.


I don’t 100% understand his answer but the jest of it is, I do not believe I could ever possibly accumulate enough in a 401K, 457, IRA or anything else that would match the guaranteed life income for me and my family that is provided by our pension.
These are tough financial times for sure, the other bit of advice suggested by the above mentioned investment professional is most 457 and 401k accounts are self directed and during times like these you may want to seek professional help. Do not be afraid to ask for professional help from a financial advisor. As mentioned it last months Newsletter your pension plan is based on a well diversified investment strategy that is designed for performance over time . While the recent market decline has affected the plans performance in the short run, the plan will stand the test of time. With that being said the Pension Board is having an investment seminar on November 6th, where we are meeting with all our fund managers to discuss our strategy going forward. All are welcome to attend, contact the pension office for details.


Q&A About How Markets Affects Retirement Savings

Former Federal Reserve chairman Alan Greenspan reckons it's a "once-in-a-century financial crisis". This was one of the comments arising out of this current twist in the ongoing crisis in the financial market. The Pension office has received many calls regarding how the fund is handling recent events. The Board and the administrator is receiving frequent updates from our asset manager and the individual managers. One thing to remember is that pension investments are different from individual investments in the sense that the pension has an infinite timeline and is designed to withstand market fluctuations no matter how wide. Your pension is guided by a 8 page investment guideline and policy statement, based on sound investment policy and Florida State Statue 112.661 .The Fund is well diversified with 13 mangers in different asset classes. (See Chart Above). All of our managers will be coming to an investment round table hosted by The Board of Trustees on November 6-7. The Retirement System Workshop is open to the public to attend. So what is the Board doing now? The Board is not "day trading" or playing the market," but relying on a prudent long-term investment strategy focused on managing risk through diversification.

Also listed in the state statues is the "Prudent Man" concept. The Prudent Man Rule states

"The requirement that a trustee, investment manager of pension funds, treasurer of a city or county, or any fiduciary (a trusted agent) must only invest funds entrusted to him/her as would a person of prudence." The state statue recommends Trustees obtain the education needed to act in a prudent way. The Fire Chief's Handbook, 6th Edition also recommends Trustees educate themselves. "Trustees have certain legal responsibilities, referred to as fiduciary responsibilities. Fire Managers who serve as pension trustees should undertake extensive education with respect to their fiduciary responsibilities, both generally and with respect to specific laws(state,federal and or local) the govern their particular pension plans." Why the Prudent Man rule is intended for trustees I would say it wouldn't be wrong to extrapolate the rule to all members of the fund. The more education one gets the more prudent we all are. So I invite you to attend our workshop, I will not be able to attend. Check out Ben Stein's explanation explanation of the sub-prime mortgage mess.

September 2008

Don't forget Retirement Seminar Tuesday and Wednesday

Also please read this article.http://www.jacksonville.com/tu-online/stories/090708/met_329408585.shtml