HomeMy WebLinkAboutORD 6660 AMEND 1945 RETIREMENT
Augusta Richmond GA
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ORDINANCE NO.
6660
AN ORDINANCE TO AMEND THE 1945 RICHMOND
COUNTY EMPLOYEES' PENSION FUND ACT (GA. L.
1945; pp. 748, AS AMENDED BY GA. L. 1949, p. 1982;
GA L. 1951, p. 3234; GA. L. 1953, p. 2624; GA. L. 1966,
p. 3360; GA. L. 1971, p. 3381; GA. L. 1976, p. 4500; GA.
L. 1980, p. 4606; GA. L. 1985, p. 5194; GA. L. 1990, p.
5290; GA. L. 1993, p. 5438; GA. L. 1997, p. 4642; GA. L.
1997, p. 4705; GA. L. 1998, p. 4742; GA. L. 1999, p. 4938;
and ORDINANCE NO. 6657 ADOPTED ON FEBRUARY
20, 2002); ENACTED PURSUANT TO THE
PROVISIONS OF THE CONSTITUTION OF THE
STATE OF GEORGIA THAT PROVIDE FOR HOME
RULE FOR COUNTIES; SO AS TO REVISE THE
PROVISIONS REGARDING INVESTMENT OF THE
FUND; TO REPEAL CONFLICTING ORDINANCES;
TO PROVIDE AN EFFECTIVE DATE; AND FOR
OTHER PURPOSES.
BE IT ORDAINED BY THE AUGUSTA-RICHMOND COUNTY COMMISISON, AS
SUCCESSOR TO THE BOARD OF COMMISSIONERS OF RICHMOND COUNTY,
GEORGIA, AND IT IS HEREBY ORDAINED BY AUTHORITY OF THE SAME AS
FOLLOWS:
Section 1. The Richmond County Employees' Pension Fund Act (Ga. L. 1945, p.
748, as amended by Ga. L. 1949, p. 1982; Ga. L. 1951, p. 3234; Ga. L. 1953, p. 2624; Ga. L.
1966, p. 3360; Ga. L. 1971, p. 3381; Ga. L. 1976, p. 4500; Ga. L. 1980, p. 4606; Ga. L. 1985, p.
5194; Ga. L. 1990, p. 5290; Ga. L. 1993, p. 5438; Ga. L. 1997, p. 4642; Ga. L. 1997, p. 4705;
Ga. L. 1998, p. 4742; Ga. L. 1999, p. 4938; and Ordinance No. 6657 adopted on February 20,
2002) is hereby amended by deleting Section 7.05, to wit:
7.05 Investment of Fund
The County comptroller shall be the custodian of such Fund and shall deposit the same 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, any 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 pension 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 (50%) of the total
amount of the fund then outstanding; and in addition thereto, the investment committee
may invest such funds in bonds and debentures assumed or guaranteed by such existing
corporation or institution existing under the laws of the United States of America, or any
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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) in
lieu thereof, provided such bonds or debentures are the type in which domestic life
insurance companies are permitted to invest under the provisions of Section 33-11-20 of
the Official Code of Georgia Annotated (Ga. Code Ann. S 56-1016), as amended. The
amount of the pension fund which may be invested in the bonds and debentures of any
one corporation may not exceed ten percent (10%) of the total amount of such fund then
outstanding.
Withdrawal from the fund for investment purposes shall be accomplished by vouchers
drawn by the Treasurer, counter-signed by the mayor of the County or the mayor's
designee.
and substituting therefor the following:
7.05 Investment of Fund
The County comptroller shall be the custodian of such Fund and shall deposit the same 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, any 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 pension 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 (55%) of the total amount
of the fund then outstanding; and in addition thereto, the investment committee may
invest such funds in bonds and debentures assumed or guaranteed by such existing
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) in
lieu thereof, provided such bonds or debentures are the type in which domestic life
insurance companies are permitted to invest under the provisions of Section 33-11-20 of
the Official Code of Georgia Annotated (Ga, Code Ann. S 56-1016), as an1ended. The
amount of the pension fund which may be invested in the bonds and debentures of any
one corporation may not exceed ten percent (10%) of the total amount of such fund then
outstanding.
Withdrawal from the fund for investment purposes shall be accomplished by vouchers
drawn by the Treasurer, counter-signed by the mayor of the County or the mayor's
designee.
Section 2. This ordinance is adopted by the Augusta-Richmond County
Commission pursuant to the provisions of the Constitution of the State of Georgia which
provide for home rule by counties.
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Section 3. All laws or ordinances or parts of laws or ordinances in conflict
with this ordinance are hereby repealed.
Section 4. This ordinance shall become effective upon its being filed with the
Secretary of State of Georgia and with the Clerk of Superior Court of Richmond County,
Georgia, in accordance with all applicable law.
1). d~ ,2003 and this d day of
'/J ~OPTED this b day of
~ ,2003.
AUgUsta-Ric~unty Commission
!/,y As its M:;J, ~
A7)J;41fMW
Clerk
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
Conm1ission at two consecutive meetings, held, on the following dates, to-wit:
NoycHlbor 5, ,2003 and November 18.
the minutes of said commission.
, 2003, as the same appear on
This
18
day of
November
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. SMITHBARNEY......
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Edwin M, May, Jr.
Smior Vic~ Pmidmt-Inv~mnmts
edwin.m.may@smithbarney.com
Charles A. May
Smior Vice Pr~sidmt-Inv"tmmts
charles.a.may@smithbarney.com
FROM:
Edwin and Charles May
(YI
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 24] 0 Toll-free 800 241 2401
THE INFORMATION SET FORTH WAS OBTAINED FROM SOURCES WH ICH WE BELIEVE RELIABLE BlIT 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.
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ADDENDUM I
Statement of Investment Policy
Objectives and Guidelines
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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 (Citv of Aueusta)
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
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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 provide
pension benefits to qualified participants and their beneficiaries. In general, the purpose of this
documt;:nt 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 of the beneficiaries of the 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 aU times, by investment in short term cash
equivalents to provide safety, liquidity, and return.
DELEGATION OF AUTIlORITY
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
INVESlMENT 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:
I. 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~ENTGUIDELfflES
Allowable Assets
I. Cash Equivalents
>- Treaswy 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) ofNon-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:
I. 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.
DIVERSIFICATION 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 bave determined 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:
~ Maximum 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
minimum 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 ofthe Fund's equity portfolio
should approximate being equal to that of the S&P 500.
Page 6
INVESlMENT 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 PERFORI\1ANCE REVIEW 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 performance 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 achieve the desired investment results. All internal controls, investment procedures, records,
reports, and documentation shall be reviewed annually by ati 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 all previously adopted Investment Policy Statements for the Pension Funds.
(.1f dayof h ,1998
1 I i-/0 ,'c..l~ y
(1..... lO l
DATE:
d;JJd~
A estor's gnature
Lena 1. Bonner
Attestor's typed name
Clerk of Commission
Title oj attestor
Page 7
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. AU9USTA-RICHMOND COUNTY
Asset Allocation
As of September 19, 2003
L949 PLAN
liCCOUNT YfD TOTAL CASH BONDS EQUITIES R/E
32,266/690.91 886,581.91 31/380/109.00
itocks 17.16%
I~ixed Income 2.27% 30,142,476.89 2,222,376.89 27/920/100.00
\ccrued Interest 273,592.56 273/592.56
I~eal 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
II~CCOUNT YTD TOTAL CASH BONDS EQUmES LOAN
;tacks 16.24% $ 4,591,147.03 $ 152,830.82 $ 4,438,316.21
1/
flixed Income 2..72% 4,449/523.60 36,782.10 4/412/741.50
Irccrued Interest 49,495.47 49/495.47
Loan 150/000.00 150/000.00
I!TOT AL 9.00% $9,240,166.10 $ 189,612.92 $ 4/462,236.97 $ 4,438,316.21 $ 150,000.00
"AssetAllocation 100.00% 2.05% 48.29% 48.03 % 1.62%
1977 PLAN
ACCOUNT YTD TOTAL CASH BONDS EQUmES
I~tocks 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
IrrOT AL 9.90% $14,474,921.89 $ 865;883.58 $ 6,744,649.24 $ 6/864,389.07
"Asset Allocation 100.00% 5.98% 46.60% 47.42%
Page 8
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Public Retirement Systems Investment Authority Law
(Code 1981, 47-20-aO, enacted by Ga.L. 2000, p.2,2.)
Chapters Sections 47 -20-84.
~ ~
~ ~ (a) As used in this Code section, the term 'Iarge 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;
47-6 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 {A} The retirement system assets are in excess of $50 million;
~ 47-20-34
~ 47-20-35 (B) The retirement system provides a defined benefit plan;
~ 47-20-36
47-17 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
47-19 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,
~ 47-20-63 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 50 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) ofthis 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.1egis.state.ga.us/cgi-bin/gl codes detail.pl?code=4 7 -20-84
Page 9
Smith Barney
Asset Allocation - Recommendations
---+- -- -.. --
Asset Class Conservative Moderate' Aggressive
I
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
Annualized Expected Standard Deviation
6.06%
4.31%
8.00%
9.59%
9.79%
14.91 %
Expected performance statistics for the strategic allocation are develaped utilizing estimates of the expected return,
risk, and correlation calculated by Smith Barney. Smith Barney utilizes a Risk-Premium based approach fur
expected return estimates and historicallO-year averages fur risk and correlation estimates.
Page 10