AGENDA REQUEST. August 31, 2015

Transcription

1 AGENDA HEADING: Agenda Items AGENDA REQUEST COMMISSION MEETING DATE: August 31, 2015 AGENDA ITEM NO: BY Pension Administration Thomas Kelley Howard H. Daher, AIF, PRP, Daher Capital Group and Carolyn Garvey, Financial Advisor, VALIC Originating Department SUBJECT: Department Head Presenter Presentation and Discussion Re: Annual State of Defined Contribution Pension Plan I.5. COMMISSION PRIORITIES: Budget and Finance EXPLANATION: The Workshop is intended to provide an understanding of the current State of the City s Defined Contribution 401(a) Plan. The City established a Defined Contribution (DC) Plan for General Employees who hired on or after September 7, A DC Plan allows the City to contribute a fixed percentage of eligible compensation to an employee s account each pay period during the term of employment, instead of paying a lifetime benefit after retirement. Employees have a mandatory contribution of 6% with the option to contribute up to 2% more than the City will match. Participation in this Plan is mandatory for all full time permanent General Employees hired after September 7, ADMINISTRATION'S RECOMMENDATION: N/A APPROVAL SUMMARY: Approval Department Head Approval City Auditor and Clerk Approval Required Date Completed Y 08/21/2015 Y 08/21/2015 Completed By Tom Kelley Pamela Nadalini Status APPROVED APPROVED

2 ADDITIONAL EXPLANATION: AGENDA REQUEST ADDITIONAL ADMIN RECOMMENDATION: FUNDING SOURCE: AMOUNT: HOUSING IMPACT (Per House): NEW CONSTRUCTION: REHABILITATION: $ 0 $ 0 SUPPORT DEPARTMENTS: City Auditor and Clerk - Pamela M. Nadalini COMMISSION ACTION: Final Action Motion: Motion By: AGENDA DISPOSITION Second By: Vote: 2

3 Howard H. Daher - AIF, PRP Principal and Founder of Daher Capital Group/ Lead Consultant and co-fiduciary Daher Capital Group, LLC Defined Contribution Plan Consultant howard@dahercapitalgroup.com Phone: Howard H. Daher is Principal and founder of Daher Capital Group, LLC. As the lead consultant and co-fiduciary to the Plans he serves, Howard brings over 15 years of experience in the retirement Plans area. His core skill sets are focused in providing fiduciary services, plan design consulting, vendor negotiations and investment analytics to his clients, while also educating employees to become better retirement planners and savers. Howard and Daher Capital Group provide employers, both private and public, with proactive solutions and consulting work on both ERISA and Non-ERISA retirement plans, and similar qualified pension plans. Prior to forming Daher Capital Group, Howard s background and resume include working with some of the largest retirement plan providers in the market, such as The Principal Financial Group, The Hartford and MetLife in their initial launch of one of the first open architecture, NAV platforms in the industry. His experience as an advisor/consultant include partner of a regional benefits firm in West Palm Beach, Florida, as well as consultant and Area Vice President of Retirement Plans for Gallagher Benefit Services/Arthur J. Gallagher & Company. Howard holds a series 7, 66 and 63 securities registration, including a life & health insurance license. Howard s industry memberships include The American Society of Pension Professionals & Actuaries (ASPPA), with educational background and credentials including the designation of Plan Sponsor Professional, assigned by Plan Sponsor Magazine to dedicated qualified plan experts in the area of retirement benefits. Howard also earned the Accredited Investment Fiduciary designation from FI360. This designation signifies his ability to manage investment processes in accordance with guidelines set forth by the Center of Fiduciary Studies. Howard enjoys participating in speaking engagements within the industry, and has presented several seminars and served as a panelist member on fiduciary and qualified plan topics with the SPARK organization. Project Work Conducted Lead Consultant on both public and private employer plans. Co-Fiduciary on over $500 million in retirement Plan assets. Oversight support services covering 50,000+ eligible employees. Governmental project (comprehensive review & analysis of 457(b) and 401(a) Plan, the contracts, documents and service agreements with each of the four vendors). Page 1 of 26

4 Carolyn Garvey Financial Advisor VALIC 425 Commercial Court Suite B Venice, FL Phone: Ext Cellular: carolyn.garvey@valic.com WHAT I CAN PROVIDE At VALIC, we have dedicated more than 50 years to helping Americans achieve their savings and retirement goals. When our clients need someone to talk to about the financial questions that can affect their lives, we are there. We have the experience and the expertise to help our clients across an extensive range of important issues, including: Retirement Planning Financial Planning Brokerage/Cash Management Accounts Mutual Funds College Planning Fixed And Variable Annuities Life Insurance Long-Term Care Insurance VALIC VALIC has more than half a century of experience helping Americans plan for and enjoy a secure retirement. We provide real solutions for real lives by consistently offering products and services that are innovative, simple to understand and easy to use. We take a personal approach to retirement plans and programs, offering customized solutions for individual needs. We are committed to the same unchanging standard of one-on-one service we have delivered since our founding. We can help you live retirement on your terms. PERSONAL INFORMATION My experience and knowledge make me a valuable resource. I have been associated with the VALIC companies since I hold the following licenses and professional designations. General Securities Representative - (Series 7) Investment Advisor Representative Life, Health And Variable Annuity Insurance Agent Certified in Long-Term Care Because retirement and investment planning is a long-term process, I offer continuing support and personal, face to face service. I will meet with you at your convenience to help you design and maintain an investment program customized to your individual needs. Remember, the first step to achieving your financial objectives is to meet with an experienced financial advisor. Your future won't wait. Let me help you to begin taking steps today to realize your dreams for the future. Securities and investment advisory services offered through VALIC Financial Advisors, Inc., member FINRA, SIPC and an SEC-registered investment advisor. Annuities issued by The Variable Annuity Life Insurance Company. Variable annuities distributed by its affiliate, AIG Capital Services, Inc., member FINRA. VALIC represents The Variable Annuity Life Insurance Company and its subsidiaries, VALIC Financial Advisors, Inc. and VALIC Retirement Services Company. This information is general in nature and may be subject to change. All companies mentioned, their employees, financial professionals and other representatives are not authorized to give legal, tax or accounting advice. Applicable laws and regulations are complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. For advice concerning your individual circumstances, consult a professional attorney, tax advisor or accountant. Copyright The Variable Annuity Life Insurance Company. All rights reserved. VALIC.com VC (3/2015) J95612 Page 2 of 26

5 DAHER CAPITAL GROUP, LLC State of the Plan: The City of Sarasota DC Plan Presentation for: The City of Sarasota Annual State of Pension Workshop Presented by: Howard H. Daher - Principal Accredited Investment Fiduciary PRP Monday, August 31, 2015 Page 3 of 26

6 City of Sarasota DC Plan Overview Effective Date of Plan: September 27, 2011 Plan Design: 6% employee mandatory contribution 6% City of Sarasota contribution 2% Match (100% of the 1 st 2% that the employees defer to the 457b Plan) DB Transfers to the DC Plan: Approx. 61 employees transferred into the DC Plan Representing $1.4 million of transferred assets 1 Page 4 of 26

7 City of Sarasota DC Plan Overview Data as of June 30, 2015: 211 employees participating in the DC Plan Total DC Plan Assets: $ 4,423, Top Five Invested Funds 1. VALIC Fixed Account Plus: $ 964, (22%) 2. Vanguard Wellington: $ 675, (15%) 3. VALIC Company I Dividend: $ 388, (9%) 4. VALIC Mid Cap Index: $ 301, (7%) 5. VALIC NASDAQ 100 Index: $ 296,, (7%) $ 1,954, (60%) 2 Page 5 of 26

8 City of Sarasota DC Plan Overview Continued DC data as of June 30, 2015: 148 of the 211 are participating in the 457b (70%) 30 participants enrolled in GPS (managed account service) 7 participants have 100% of their account in Fixed Account 34 participants have 100% of their account in Van Wellington 12 month comparison ( 6/2014 vs. 6/2015): 6/2015: 211 participants & $ 4,423, ($ 20, average account balance) 6/2014: 167 participants & $ 3,328, ($ 19, average account balance) 3 Page 6 of 26

9 Begins with: Investment Due Diligence Review of VALIC s investment platform/contract 63 investments available for the DC Plan menu Apply the IPS Criteria Screening 12 Point 1. Manager Tenure Yr. vs. Benchmark Yr. vs. Peer Group Yr. vs. Benchmark Yr. vs. Peer Group Yr. vs. Benchmark Yr. vs. Peer Group Yr.. Information Ratio Yr.. Information Ratio Yr. Standard Deviation Yr. Alpha 12. Net Expense Quarterly Factors Accounted For Expense Risk Return Style Peer Group Quantitative Qualitative 4 Page 7 of 26

10 DC Plan Investment Menu Summary Goal: Screen for best in class investments, provide representation within the core asset classes & diversify the menu for participant selection Large Value Large Blend Large Growth VALIC Co. Dividend Value VALIC Co. Broad Cap Val VALIC Co. Stock Index VALIC Co. Soc. Resp. VALIC Co. Large Cap Core VALIC Co. NASDAQ 100 Index Mid Value Mid Blend Mid Growth n/a VALIC Co. Mid Cap Index Ariel Appreciation Small Value Small Blend Small Growth VALIC Co. Small Cap Value Domestic Stock Investments VALIC Co. Small Cap VALIC Co. Small Cap Index n/a VALIC Co. Small Cap Agg 5 Page 8 of 26

11 DC Plan Investment Menu - Summary Goal: Screen for best in class investments, provide representation within the core asset classes & diversify the menu for participant selection International/Foreign Stock Investments Foreign Large Value Foreign Large Blend Foreign Large Growth VALIC Co. Foreign Value VALIC Co. International Eq. VALIC Co. International Gro World Allocation VALIC Co. Global Strategy Sector/Specialty Investments Healthcare VALIC Co. Health Sciences VALIC Global Real Estate 6 Page 9 of 26

12 DC Plan Investment Menu - Summary Goal: Screen for best in class investments, provide representation within the core asset classes & diversify the menu for participant selection Conservative Allocation Moderate Allocation Aggressive Allocation VALIC Co. Conservative Growth Lifestyle Asset Allocation Funds VALIC Co. Moderate Growth Lifestyle Vanguard Wellington (Plan Default Investment Option) VALIC Co. Aggressive Growth Lifestyle 7 Page 10 of 26

13 DC Plan Investment Menu - Summary Goal: Screen for best in class investments, provide representation within the core asset classes & diversify the menu for participant selection Bond/Income Funds Intermediate Term Bond Long Term Bond Multisector Bond VALIC Co. Core Bond World Bond VALIC Co. International Gov t Bond Vanguard Long Term Investment VALIC Co. Strategic Bond Inflation Protected Bond VALIC Co. Inflation Protected Stable Value/Money Market Funds Guarantee Fixed Account VALIC Fixed Account Plus Guarantee Short Term Fixed Account VALIC Short Term Fixed Account Money Market VALIC Money Market 8 Page 11 of 26

14 One fund closing & one addition was made to the DC Plan: VALIC Company I Mid Cap Strategic Growth (Mid Cap Grow Category): o o On the watch list for some time unfavorable risk measures, criteria & performance. Assets and Future contributions were mapped/transferred to VALIC Co I Mid Cap Index. DC Plan Investment Menu Changes Additions - Closing o Approximately $71, (1.71% of TTL P.A.) ending March VALIC Company I Global Real Estate Fund (Specialty Real Estate Category): o Fund was added to the DC Plan menu in Q o Approximately $9k invested ending Q Page 12 of 26

15 VALIC s Employee Engagement & Education Process Notification from HR of new hire Starter Account Established (Vanguard Wellington is the default fund) Carolyn Garvey (VALIC Rep) makes personal contact to arrange a meeting with employees Discuss plan overview, risk tolerance, information on investment choices, overall account management As of 6/30, Carolyn is reporting 100% engagement with the DC Plan participants 13 Page 13 of 26

16 VALIC s Employee Engagement & Education Process Bi-monthly seminars Planning for Financial Security Retirement Planning Understanding Social Security Options, etc. Monthly VALIC sponsored s on various topics, Savings Matter newsletter 14 On Site Location Visits: City Hall, Police Department, Public Works and the Utility offices visited on a regular basis for reviews, enrollments, questions etc. Other departments upon request or by initiation. Page 14 of 26

17 VALIC s Employee Engagement & Education Process Individualized meetings: Encouraging a personalized financial plan (offered at no charge) Assist employees with paperwork and attaining Plan Administrative signature Annually, employees receive a call from VALIC s Call Center re. questions, concerns, or scheduling a meeting with Carolyn Garvey (VALIC Rep) 15 Page 15 of 26

18 VALIC s Employee Engagement & Education Process Additional Contact GPS participants o VALIC participants are contacted each year for an annual review (per DOL regulations). VALIC/Gregg Hudak continue to provide Brainshark presentations (via technology) on retirement related topics 16 Page 16 of 26

19 Participant Experience & Discussion Points Real World Employee Tasks: Monthly budget Saving for retirement is there room? Personal Debt credit card, student loans, child support, etc. Investment knowledge too confusing? Check-out! Stock market concerns risk adverse 17 Page 17 of 26

20 Participant Driven Solutions Help & Support are Readily Available for City employees: Improving participant outcomes Retirement Readiness! Strategic Participant Seminars Strategies for Women, Social Security, Retirement Income, Your Retirement Investment Education Investing On Campus Support: City Hall, Federal Bldg., Police Station, Public Works Page 18 of 26

21 DCG - The ERAC - VALIC Ongoing DC Plan Oversight Investment Due Diligence & Monitoring Vendor Management The City of Sarasota DC Plan Employee Education & Participant Outcomes Plan Administration Investment Fee/Expense Oversight 19 Page 19 of 26

22 Disclosures This document attempts to provide only broad general guidelines and information that can be used to help you shape your employee retirement benefit plan. The charts and other data contained in this document shall be dependent upon the quality and accuracy of plan information supplied by service providers, investment firms and reporting companies. All information and opinions will be for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The type of securities mentioned may not be suitable for everyone. Each investor needs to review a security transaction for his or her own particular situation. This information does not assess the suitability, or give any assurance about the potential value, of any particular investment. Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Centurion Group, LLC, a registered investment advisor and separate entity of LPL Financial 20 Page 20 of 26 For Investment Professional/Plan Sponsor Use Only.

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