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Home My WebLink AboutORD 6658 AMEND RETIREMENT PLAN Augusta Richmond GA DOCUMENT NAME: 0,.. dCX)~ - ld.-O-~ DOCUMENTTYPE:()(cJ\~ce YEAR: C) ~ BOX NUMBER: \<1 FILE NUMBER: \19SL\LY NUMBER OF PAGES: \~ f -, ... . " ,. ORDINANCE NO. 6658 AN ORDINANCE TO AMEND THE RETIREMENT PLAN FOR EMPLOYEES OF RICHMOND COUNTY, GEORGIA EFFECTIVE JANUARY 1, 1977, SO AS TO REVISE THE PROVISIONS REGARDING INVESTMENT OF THE FUND; TO REPEAL CONFLICGING ORDINANCES; TO PROVIDE AN EFFECTIVE DATE; AND FOR OTHER PURPOSES BE IT ORDAINED BY THE AUGUSTA-RICHMOND COUNTY COMMISSION AND IT IS HEREBY ORDAINED BY AUTHORITY OF SAME AS FOLLOWS: Section 1. The Retirement Plan for Employees of Richmond County, Georgia effective January I, 1977, as amended, including in particular Ordinance No. 6655 adopted on February 20, 2002, is hereby amended by deleting Section 8.05 of the Plan, to wit: 8.05 Investment of Fund The County comptroller shall be the custodian of such fund and shall deposit all contributions to the Plan in a bank or banks, and, pursuant to the direction of the pension fund investment committee, which committee shall consist of the members of the Augusta-Richmond County Commission, shall invest and reinvest, from time to time, and portion thereof not immediately needed for the payment of pensions, in securities approved by law for the investment of Trust funds; and, in such securities other than those specifically approved by law for the investment of Trust funds, as the pension fund investment committee shall deem proper, from time to time; provided, however, that the amount of the Fund which may be invested in such securities other than those specifically approved by law for the investment of Trust funds may not exceed fifty percent (50%) of the total amount of the Fund then outstanding; and in addition thereto, the investment committee may reinvest such funds in bonds and debentures assumed or guaranteed by any solvent corporation or institution existing under the laws of the United States of America, or any state thereof, provided such bonds or debentures are rated at the time of their purchase, by a nationally recognized securities rating service, as AAA (Aaa); AA (Aa) or A (a) or in lieu thereof, provided such bonds or debentures are the type in which domestic life insurance companies are permitted to invest under any applicable provisions of the Official Code of Georgia Annotated, as amended. The amount of the pension fund which may be ~ . ~ , '.'~ . I . . '. .. . . \ I , , ADOPTED this ~ day of cjyj)-./"1~ '1; /-1 J t9---r...&.t- , 2003. I, the undersigned, LENA BONNER, CLERK, do hereby certify that the foregoing is a true and correct copy of an ordinance adopted by the said Augusta-Richmond County Commission at two consecutive meetings, held, on the following dates, to-wit: November 18 ~~ Clerk November 5, , 2003 and the minutes of said commission. This 18 November day of , 2003 and this ---L..:1.- day of August~cl~nd County Commission ,yJ3Y ~ ~~ 6 Lf As its ayo , 2003, as the same appear on . l . . invested in the bonds and debentures of any once corporation may not exceed ten percent (10%) of the total amount of such fund then outstanding. and substituting therefor the following: 8.05 Investment of Fund The County comptroller shall be the custodian of such fund and shall deposit all contributions to the Plan in a bank or banks, and, pursuant to the direction of the pension fund investment committee, which committee shall consist of the members of the Augusta-Richmond County Commission, shall invest and reinvest, from time to time, and portion thereof not immediately needed for the payment of pensions, in securities approved by law for the investment of Trust funds; and, in such securities other than those specifically approved by law for the investment of Trust funds, as the pension fund investment committee shall deem proper, from time to time; provided, however, that the amount of the Fund which may be invested in such securities other than those specifically approved by law for the investment of Trust funds may not exceed fifty-five percent (55%) ofthe total amount of the Fund then outstanding; and in addition thereto, the investment committee may reinvest such funds in bonds and debentures assumed or guaranteed by any solvent corporation or institution existing under the laws of the United States of America, or any state thereof, provided such bonds or debentures are rated at the time of their purchase, by a nationally recognized securities rating service, as AAA (Aaa); AA (Aa) or A (a) or in lieu thereof, provided such bonds or debentures are the type in which domestic life insurance companies are permitted to invest under any applicable provisions of the Official Code of Georgia Annotated, as amended. The anlount of the pension fund which may be invested in the bonds and debentures of any once corporation may not exceed ten percent (l 0%) of the total amount of such fund then outstanding. Section 2. All laws or ordinances or parts of laws or ordinances in conflict with this ordinance are hereby repealed. Section 3. This Ordinance shall be effective upon adoption. ICj. SMITH BARNEY..... cltlgroupJ Edwin M. May. Jr. Smior Viet Pmidmt-Invmmmts edwin.m.may@smithbarney.com Charles A. May Smior Via Pmitknt-Invutmmts charles. a. may@smithbarney.com FROM: Edwin and Charles May fi~ MEMORANDU TO: Pension and Audit Committee REF: City of Augusta Pension Funds - Asset Allocation DATE: September 22, 2003 . We propose that the allocation of assets in the 1945,1977 and 1949 Pension Plans be revised in accordance with the attached proposed Addendum I (See page 2) to the City of Augusta Investment Policy Statement. This proposal is in compliance with the State of Georgia Public Retirement Systems Investment Authority Law. Enclosed Documents: Page 2 - Addendum I Page 3-7 - Investment Policy Statement Page 8 - Current Asset Allocation Page 9 - Public Retirement Systems Investment Authority Law Page 10 - Smith Barney Asset Allocation - Recommendations Citigroup Global Markets Inc. One Tenth Street. Suite 600 Augusta. GA 3090 I Tel 706 724 260 I Fax 706 722 2410 Toll-free 800 241 240 I THE INFOIUvIATION SET FORTH WAS OBTAINED FROM SOURCES WHICH WE BELIEVE RELIABLE BUT WE DO NOT GUARANTEE ITS ACCURACY OR COMPLETENESS. NEITHER THE INFORMATION NOR ANY OPINION EXPRESSED CONSTITUTES A SOLICITATION BY US OF THE PURCHASE OR SALE OF ANY SECURITIES. ADDENDUM I Statement of Investment Policy Objectives and Guidelines AUGUSTA, GEORGIA PENSION FUNDS January 1998 Page 6 Asset Allocation Guidelines Investment management of the assets of the Pension Funds shall be in accordance with the following asset allocation guidelines: 1. Aggregate Fund Asset Allocation Guidelines (at market value) a. 1949 Plan (City of Aue:usta) Asset Class Minimum Equities 20% Fixed Income 20% Cash and Equivalents 0% Maximum 60% 60% 20% b. 1945 & 1977 Plans (Richmond County) Asset Class Minimum Maximum Equities 20% 55% Fixed Income 20% 60% Cash and Equivalents 0% 20% Established this day of ,2003 Bob Young, Mayor Date Attestor's typed name Title of attestor Preferred 40-60% 40-60% 5% Preferred 40-55% 40-60% 5% Page 2 Statement of Investment Policy Objectives and Guidelines AUGUSTA, GEORGIA PENSION FUNDS January 1998 STATEMENT OF PURPOSE The purpose of the City of Augusta 1949 Pension Fund, Richmond County 1945 Pension Fund, and Richmond County 1977 Pension Fund (hereinafter referred to as the Pension Funds) is to provid~ pension benefits to qualified participants and their beneficiaries. In general, the purpose of this document is to outline a philosophy and attitude which will guide the investment management of the assets towards the desired results. It is intended to be sufficiently specific to be meaningful, yet fleXIble enough to be practical. GENERAL INVESTMENT PRINCIPLES 1. Investments shall be made solely in the interest ofthe beneficiaries ofthe Pension Funds. 2. The Funds shall be invested with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the investment of a fund of like character and with like aims, 3. Investment of the Funds shall be so diversified as to minimize the risk oflarge losses, unless under the circumstances it is clearly prudent not to do so. 4. The Trustees may employ one or more investment managers of varying styles and philosophies to attain the Funds' objectives. 5. Cash is to be employed productively at all times, by investment m short term cash equivalents to provide safety, liquidity, and return. DELEGATION OF AUTHORITY The Trustees delegate the investment management duties for all or some part of the Funds to one or more professional investment manager(s) who shall be guided by the overall investment policy guidelines established by this policy statement. The Trustees delegate to the Investment Committee the authority to select, retain, or terminate professional investment manager(s). Page 3 INVESTMENT OBJECTIVES In order to meet its needs, the investment strategy of the Pension Funds is to emphasize total return; that is, the aggregate return from capital appreciation and dividend and interest income. Specifically, the primary objective in the investment management for the Pension Funds assets shall be: Long-Term Growth of Capital - To emphasize long-term growth of principal while avoiding excessive risk. Short-term volatility will be tolerated in as much as it is consistent with the volatility of a comparable market index. Preservation of Capital - To minimize the probability of loss of principal over the investment horizon. Emphasis is placed on minimizing return volatility rather than maximizing total return. : Income and Growth - To achieve a balanced return of current income and modest growth of principal. The Funds' absolute minimum annual rate of return objective shall be the actuarial assumption. The current actuarial assumption is 8.0%. The investment objectives above relate to the aggregate Fund. They are not meant to be imposed on each investment account (if more than one account is used). The goal of each investment manager, over the investment horizon, shall be to: 1. Approximate market index, or blended market index, selected and agreed upon by the Trustees that most closely corresponds to the style of investment management. }> Equity Manager--approximate the S&P 500 Stock, Russell 1000 Value or Russell 1000 Growth Index, depending on manager investment style. }> Bond Manager--approximate the LB Govt/Corp. Bond Index 2. Display an overall level of risk in the portfolio which is consistent with the risk associated with the benchmark specified above. Risk will be measured by the standard deviation of quarterly returns. Specific investment goals and constraints for each investment manager, if any, shall be incorporated as part of this statement of investment policy. Each manager shall receive a written statement outlining his specific goals and constraints as they differ from those objectives of the entire Fund. Page 4 MARKETABILITY OF ASSETS The Trustees require that all of the Funds assets be invested in liquid securities, defined as securities that can be transacted quickly and efficiently for the Funds, with minimal impact on market price. The use of derivative securities or other synthetic products whose prices are subject to potentially high volatility and whose returns are speculative or leveraged. or whose marketability may be limited, is prolubited. ~S~ENTGUIDELrnES Allowable Assets 1. Cash Equivalents ~ Treasury Bills ~ Money Market Funds ~ STIF Funds ~ Commercial Paper ~ Banker's Acceptances ~ Repurchase Agreements ~ Certificates of Deposit 2. Fixed Income Securities ~ U.S. Government and Agency Securities ~ Corporate Notes and Bonds ~ Mortgage Backed Bonds ~ Preferred Stock ~ Planned Amortization Class Collateralized Mortgage Obligations (pAC CMOs) or other "early tranche" CMOs 3. Equity Securities ~ Common Stocks ~ Convertible Notes and Bonds ~ Convertible Preferred Stock ~ American Depository Receipts (ADRs) of Non-U.S. Companies 4. Mutual Funds ~ Mutual Funds which invest in securities as allowed in this statement. Page 5 Asset Allocation Guidelines Investment management of the assets of the Pension Funds shall be in accordance with the following asset allocation guidelines: 1. Aggregate Fund Asset Allocation Guidelines (at market value) Asset Class Equities Fixed Income Cash and Equivalents Minimum 20% 20% 0% Maximum 50% 60% 20% Preferred 45% 50% 5% 2. The Trustees will employ investment managers whose investment disciplines reqUITe investment outside the established asset allocation guidelines. However, taken as a component of the aggregate Fund, such disciplines must fit within the overall asset allocation guidelines established n this statement. Such investment managers will receive written direction from the Trustees regarding specific objectives and guidelines. DIVERSIF1CATION AND RISK PARAMETERS The Trustees recognize that virtually all investments entail some degree of risk, and also understand that defining risk for the Funds' assets is not a precise science. However, to establish a general risk tolerance for the Funds, the Trustees have detennined that high quality investments providing an opportunity for modest growth of capital are essential. While the Funds as a whole should project a generally conservative identity, limited use of more aggressive investments is permissible for diversification purposes. However, in order to achieve a prudent level of portfolio diversification, the securities of anyone company should not exceed 5% of the total Fund, and no more than 20% of the total Fund should be invested in anyone industry. Guidelines for Fixed Income Investments and Cash Equivalents 1. The Pension Funds assets may be invested only in investment grade bonds rated A or better by both Standard and Poors and Moody rating agencies. 2. Fixed income maturity restrictions are as follows: ~ Maximwn maturity for any single security is 30 years. ~ Weighted average portfolio maturity may not exceed 15 years. 3. Money Market Funds selected shall contain securities whose credit rating at the absolute rninimwn would be rated investment grade by Standard and Poors, and/or Moody's. Guidelines For Equity Investments To the extent the Funds holds equity securities, risk is to be measured in terms of volatility relative to the S&P 500 Stock Index. The Trustees desire that the average volatility of the Fund's equity portfolio should approximate being equal to that of the S&P 500. Page 6 , , INVESTMENT COMMITTEE An Investment Committee shall be created to monitor performance and investment results as well as oversee the implementation of the Investment Policy Statement. This Investment Committee shall consist of the following members: Mayor, Mayor-Pro Tern, Chairman Finance Committee, Administrator, and Comptroller. The Comptroller is appointed as agent of the Investment Committee and authorized to take any administrative action necessary in support of this Investment Policy Statement. INVESTMENT MANAGER PERFORNIANCE REVIE\V AND EVALUATION Performance reports generated by the Investment Consultant shall be compiled at least quarterly and communicated to the Trustees for review. The investment performance of total portfolios, as well as asset class components, will be measured against commonly accepted perfonnance benchmarks. Investment managers shall be reviewed quarterly regarding performance, personnel, strategy, research capabilities, organizational and business matters, and other qualitative factors that may impact their ability to acbieve the desired investment results. All internal controls, investment procedures, records, reports, and docwnentation shall be reviewed annually by an independent auditor. INVESTMENT POLICY REVIEW To assure continued relevance of the guidelines, objectives, financial status and capital markets expectations as established in this statement of investment policy, the Trustees plans to review investment policy at least annually. This statement of investment policy is adopted by the Commissioners of Augusta, Georgia, and is meant to supersede aU previously adopted Investment Policy Statements for the Pension Funds. (.1f, day of h ' 1998 . \) '" c.,l~Y tl,l,)-I lO l DATE: d;Jj~9i~ A estor's gnature Lena 1. Bonner Attestor's typed name Clerk of CommissIon Title of attestor Page 7 AUGUSTA-RICHMOND COUNTY Asset Allocation As afSeptember 19,2003 . , L949 PLAN nACCOUNT YTD TOTAL CASH BONDS EQUITIES R/E II 32,266,690.91 886,581.91 31,380,109.00 ;tocks 17.16% ~ixed Income 2.27% 30,142,476.89 2,222,376.89 27,920,100.00 ~ccroed Interest 273,592.56 273,592.56 IIReal Estate 1,267,600.00 1,267,600.00 fOTAL 9.20% $63,950,360.36 $ 3,108,958.80 $28,193,692.56 $31,380,109.00 $1,267,600.00 IIAsset Allocation 100.00% 4.86% 44.09% 49.07% 1.98% 1945 PLAN I\ACCOUNT YfD TOTAL CASH BONDS EQUITIES LOAN 3tocks 16.24% $ 4,591,147.03 $ 152,830.82 $ 4,438,316.21 II rixed Income 2..72% 4,449,523.60 36,782.10 4,412,741.50 licroed Interest 49,495.47 49,495.47 Loan 150,000.00 150,000.00 IfTOTAL 9.00% $ 9,240,166.10 $ 189,612.92 $ 4,462,236.97 $ 4,438,316.21 $ 150,000.00 II Asset Allocation 100.00% 2.05% 48.29% 48.03 % 1.62% 1977 PLAN ACCOUNT YTD TOTAL CASH BONDS EQUmES Ibwoo 17.20% $ 7,079,095.35 $ 214,706.28 $ 6,864,389.07 I~ixed Income 2.52% 7,331,773.80 651,177.30 6,680,596.50 Accrued Interest 64,052.74 64,052.74 IffOTAL 9.90% $14,474,921.89 $ 865,883.58 $ 6,744,649.24 $ 6,864,389.07 H Asset Allocation 100.00% 5.98% 46.60% 47.42% Page 8 ~U.a::Y1U q!)enerQl ~tmlllu" ~ ~~~i\ ~:' ~~.~.~.~~~ ~. I~~!~,~ ~ ~~.~. 't.l~I--~ ."-~,.,' .-....., - '. "'1,...'.......,.: -_....._.;.t.. ':',....-.,._.....'... """".r.. ......... .-......_y"':.i:.:.._-~..'4;.1"i};~ .-.-~~, ".-~~. ..._d' >.~.-...~ Public Retirement Systems Investment Authority Law (Code 1981,47-20-80, enacted by Ga.L. 2000, p.2,2.) Chapters Sections 47-20-84. ~ 47-20-1 !Z:2. 47-20-2 (a) As used in this Code section, the term 'large retirement system' means: ~ 47-20-3 ~ ~ (1) Any retirement system created by this title which has an accumulated unfunded ~ 47 -20-10 actuarial accrued liability not greater than 25 percent of the total of its assets; ~ 47-20-11 ~ 47 -20-12 (2) The Georgia Municipal Employees Benefit System created by Chapter 5 of this ~ 47-20-13 title; ~ 47-20-20 (3) Any association of like political subdivisions which, on, before, or after July 1, ~ 47-20-21 1999, contracts with its members for the pooling of assets; and ~ 47-20-30 ~ 47 -20-31 (4) Any public retirement system other than a retirement system defined in ~ 47-20-32 paragraphs (1), (2), and (3) of this subsection which meets the following criteria: ~ 47-20-33 ~ 47 -20-34 (A) The retirement system assets are in excess of $50 million; ~ 47-20-35 (B) The retirement system provides a defined benefit plan; ~ 47-20-36 ~ 47-20-37 (C) The retirement system investments are managed by one or more independent ~ 47-20-50 professional investment managers recognized by the National Association of ~ 47 -20-50.1 Securities Dealers and the United States Securities and Exchange Commission and ~ 47-20-51 which adhere to the code of ethical standards and conduct of the Association for ~ 47-20-60 Investment Management and Research; ~ 47-20-61 (D) The retirement system Investments are limited to those equities of investment ~ 47-20-62 grade quality or better, provided that leverage techniques, option techniques, 47 -24 47-20-63 futures, commodities, private placements, and direct participation plans may not 47-20-64 be used in making equity investments; and 47-20-80 (E) Has an accumulated unfunded actuarial liability not greater than 25 percent of 47-20-81 the total of its assets. 47-20-82 (b) A large retirement system may not invest more than 10 percent of the 47-20-83 retirement system assets in corporations or in obligations of corporations 47-20-84 organized In a country other than the United States or Canada subject to the provisions of paragraph (1) of subsection (a) of Code Section 47-20-83. 47-20-85 47-20-86 (c) A fund shall not Invest more than 55 percent of retirement system assets in equities; provided, however, that a large retirement system shall invest not more than 60 percent of its assets in equities. Any fund which is not in compliance with the limitations imposed by this subsection shall be granted a two-year period to come into compliance; provided, however, that during such two-year period, the fund shall not Increase the percentage of its assets Invested in equities. (d) In the event the value of a fund's assets decreases so as to render such fund ineligible to invest in foreign equities as provided in subsection (b) of this Code section and to invest in excess of 55 percent of Its assets in total equities as provided in subsection (c) of this Code section, such fund shall have 12 months from the date of such event to come into compliance with the investment authority provided by this article; provided, however, that during such period such fund shall not increase its holdings in foreign equities and shall not increase Its total holdings in equities. htto:/ /www.lems.state.ga.us/cgi-bin!glcodesdetail.pl ?code=4 7 -20-84 Page 9 . . . , Smith Barney Asset Allocation - Recommendations -. . -- Asset Class Conservative Moderate. Aggressive Cash 2.00% 2.00% 2.00% Fixed Income (Bonds) 73.00% 38.00% 0.00% Equity (Stocks) 25.00% 60.00% 98.00% Total Portfolio 100.00% 100.00% 100.00% Annualized Expected Return AIlnua1ized Expected Standard Deviation 6.06% 4.31% 8.00% 9.59% 9.79% 14.91 % Expected performance statistics for the strategic allocation are developed utilizing estimates of the expected return, risk, and correlation calculated by Smith Barney. Smith Barney utilizes a Risk-Premium based approach jrlT expected return estimates and historicallO-year averages jrlT risk and correlation estimates. Page 10