THE YOUNG MEN S CHRISTIAN ASSOCIATION RETIREMENT FUND RETIREMENT PLAN

Transcription

1 THE YOUNG MEN S CHRISTIAN ASSOCIATION RETIREMENT FUND Financial Statements (With Independent Auditors Report Thereon)

2 KPMG LLP 345 Park Avenue New York, NY INDEPENDENT AUDITORS REPORT The Young Men s Christian Association Retirement Fund as Trustee of the Young Men s Christian Association Retirement Fund Retirement Plan: We have audited the accompanying statements of net assets available for benefits of the Young Men s Christian Association Retirement Fund Retirement Plan (Retirement Plan) as of June 30, 2012 and 2011 and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Retirement Plan s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Retirement Plan s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Retirement Plan as of and the changes in net assets available for benefits for the years then ended in conformity with U.S generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplemental Schedule H, line 4i- Schedule of Assets (Held at End of Year) as of June 30, 2012, Schedule H, line 4a Schedule of Delinquent Participant Contributions for the year ended June 30, 2012, and Schedule H, Line 4j Schedule of Reportable Transactions for the year ended June 30, 2012, are presented for the purpose of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of Such information is the responsibility of the Plan s management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole. September 28, 2012 KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative ( KPMG International ), a Swiss entity.

3 YOUNG MEN'S CHRISTIAN ASSOCIATION RETIREMENT FUND Statements of Net Assets Available for Benefits Due from the YMCA Retirement Fund (note 4) $ 3,058,969 3,016,653 Contributions receivable: Participants YMCAs 7,600 6,000 Total contributions receivable 8,000 6,400 Net assets available for benefits $ 3,066,969 3,023,053 See accompanying notes to financial statements. 2

4 YOUNG MEN'S CHRISTIAN ASSOCIATION RETIREMENT FUND Statements of Changes in Net Assets Available for Benefits Years ended Additions in net assets attributable to: Contributions: Participants $ 9,242 10,573 YMCAs 148, ,089 Total contributions 157, ,662 Interest credited to account balances from the YMCA Retirement Fund 102, ,255 Total additions 259, ,917 Deductions from net assets attributable to: Benefit payments: Consideration provided to purchase life annuities 145, ,821 Lump sum distributions 65,281 71,984 Death benefits 4,804 3,720 Total deductions 215, ,525 Net increase 43,916 44,392 YMCA Retirement Fund Retirement Plan: Net assets available for benefits at beginning of year 3,023,053 2,978,661 Net assets available for benefits at end of year $ 3,066,969 3,023,053 See accompanying notes to financial statements. 3

5 THE YOUNG MEN S CHRISTIAN ASSOCIATION RETIREMENT FUND Notes to Financial Statements (1) Organization The Young Men s Christian Association Retirement Fund Retirement Plan (Retirement Plan) is a defined contribution, money purchase, church pension plan that is intended to satisfy the qualification requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended (Code). The Retirement Plan is sponsored by the Young Men s Christian Association Retirement Fund (Fund) which was incorporated in New York in The Fund is a not-for-profit corporation that is exempt from Federal income taxation pursuant to Section 501(c)(3) of the Code. As a church pension fund under Section 414(e)(3)(A) of the Code, the Fund is organized and operated for the purpose of providing retirement and other benefits for employees of participating YMCAs throughout the United States. The Fund also sponsors the Young Men s Christian Association Retirement Fund Tax-Deferred Savings Plan (Savings Plan) which is a church retirement income account plan as defined under Section 403(b)(9) of the Code. On December 21, 2004 President Bush signed legislation (U.S. Public Law ) permanently classifying the plans sponsored by the Fund as church plans. As a result of the legislation, the Retirement Plan elected, effective July 1, 2006, under section 410(d) of the Code, to be treated as a retirement plan subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA). During the plan year ended June 30, 2006, the Fund amended its articles of incorporation and restated the Retirement Plan document to comply with the legislation. As plan sponsor, the Fund provides administrative and investment services to the Retirement Plan. All administrative and investment expenses related to the operation of the Retirement Plan are paid from the Fund s general assets. The Fund is domiciled in the State of New York and is examined every five years by the New York State Department of Financial Services (NYSFS). The examination of the five year period ended June 30, 2009 comprised a verification of assets and liabilities to determine whether the 2009 annual statement filed with the NYSFS by the Fund fairly presents its financial condition. The examiner reviewed the Fund s income and disbursements necessary to accomplish such verification and utilized the guidelines established by the Government Accounting Standards Board, and such other examination procedures, as deemed appropriate, in such review. On July 20, 2012, a draft version of NYSFS s Report on Examination of the Young Men s Christian Association Retirement Fund was received by the Fund. There were no findings indicated in the report. (2) Description of the Retirement Plan The Retirement Plan is a multiple employer plan under which Young Men s Christian Associations have elected to participate in order to provide retirement benefits for their employees (YMCAs). The following brief description of the Retirement Plan is provided for general information purposes only. Participants should refer to the Plan document for complete information. 4

6 THE YOUNG MEN S CHRISTIAN ASSOCIATION RETIREMENT FUND Notes to Financial Statements (a) YMCA Participation: YMCA s have the option of selecting a contribution rate for the Retirement Plan which is based on a percentage of compensation. The options range from 12% to 8%. A YMCA may also elect for its employees to participate on a non-contributory basis by remitting the total contribution or on a contributory basis by requiring mandatory payroll deduction. (b) Eligibility: Employees of YMCAs and the Fund must meet the eligibility requirements of a two-year service requirement and attainment of age 21. To satisfy the service requirement, employees must complete 1,000 hours of service in any two anniversary years of employment. All contributions to the Retirement Plan for participants who have completed two years of service are immediately and fully vested. (c) Participant Accounts and Interest: Participants do not direct the investment of their accounts. The Fund s Investment Committee and Management to the extent delegated by the Board of Trustees of the Fund (Board of Trustees) are responsible for directing the investments of all assets of the plans sponsored by the Fund. Assets are commingled to achieve economies of scale and diversification. Participant accounts earn interest credits as declared by the Board of Trustees in its sole discretion. The Fund also serves as plan administrator of the Retirement Plan. However, YMCAs are responsible for timely enrollment of eligible employees and remittance of contributions. The Board of Trustees set the interest credit rates twice a year. Interest is credited to participant accounts daily. Account balance interest credits declared for the period beginning July 2010 through December 2012 were set at 3% per annum. A participant s contributions and interest thereon are maintained in the participant s personal account. In addition, each participant has an account attributable to YMCA contributions made on the participant s behalf, referred to as the YMCA Account. Effective July 1, 2009, contributions and interest thereon are maintained in accounts based upon the source of the contribution. Mandatory participant contributions and interest thereon are maintained in the participant s personal account. All employer contributions and interest thereon are maintained in the YMCA Account. Prior to January 1, 2011, participants could elect to establish an additional account for the purpose of making voluntary after-tax contributions to the Retirement Plan. Effective January 1, 2011, the Retirement Plan stopped accepting after-tax contributions. For calendar years 2012 and 2011 federal law limits total contributions to all Plan accounts to the lesser of $50 and $49 respectively, or 100% of participants annual compensation. 5

7 THE YOUNG MEN S CHRISTIAN ASSOCIATION RETIREMENT FUND Notes to Financial Statements (d) Vesting and Forfeitures: Effective July 1, 2006, participants who commence participation on or after that date are immediately and fully vested in contributions to all accounts on or after such date. Forfeited amounts with respect to contributions prior to July 1, 2006 attributable to participants who do not become vested in their YMCA Account were applied as credits to future YMCA employer contribution payments for the YMCAs that employed such participants. In 2012 and 2011 respectively, employer contributions were reduced by $2,102 and $2,140 from forfeited nonvested accounts. (e) Retirement: Normal retirement occurs when participants retire at age 60 or older. Early retirement occurs on or after age 55 but before age 60. Retirement benefits are based on the participant s Personal and YMCA Account balances plus any additional voluntary accounts. At retirement, the account balances (except for certain small balances which may be paid in a lump sum) are converted into a life annuity from the Fund using annuity purchase tables then in effect. (f) Disability and Death Benefits: The Retirement Plan through the Fund provides a permanent disability retirement benefit for participants under the age of 60 with five or more years of plan participation who become permanently and totally disabled. The pre-retirement permanent disability benefit is based on projections of contributions to age 60, with compensation fixed at the average of the five years immediately preceding the disability. Interest credits during this projected period are deemed to be at the regular rate, which is set at 3% per annum. The Retirement Plan also provides death benefits. The preretirement benefit for active participants provides the greater of $10 or the sum of the basic personal and YMCA Accounts at the time of death. The post-retirement death benefit is based on the annual retirement benefit derived from basic personal account and YMCA Account balances as determined at retirement. The Retirement Plan permits participants at retirement to use up to 90% of their postretirement death benefit to permanently increase their retirement annuity. The remaining balance is payable as a death benefit. (g) Lump Sum Distributions: Participants who have severed employment from YMCAs may request a distribution of their account balances subject to conditions and circumstances described in the plan document. (h) Plan Mergers: Plan mergers or transfers between the Retirement Plan and any other plan are prohibited. (3) Summary of Significant Accounting Policies (a) Basis of Accounting: The accompanying financial statements are prepared using the accrual method of accounting and in accordance with U.S. generally accepted accounting principles (GAAP). 6

8 THE YOUNG MEN S CHRISTIAN ASSOCIATION RETIREMENT FUND Notes to Financial Statements (b) Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and changes therein during the reporting period. Actual results could differ from those estimates. (c) Amounts Due from the YMCA Retirement Fund: The receivable from the YMCA Retirement Fund represents accumulated account balances of participants which are equal to contributions received and allocated to participant accounts plus interest credited on those accounts. At retirement, participants elect a form of annuity benefit, the consideration for which is provided from the respective accumulated account balances. Transactions in the accumulated account balances are recorded on a trade-date basis. Interest income on accumulated account balances is recorded as earned. (d) Benefit Payments: Benefit payments are recorded when paid. (4) Due from the YMCA Retirement Fund Pursuant to U. S. Public Law the plans of the YMCA Retirement Fund have church plan status. This status enables the Fund to maintain the contributions of the Retirement Plan and the Savings Plan in a commingled account for the purposes of investing. This commingled account is credited with earnings from the underlying investments and charged for Retirement Plan and Savings Plan withdrawals and administrative expenses. The Retirement Plan s interest in the Fund consists of the total of all contributions and interest credits as declared by the Board of Trustees, in its sole discretion, net of distributions. The interest credit to the Retirement Plan participant accounts was approximately 3% for the fiscal years ended. (See note 2(c)). The following represents the fair value of the investments for the Fund as of June 30: Investments and cash at fair value: Cash and cash equivalents $ 327, ,893 Assets held under securities lending agreement 290, ,690 Domestic equities 411, ,457 Foreign equities 728, ,403 Government and agency bonds 538, ,038 Corporate bonds 449, ,808 Common/collective trusts 1,186,537 1,201,815 Alternative investments 1,243,093 1,287,208 Payable under securities loan agreement (299,280) (365,565) Other investment liabilities, net (2,283) (115,062) Net investments and cash $ 4,873,795 4,919,685 7

9 THE YOUNG MEN S CHRISTIAN ASSOCIATION RETIREMENT FUND Notes to Financial Statements The accumulated account balances and reserves of the Fund for the fiscal years ended June 30: Accumulated account balances of the Retirement Plan $ 3,058,969 3,016,653 Accumulated account balances of the Tax-Deferred Savings Plan 499, ,771 Liabilities for future annuity benefits 1,535,712 1,379,305 Death and disability benefit reserves 260, ,879 Total accumulated account balances and reserves $ 5,354,832 5,123,608 Fund deficit $ (481,037) (203,923) The following is a summary of the investment results of the Fund for the fiscal year ended June 30: Interest and dividends $ 73,177 73,729 Net realized gain on investments 8, ,835 Net unrealized (loss)/gain on investments (36,166) 676,300 Investment expenses (15,634) (15,080) Total investment revenues $ 29, ,784 At, the Fund s liabilities exceed assets by $481,037 and $203,923, respectively. The deficit position is the result of the economic downturn and decline in the investment markets experienced during the 2009 fiscal year. During the subsequent two years the Fund was able to reduce the June 30, 2009 deficit of $1,093,240 to $203,923 at June 30, Investment returns of 21.61% and 14.03% in fiscal year 2011 and 2010, respectively were the primary drivers in this recovery. The investment markets yielded only 0.55% during the past year causing the deficit to grow to its current level of $481,037. The extended payout period of the Fund s benefit liabilities will provide adequate time for the asset base to recover. Management closely monitors cash flows and reserve requirements for benefit payments as well as investment market activity and believes that the Fund s assets will be sufficient over time to pay all obligations as they become due. (5) Related Party Transactions The Fund is the plan sponsor of the Retirement Plan. Therefore, transactions between the Fund and the Retirement Plan are considered related party transactions. (6) Plan Termination Although it has not expressed any intent to do so, the Fund has the right under the Retirement Plan to terminate the Retirement Plan subject to applicable law. In the event of the Retirement Plan termination, participants would become 100% vested in their employer contributions. 8

10 (7) Tax Status THE YOUNG MEN S CHRISTIAN ASSOCIATION RETIREMENT FUND Notes to Financial Statements The Retirement Plan is intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended and the Fund intends to operate the Retirement Plan in compliance therewith. The Retirement Plan received a favorable determination letter from the Internal Revenue Service (IRS) on March 24, 2009 indicating that it meets all of the requirements of a qualified pension plan under the Internal Revenue Code. U.S. generally accepted accounting principles require the Fund s management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. Management has analyzed the Plan s tax positions, and has concluded that as of June 30, 2012, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the Plan s financial statements. The IRS generally has the ability to examine an organization s activity for up to three years. (8) Subsequent Events Management has evaluated subsequent events through September 28, 2012, the date the financial statements were available to be issued. 9

11 YOUNG MEN'S CHRISTIAN ASSOCIATION RETIREMENT FUND Schedule H, line 4i - Schedule of Assets ( Held at End of Year) June 30, 2012 Identity of issue, borrower, lessor or similar party Description of investment including maturity date, rate of interest, collateral, par, or maturity value Cost Current value *YMCA Retirement Fund Due from YMCA Retirement Fund $ 3,058,969 3,058,969 * Related party as defined by ERISA See accompanying independent auditors' report. 10

12 YOUNG MEN'S CHRISTIAN ASSOCIATION RETIREMENT FUND Schedule H, line 4j - Schedule of Reportable Transactions Year ended June 30, 2012 Identity of party involved Description of asset (include interest rate and maturity in case of loan) Purchase price Selling price Lease rental Expense incurred with transaction Cost of assets Current value of assets on transaction date Net gain or (loss) Series of transactions YMCA Due from YMCA Retirement Fund Retirement Fund $ - 215, , ,731 - YMCA Due from YMCA Retirement Fund Retirement Fund $ 259, , ,647 - See accompanying independent auditors' report. 11

13 YOUNG MEN'S CHRISTIAN ASSOCIATION RETIREMENT FUND Year ended June 30, 2012 Schedule H, Line 4a, Schedule of Delinquent Participant Contributions Amounts in dollars (a) Identity of party involved (b) Relationship to the plan, employer, or other party in interest 12 (c) Amount of transaction (d) Interest incurred on loan YMCA of the Coosa Valley, Inc. Participating Employer $ 388 _ Atmore Area YMCA Inc. Participating Employer YMCA of Metropolitan Little Rock Participating Employer 1,396 6 Central Connecticut Coast YMCA Participating Employer 19, YMCA of Norwalk Inc. Participating Employer 1,326 _ Valley-Shore YMCA Participating Employer 5,836 1 North Central Florida YMCA Participating Employer 3,598 2 Lake Wales Family YMCA Participating Employer 1,243 1 Highlands County Family YMCA Participating Employer 2,454 3 Butler Street YMCA Participating Employer 2, Georgia Mountains YMCA Participating Employer 593 _ Rome-Floyd County YMCA Participating Employer 361 _ Toccoa-Stephens County YMCA Inc. Participating Employer 231 _ Clinton Community YMCA Participating Employer YMCA of McDonough County Participating Employer 7,367 5 YMCA of Jefferson County Participating Employer 2,995 1 Christian County YMCA Participating Employer 482 _ Clinton County Family YMCA Participating Employer 1,965 _ Hobart Family YMCA Inc. Participating Employer 1,214 _ Cass County Family YMCA Inc. Participating Employer 412 _ Pulaski County Family YMCA Participating Employer 187 _ Duneland Family YMCA Participating Employer 570 _ YMCA of Richmond Participating Employer 100 _ YMCA of Northeast Iowa, Inc. Participating Employer 42 _ Hoerner YMCA Participating Employer 525 _ Union County YMCA Participating Employer 677 _ YMCA of Central Louisiana Participating Employer 187 _ Lafayette Louisiana YMCA Participating Employer 1,105 _ Piscataquis Regional YMCA Participating Employer 137 _ Penobscot Bay YMCA Participating Employer 4,150 2 Northern Berkshire YMCA Participating Employer 291 _ YMCA of Greater Westfield Inc. Participating Employer 9,159 2 YMCA of Red Wing Minnesota Participating Employer 1,317 1 Family YMCA of Southeast Mississippi Inc. Participating Employer 1,088 2 Randolph Area YMCA Participating Employer 1,135 2 Alliance Area Family YMCA Participating Employer 124 _ North Country YMCA Inc. Participating Employer 1,058 2 YMCA of Greater Bergen County Participating Employer 1,715 _ Wyckoff Family YMCA Inc Participating Employer 22,230 9 Hoboken-North Hudson YMCA Participating Employer YMCA of Garfield Participating Employer 8,986 5 YMCA of Paterson NJ Participating Employer 6,870 4 Ithaca and Tompkins County YMCA Participating Employer 2,028 1

14 YOUNG MEN'S CHRISTIAN ASSOCIATION RETIREMENT FUND Schedule H, Line 4a, Schedule of Delinquent Participant Contributions Year ended June 30, 2012 Amounts in dollars (b) Relationship to the plan, employer, or other party in interest (d) Interest incurred on loan (c) Amount of (a) Identity of party involved transaction New Rochelle YMCA Participating Employer 5,080 5 Bertie County YMCA Participating Employer 268 _ Geary Family YMCA of Fostoria Ohio Inc. Participating Employer 711 _ YMCA of Darke County Inc. Participating Employer 850 _ Springfield Family YMCA Participating Employer 2,478 2 YMCA of Trumbull County Ohio Participating Employer 410 _ Family YMCA of Bartlesville Participating Employer 2,110 1 Stillwater Family YMCA Participating Employer 869 _ Bethlehem YMCA Participating Employer 11, Carlisle Family YMCA Participating Employer 2,198 1 YMCA of Corry Participating Employer 1,059 _ Freeland YMCA Participating Employer Greater Johnstown Community YMCA Participating Employer 483 _ Lock Haven Area YMCA Participating Employer 694 _ New Castle Community YMCA Participating Employer 1,316 _ Schuylkill YMCA Participating Employer 2,727 2 Allegheny Valley YMCA Participating Employer 696 _ San Juan - Puerto Rico YMCA Participating Employer 871 _ YMCA of Jackson Participating Employer 6, YMCA of Dyer County Participating Employer 3, Milan Family YMCA Participating Employer 76 _ YMCA of Big Spring Texas Participating Employer 853 _ YMCA of Greater El Paso TX & Rio Grande Valley Participating Employer 3,624 2 Greenville/Hunt County YMCA Participating Employer 156 _ YMCA of Tyler Texas Inc. Participating Employer 5, Hensel Eckman YMCA Inc. Participating Employer 330 _ YMCA of Parkersburg West Virginia Participating Employer 1,010 _ YMCA of Wheeling Participating Employer 2,097 _ Cheyenne Family YMCA Participating Employer 17, Totals $ 195, Represents amounts less than $