assistant chief investment officer can present no council back then over time you are so
good morning. Thank you. We have some callers who are on the line that are not identified callers online or on the phone. Identify yourself please. caller number one
yeah. Good morning, Christine from the Financial Aid Commission
caller number three, which is identify yourself.
i Good morning. This is Kevin beloved from with intelligence. Any number one's extremely confused.
Thank you. Thank you. So we got retirements on page five. What's the board's pleasure to
upload the retirement. Support
motion has been made and properly supported all those in favor. Those who oppose have the same way. We have receipts for acknowledgement, okay, fine. And then we have this person has
a separate color for football. What's the Voice Project?
Madam Chair, I'll make the motion that I wanted to comment on receipts, one of the items that's not in the receipts that will be coming as Detroit City Council did meet and approve the acceptance of the state pension agreement. So that money is going to be transferred over here in the next week or two of the agreement we made with the state indicated that the city would pay interest on money from the time we got it from the state until we transmitted. And we did have money invested. So there'll be about 150,000 of interest on top. So that money is coming over. I just wanted to acknowledge that as part of the receipts that are coming since we've talked about before. And I'll make a motion to support disbursements or groups wishes.
Support
much less than made up properly supported. All in favor.
Both both both at the same rate.
We have our annuity savings bond with 7641 7642 7643 and 7644. What's the board's pleasure?
Motion to approve support.
motion has been made appropriate supportive. All those in favor?
Those folks have the same.
The employee role LEDs from September 27. October 4 and October 18 was the board's pleasure. Most sport
Much has been made improperly supported. Those are my favorite. That was a policy at the same rate. Limits for this for distribution for September 20 minutes for approval on August 16. What's the board's pleasure?
Motion to support
much has been made. supportive. All those in favor. Those will follow us at the same
time. We don't have any days either. Early but we do have some public
speakers in house and boats are calmer in.
The Morning, morning. Yes ma'am. When a fanboy. I'm a retired three from Detroit. On July 18 2013 1000s of city employees and retirees lost big when a state appointed manager made Detroit the largest US city to file for bankruptcy. Mr. Cook, representing the faces of those employees and retirees. After 10 years, three months. We are asking this body to render service by providing documents and help in the end With the saving fund recruitment, better known as the callback, this body has the ability to render assistance in this matter, Mr. Cook, and I would greatly appreciate your systems and obtaining the necessary documents. For example, mortality. How did the agency obtain the interest rate for the retirees? With the ASF? Why did the agency targeted those retirees from 2003? To 2013? Now many of you were not around. You're not involved in this mess. However, having said that, you're in a position now to help us read the problem. Mr. Michael Vanover, back was the lawyer at that particular point. I know he knows. But this is something that visit this agency, this body, this body can do some things to help 1000s of employees 1000s of retirees who are left hanging, we're still paying on this call back the SF How much more time after 10 years and three months do we have to continue down his name. At some point, there should be some form of remediation, some form of hill to address this particular heel. Now I'm proposing we're proposing this to tokenize. We need documentation we need all the documentation that's pertinent to this particular case. If you're new, that would be very, very appreciated. Thank you for your time. Thank you.
Morning, everybody.
So
they want to try and be quick. The last time we were here, we were talking about a document trying to ban old Greg gave the explanation but the people are receded it documented this time. I apologize for not having it I will email like ASAP. Okay. At the bottom of the document, it has some kind of footnote talking about life expectancy, but in the document that I'm referring to, it also references another document. Okay, and this document that we tried to get Now, which was the was was the calculations, as well we say madam chair is under for disclosure, they navigate to people for disclosure. Because as you know, if you go get any type of loan, or buy a car or anything, they're going to give you a sheet, you're going to give you the reasonable amount. They're gonna tell you how much and fishy paying and all other identity hand they're going to give you the total is not going to be the rest of your life. So they never gave us that. So as I'm saying, the documented you attorney battle battle of whether the existence of whatever you told them, we're going to be seated in this game, bring it up on our phone about technical difficulties, I thought it was going to be on my weekdays in my car, I'm gonna have to fault my crew for that because that's what I'm telling him all the time. But he changed and cognize lounge chair I left my briefcase with the copies and put them to the left as that. So once you get that, we need to follow up. Calculation of the law is there we also like to have a copy of the mortality table that you come up with was a bad thing.
We didn't do the calculation so they're very good that calculation so they're actually more tally tables.
I was about to go to American doing a tear. Trustee ca and do you remember who failed or axillary was going to remember at the time, they were trying to catch some kind of dispersion, gay go roller. Remember it was a case of the actuaries get some in a cold they say you can't do that.
That's why we call them agreeing that we give a lot of big one the other single Seagull helmet. That's right, the city of smellivision enteries ever grant anything to get a different viewpoint to them, whatever,
whatever whatever Mark telling you. I'm sure we use
the same hotel, but
I believe it did for cost benefits. I don't think
there might be a good starting point to actually go outside. So I got some other questions, Madam Chair, I know, Gil time thing. So I will submit those questions, but this time to get to the bottom law, if you know what I'm saying? Because, you know, even with that. And then the other thing I like, I like to ask this question, who have the authority to give an attorney to go to the bankruptcy court? Because, you know, it's been a lot of efforts has been put forth. But they went to the wrong places, Madam Chair, because, you know, I heard that some people went to the district court and has authority is the bankruptcy court. That's who that that boy, everything we talked about. So, you know, like we have some a case of well, we need an attorney to take it to the bankruptcy court. So that's what I'm saying. You got to have the authority to have them do that. So what
I would say,
but I don't think we have the authority to send Michael, back to England.
For anything on your behalf, you would have to retain an attorney for your
DJ going out on behalf of Vince
Cable on behalf of the individual pensioners Now
correct me if I'm wrong? Is that the system?
Okay, because the other thing he relayed to me this last day, Madam Chair, he Marco relayed to me the the bank that the pension is still above the authority of the state is actually you say we got another 10 years.
We have another 10 years with the Investment Committee place. See, bankruptcy plan was for a 10 year period
with the committee that you talked about a part of the bankruptcy, right. Okay, no words, when is this board gonna get data for?
This court continues to work with the Investment Committee, members of this board sit for another 10 years? That's correct.
So this what I'm talking about? Yeah. Okay. Can you go back to the bankruptcy board and see if I'm getting it, but the reason I'm saying that, you know, the whole city was appointed to the Financial Review Committee, they let them go. So why are we still up under this? Because as attorney No, really, we didn't even need the state oversight, because that's why he was hired because we had already as a board made a lot of changes to what people was putting the plan about as far as how the investment was vetted. And all right, Mark.
Tom, and then we're gonna move on to
you appeared at the last board meeting with other retirees and we heard everybody is affected by this clawback and we understand it. So in the last meeting, this board adopted a resolution requesting that the mayor and city council consider appropriate action to go back to the bankruptcy court to allow for a new lump sum cash option window, which means if you want to stop this, you can pay up the balance of your club back and not have to pay the 6.75 into the future. You can stop this Now that it's up to council and the mayor to approach the bankruptcy court to allow you to do that, that's something we did less than as needed. We feel your everybody's pain, but we're restricted by this. It's a bankruptcy that's caused causing all this disruption in everybody's life. And that's an option that you'll be able to hopefully be able to take advantage of.
The only problem with it is what it always is, they can't come up with the relative price to the table. Thank you. Can we put a resolution on the table? Thank you.
Teacher advocacy. All right, thank you. Do we have any public comment? Speakers online? Anyone online for wants?
I'm sure Jacqueline Cole and world war two this week, prevalent. And again, I think your efforts on behalf of I read through I just want to I know the calendar, unshared for NAT. And this one, make sure you read it if there is an additional date in 2024, outside of the annual pitching conference, which was born on June 10, to the 12 Verizon annual June 10. To the 12. It will be in Atlanta for the net pension and financial debt June 10 to 12 in Atlanta, Georgia, then on March 28 2020, for the the future date for March 20 2024. There will be a NASA SoCal day of education and private education, private equity, the trustees and staff on the day of education, private equity, before his death in his complimentary just have to get the service out. Excellent Day, March 20, through the 20th to the 21st. So that is the end of my formal preparation to to Marcela and thank you all again.
Anyone else online for public comment?
Thank you and we will move to the assistant directors report. Thank you, Madam
Chair, the whole report just bring it to your attention in the portal.
The valuation reports that
you've already approved had been finalized and posted on the website it's
just that you simply have a copy of those memo from Ramsey in terms of the update on the annual audit
the executive directors report also just a couple FYI items in the portal was an update from gamer rotor with their project list. We were asked to present that so that's in there and also the the hybrid COLA that was approved was applied on the October 1 jacket with the retro back to July one so that going forward that should just be approved every year then that should be applied on their August 1 Check that was done on the October 1 Check. That's all we have.
Do we get hard copies of the cable rotary
I can get you a hard copy of the get report. April report. Ask them not to be citadels anymore. They just tell them off everyday.
Yeah, I know that I use credit. Okay, we'll get
one just for you. Oh, thank you else want to
question if anyone can give us an update on the timing of the computer system.
So we they had a lot of testing where we shut down the old system and ran the new system just to make sure everything works properly. As usual find some bugs and but not major bugs. So that's been updated. Me and Cory have a meeting NET Core is the gentleman from New hy that we talked next Wednesday, he's gonna be on site we're going to have a discussion on where we're gonna permanently shut down the old system, which hopefully, from week from today, we have a discussion so maybe a week or two after that it will be shut down for that for the internal system, the self service portal, you want to make sure all our internal stuff works properly and then we'll get the self service up and running with it. And then we'll send out the
date because I'm sure you will deploy the day.
Yeah, but the the internal stuff we're hoping first week, November, the self service, I can't give you a day right now, because we got to make sure that works properly in house. So but before the end of the year for the sub service, because the training is done the videos, pamphlets that we want to send out to people that haven't signed up yet for the portal. But I'll get something next Wednesday more firm data on the self service portal.
Yeah, I'm sorry to go back to the road report. So I'm for the Board's knowledge, and I guess maybe some direction for Dave and Gail. So those valuation reports are just going final. And as David or Gail mentioned, we all previously saw them for the hybrid because the city contributes on a percentage of payroll, those rates were given to HR and city payroll, and they've been implemented. So the excuse me, contributions you see coming over from the city are done every pay period now for the hybrid using those rates, which are specific to the different workgroups. So there's a slightly different rate for general city versus DDOT versus library versus DWSD. So So that part's working great. Though one loose on though on the component to plan is the board adopted 30 year level principle. That's what the valuation now shows. So I think the last step if he hasn't already, is Ramsey needs to build the city for that contribution now. And then what the city has to do is because we budgeted 30, year level dollar, not 30 year level principle, we need to present a budget amendment to city council, the pay at the city houses we all know until June 30 of 24 to pay it, but I think getting that building over there so that we have the document that supports the budget amendment is the left stuff there.
Okay, so give me any NPC is on schedule the agenda today for 230. So, we're going to have the same situation than the previous meeting with the concerns with not having the material and I haven't had time to review the material. Do we want them to present? Is it
okay, so is Kevin still on? Okay, so we're ready for your presentation. Kevin?
Is here there is a document.
Okay. Yeah, this one is the EVP when it wasn't in there. Thank you.
We definitely can't hear you.
Morning. Can anyone hear me? Yes, you can. Okay, can someone give me control to share screen? I don't know if you guys can. Can you see a screen if I share? Yes. Okay, thanks a lot. Kevin, we still can't hear you know. Check your settings, please.
Oh, he's gotta go. I just worked at the last meeting. We can help.
I'm like your mic and plug it back in. Kevin. Can't hear you. He can hear as he seems like, dialing in your cell phone, Kevin. Yep, perfect.
I don't have your money here. I'm sorry. I don't know why that would change because it just worked on the GBP. One. I just wanted to make sure that there should be two documents you all should have. That was part of the Investment Committee meeting earlier this week. It's the asset allocation review, as well as the Flash report. I just didn't Kevin, does everybody have those in front of them? Yes.
I think it'd be helpful to identify the page because this is a very long report.
Yeah, we're just gonna go to one page Tom. So maybe just a tip if you could turn to the page that shows the different asset mixes. So it gives us turning to that is you may recall over the last few meetings that that I've reported to you. We've been working with the Investment Committee in regards to looking at the asset allocation. As it relates to the overall equity portfolio. There's been many discussions and educational presentations with regards to act versus passive management, as well as global equity strategies. The end, I'll give you the end, which I think Kevin's gonna have a discussion with you regarding the investment committees vote, the Investment Committee has voted to go to a fully global equity strategy within the overall equity portfolio. So you'll see here on these different mixes, these were some of the mixes that we have been discussing with the Investment Committee, you'll see that second to last column, we will see the overall non US equity portfolio developed equity, non US small cap equity in emerging markets, we'll go to global equity strategy. So, all of the underlying Look, I'm sorry, is there a question?
We're just trying to find the page, we found it, thank you. Okay.
You're welcome. So you'll see here in that mix, that the non US equity portfolio in the emerging market portfolios go to zero, and those dollars will be allocated to active global equity managers. And I'll explain to you what those global equity managers are. So that was a motion and a vote taken by the Investment Committee to move in that direction. So global equity strategies are managers that have the flexibility to invest in the equity world, both within the US developed non US and opportunistically emerging market. So the strategies certainly can be more weight into the US market, if they feel that the US markets in favor, and then vice versa, if they feel that the non US marketplace is in favor, they can tilt the portfolios. So that will fully replace the existing managers in the non US and emerging market equity portfolios. The philosophy that the Investment Committee is is adopted behind this because it will bring more flexibility into the portfolio to have a overlay to us when the US markets are in favor again, and then be much more tactical with a non US equity exposures. And we'll show you this in a performance that non US markets have underperformed the US markets for an elongated period of time, it's not that the investment committee does not want to have exposure to the non US, they wanted to approach it in a much more tactical way. And by employing global equity managers, you'll have that tactical ability to do so. So again, in summary that would result in a non US equity developed, large cap, small cap and emerging market equity managers being replaced by global equity. So the next step is NTPC. We'll be working with Kevin and ultimately bringing names committee to begin the process of looking at potential candidates to manage that, ultimately, which is now a 90%. Waiting to global equity expectation would be and this is not set in stone, at least two managers to manage that allocation, potentially three. And with having multiple managers, the design will be to have complementary managers. So there'll be managers that are more value oriented managers that are more growth oriented. And so making sure that we have a complementary nature to managers across the style styles. You'll see nothing else is changing in the policy. So it is very similar in the current in the essence of the current policy for total equity. It's just how that equity portfolio will be employed. And you'll see the overall impact of that lowering kind of the volatility of the overall portfolio given the flexible nature of those global equity strategies. So I'll stop and pause there. Kevin or Tom, obviously, you were part of the discussion if there's anything you wanted to add to that.
For the ICA sitting committee, turned all of this discussion and voted on what is the fifth column here on the screen here. That corporate 90% of global equity. A global equity manager is typically about 50% domestic and 50% International or emerging markets. So like you said, it's going to get to our domestic equity exposure, but that's where you want the returns to come. You also get suggested we look back and getting bored exposure to fixed income, but we didn't address it in the guest allocation plan that was being proposed here. But you know, there's bands that you can use to get higher investments in the income component, but it's the one concern I had was attend your expectation, but Kevin just described the floor so risk. There's concern but don't have a lot of concern for that.
Yep, as Tom said, you'll see there that the expected rate of return does drop slightly, I'll just remind everybody that this is what we call a beta only assumption, which just simply means you're not assuming active management. And so when you look at that 6.35% 10 year rate of return, we would say you can add of anywhere from 25 to 50 basis points, additional performance on an after fee basis. So certainly far exceed that 6.25%, an actuarial required rate of return. And as Tom mentioned, now that we've now that we've got direction with regards to the equity portfolio, you know, we are going to have discussions about it is as it relates to us investment grade, fixed income, potential rebalancing some of that portfolio to also direct some of the volatility, and then also potential further discussions on do we want to do more within the private debt space, whether that's increasing that 15% allocation, or redeploying some of the existing strategies within that portfolio today? You know, things like convertibles and saying, Do we think other private debt credit opportunity strategies are more attractive than convertible? So I think more to come. So we'll be implementing the new global equity strategies with the committee over the next several meetings, but also having further discussions with regards to the fixed income portfolio.
Thanks, Kevin, I think just just to end this, we do need the board to affirm the decision which again, is to transition from developed and emerging equity allocations to global equity, that represents 19%.
I'll make that motion to support ice action. Support.
motion has been made in practice supportive those in favor?
Those opposed the same? Motion. Yes. Great. Thank you, Kim, if we could maybe switch to the flash report and give a quick overview of the August performance.
Okay, why don't we go right into that with the one page that has a total rate of return with a composite? Perfect. So you can see here the total and I would say this is preliminary on these monthly flash reports. What we're doing is we're rolling over the market values for the alternative investment portfolios, those valuations are given to us on a quarterly basis with quarterly lagged actually. So you look here, predecessor collimator, because we don't have updated market values are things like private equity portfolio, private real estate portfolio, etc. So these numbers are, you can see the total market value assets at the end of August was just over 1.6 billion. Moving left to right, you'll see that first column, which is the month of August, the overall composite was down 1.7% slightly outperformed the policy index return, which was down 1.8. Just as a reminder, that policy index is that investment strategy that has been adopted, and we're assuming that would be fully indexed. And it's static as well. As you know, the portfolio moves around as the market moves around. So when we're looking at that comparison, obviously, we want to be able to outperform that policy index on an after fee basis, over kind of full market cycle as you can see, when we look here, sorry, Can Can you pull that down just a little bit, it's getting cut off on my top. By daily like that, that's fine. You can see across the board there, when you look over the longer trailing periods of time, the portfolio is outperforming that policy index. Now on the shorter term, you'll see the year to date column, which is January one to August 31. You are seeing underperformance relative to the policy index. The bulk of that underperformance is coming from the domestic equity portfolio, you can see a total equity portfolio which comprises about 46.3% of the total portfolio. So obviously the biggest driver of performance. So that's combining both your non US and your US exposure. So you can see that 46.3% is broken down you'll see the total domestic equity composites just under 29% of the overall portfolio and the total international equity is about 80%. So you strategically have an overweight to us and that has benefited the portfolio. But you can see there that total domestic equity portfolio performance and is underperforming the Russell 3000 index. A big piece of that underperformance can correlate back to tobacco, which is one of the managers in the large cap portfolio. So one of the things that the committee is going to be looking at is twofold as we start to implement the global equity strategies, is also taking a look at the active managers within the large cap portfolio and making determinations if we want to stay with those managers or go to more of a passive approach. So tolovana has been significantly underperforming their benchmark. More to come on that but you can see the year to date 11.7 versus 80%. On the non US equity side, you can see 7.9 versus 9.2%. So also slightly trailing a big piece of the underperformance in that non US equity portfolio is the value bias within the Mondrian portfolio. But again, with the decision to move to global equity, all of those managers eventually when some final decisions are made and contracts are negotiated for global equity, those managers will all be liquidated and those monies will be transferred to the global equity portfolio. You can see the total fixed income portfolio which comprises about 26% of the overall portfolio on a relative basis, obviously absolute return, you can see 3.1% Certainly underperforming the equity marketplace, but relative to the benchmark significantly outperforming we can see that 3.1 versus 1.4. And if you look over the longer trailing periods of time you can see significant outperformance specifically, if you look, you know, in a negative market, you can see down 4.4% the portfolio's up positive 2.8%. But again, over all time periods now you can see that fixed income portfolio forming a lot of that does have to do with some of that private debt credit opportunity allocations. Again, more to come on that we could potentially be looking at reallocating some back into investment rates for fixed income, given the higher interest rate environment. And again, potentially looking at ways to slightly de risk that portfolio. You can see the private equity portfolio and employment every basis of five nine versus three, nine, the diversifying strategies portfolio has been very additive to performance, that portfolio was was was built out to kind of provide some downside protection, it has done very well, we'll be looking at some of those underlying strategies, and potentially making some changes to that. And then finally, when you look at the real estate portfolio, you can see here today, you know, we've talked, you know, real estate continues to be that one asset class is feeling the impacts and kind of his post COVID world, specifically the office sector, as businesses are trying to make determinations on cutting back to work, you're seeing many companies, you know, downsizing their office space, so the demand for Office has declined substantially. And that's having a big impact on valuations. I would note, the investment committee did take action to step back and remind everyone, we are not allocating new dollars to real estate, we've been looking at ways to potentially to get some liquidity from that real estate portfolio, until the Investment Committee took action for staff and NTPC. to liquidate, I think it's up to $30 million from the open end core real estate managers, there are cues for those real estate managers meeting, it might take some time to get some of that money out. But we will be looking to get some liquidity out of the overall real estate portfolio itself. And then finally, you'll see a real asset portfolio of 3.5% underperforming that broad base benchmark isn't a great benchmark when underperforming that broad base benchmark here, we are going to discussions about the MLP strategies within the portfolio and potentially look at making a determination and we want to continue to have MLPs are there other liquid real asset strategies that we might want to allocate? So again, more to come on? I'll stop and pause there again, Tom or Kevin, if you have anything you'd like to add. But again, in summary, you know, next steps are to look at some of the active strategies within that US equity bucket and make determinations on everyone had to take some of that active management away and redeploy into
one thing the board should do is approve the action to draw down up to 30 million from the pretty real estate company or managers. The IC
Yeah, all support.
Nothing that's the name and properly support it. All in favor. at the same rate
that's all I have. Thank you.
Thank you any questions for anything?
So we'll get back to our agenda, we have the chief investment officers report.
Thank you, madam chair just had one additional quick item from meeting to discuss in that is the web assurance fund. When we last spoke about the fund in August, I mention that we were in discussions with potential bidders. That process has concluded with one bidder offering $1.3 million for the lectures. As you as you know, it's a 5050 partnership with police and fire, and the police and fire Investment Committee. And board as well as the GRS Investment Committee and Monday, has approved the sale. The key rationale, to summarize it behind those decisions was that a sale represents an opportunity to not only stop the flow of the continually increasing premium payments, but to monetize what has been an underperforming asset. When evaluating from a financial perspective, the present value of the future cash flows, enters negative territory as these individuals look beyond three years. And that assumes that we collect near all of the death benefit, which has not been the case historically. I know there's a lot of history with investments. But if you look at the stock today, look at the future cash flows, which is how to properly evaluate the offer.
It becomes clear
unless folks know
individuals that than others don't, that it's a it's a good offer
to take. myself along with Woody Tyler, the CIO for the police and fire are recommending to accept the offer when he has joined the meeting today. If there's any questions regarding the police fires rationale. But that's that's where we're at the recommendation is to affirm the investment case decision to accept the $1.3 million offer.
Questions? Well, before the discussion, I'll make a motion to support the action taken by the Investment Committee, subject to discussion in support
support discussion.
The Investment Committee there were six members 75 voted to do is post doing it by looking at the offer the 1.3 million, we wouldn't be putting up half of that, to pay for this. But when you look at the outstanding policies, there's $9.5 million. So potential payoffs when these
seniors pass I'm trying to get to their ages. It's, it's on the
portal it is page 264. And a portal
within okay. All new 90s, one in the 86 years old. So I know we're paying $100,000 Approximately annually, but I would take the I would bite the piano out of his investments for half of its 1.3 $625,000 and sit and wait for these policies to
come through. Yeah, so my, my discussion, I mean, and Tom, I heard what you did at the IC meeting. I know that those of us that have been on the board for a while when we remember writing gun rest assault, he would wrestle with these things. And he told us the story that the way we got these policies as we had a failed investment where the lawyers had to claw these things back. They were policies where they probably took advantage of people in a certain religious group that policies were taken out on them. You remember, Ryan had issues where because their faith, these people don't file death certificates. So he had to fight to get death certificates. When someone passed, we had a son of one of the beneficiaries that wanted a ransom payment to give us a copy of the death certificate. So to me, this is a troubled investment that for the time that I've sat on the board and talked about it. It's just been an ordinate amount of work on behalf of the investment officers who have better things to do. Do and to me if it was so sure trustee Shan that these people were going to pass and we're going to get the policies that maybe your analysis is true. But you don't know that there's not going to be another sickening story we're going to have to hear on? Well, you know, I know the person looks like they're 105, but we can't track them down and they didn't file a death certificate and some relative ones, this is just a bad thing for What are you're coming to be spending their time on. So because this was a failed investment that the boards took over, and the lawyers worked really hard, I think when I remember the history, there was even at one point, Clark Hill was making the payments and the he missed the payment. And then we had a lawsuit against our own lawyers to like recover from now malpractice fund, these things are just a very problematic investment that takes a huge amount of time on behalf of our investment officers. So the reason I'm in favor of it is I think it's time when there's an offer, to clear the ducks on these, you know, recognize that the lawyers and our investment officers did do a good job taking a bad thing and getting the most they could out of it. But as one trustee, I think it's tight, you know, and I agree with the IC, it's time to just cut the cord on this as Mr. Tyler will tell you, the PFR OS board, and their IC is easy to give up money either. They did a rational analysis and came to the conclusion that this is the right thing to do. So I'm in favor of doing it for those reasons.
I just want to say I haven't one of the trustees that voted in support of getting rid of it. But after here tells rationale might reconsider it. And I felt when I pulled him over, I felt that our hands on pretty much time because police and fire is getting down. And once again, in this situation like we were with the confidence that you get screwed over blindsided and screwed over with them exiting.
These policies are written with major life insurance companies. John Hancock Voya principle Transamerica, and I have to believe that the firm that we are using legitimize that these are good policies that will be paid off at some time.
Well, through the Chair, I think as you indicated, the only option is if if the rest of the majority of the board wants to double down on this, we'd have to dis affirm an ice action, go back to them where they could still override, and TFRs. If you want to have a relationship with them going forward, they want to take the deal. So our board, if you want to double down would say, You know what, we'll buy you out for half of it. And then it would be what do you would be free of it. And it would be Kevin, that's going to have to follow these things, make sure he pays the premiums on time, hope there's not some story where we can't get a death certificate, I just think it's a silly thing, time with the billion dollar fund that we're managing to have our Investment Officer trying to track individual policies that have a history of some bad stuff. And I agree, the people that are buying them, they're in this business, they have people that are used to, you know, however long it takes to clock, they're gonna like work it, I just don't think it's right for us to do it,
we have a firm that does a thing, notify us when the payments are due. So we have it as being monitored.
So through the Chair, I just again, I've stand where I am, I think I agree with the ICS action, that's why I made the motion to support it. I think it's been 10 years of listening to the soak story. And we're never going to get to the end of it unless we take this offer. And again, our fund has a lot of issues we hear from retirees on changes they want us to make having to monitor this stuff. And now someone following up to make sure Kevin makes the payment on time because God forbid, we don't want to lose the policy. And these are the kind of policies that you might want to hear from Mr. Tyler. The longer these people live, the the amount you got to pay I think goes up every every year. So I don't know if the board wants to hear from Mr. Tyler on the PFRs. You know, analysis.
I don't want to really echo what John said, but I do know that the heavy lifting on analysis that doing the analysis of cost, you know, this and the you know, a lot of the research into this was done by the, you know, waiting for the police and fire system because they've been driving this initially. So I don't know if the board wants to at least hear what the real details of some of this analysis is. And that's why I suggested to Kevin that wouldn't come today just in case you really wanted to get into the deeper dive on it. But and he is here so he can do it. But it's up to the board
so this is what he Tyler. He's the CIO for police and fire. I don't know if everybody met him
before. But this is a gentleman is pleased to represent company's relationship with a pinup. They have no respect for this board. They want nothing to do with support. We're the stepchild.
Well, yeah, and I know that that that is not the case.
Why am I talking about the board? Gotcha. Yeah, they're involved in that.
Now in Kevin's touched on a lot of the things that, you know, we looked at him, he made a good point. Certainly, when you look at it, you can see, really, if you look, one of these policies and flip the Kevin's page and page two, you look down to shovel policy on a present value basis, she's 86. And that's really not worth it. If you consider that she's likely to live into her 90s, it's probably worth it's actually got a negative present value. So they're not fitting on that policy. And if even if you wanted to keep it, the recommendation would be that least discontinue that policy. That makes sense. For a shovel,
that's 1,000,005.
So did that. So it's not nine and a half million. It's actually 8 million that we're looking at. And you have really three pots. You'd have the $5 million policy. And then you have the Kilgour. So you're always policy, which is two hours, two policies written by that person. We have Waldman. So we're looking at three policies, really, and we're betting these three puppies, three people passing away before the third or fourth year, when, as Kevin pointed out, the present value goes negative. So when we're paying out about 850,000, these were when these were initiated, if you look at a universal life policy, it actually it makes sense when you're younger, you're 30 years old, you want you want to get insurance, you pay less on it when you're younger, but the price goes up each year. And we were talking to our Northstar, who's managing this for us. And they mentioned 10 to 15% of those policies pay off. Because that, at the point, if you're a younger person, by the time you get in your late 50s, or 60s, those policies are so expensive. He's just not paying on it. But we purchased these policies, we've continued to make the payments, the payments will go up each year as we continue. It works out why, you know, again, the average life expectancy for a person in their sort of mid 90s is four years. And why that present value goes to negative present value at year three or four is because the insurance companies know how to prices.
What is the annual premium for all these
for all these 850,000? And
a percent so it goes up by roughly 68,000 a year.
Thank you point. Let me just get any call it a bet on these three policies. And that's, that's what it is. And it I don't I don't think that we should be you know, in a crapshoot of betting with what should be investments on behalf of our beneficiaries. This is a business we just shouldn't be. This is an opportunity to get out and start the payments and monetize $1.3 million dollars
look at their ages 90 to 9496 years old. They're getting old. Yeah, they are old.
Is that the same discussion that was happening five years ago?
I'm not talking about we know. It is what it is today. There are blank in their 90s they're going to be leaving soon.
Well, I happen to have to live to 102 just passed away two years ago. I get it it You know, one of the greatest sort of predictors of life expectancy is how long you live. And so that's why, you know, if you live again for maybe, and I'm guessing the average life expectancy for a male in this country is maybe two and then two more years for
life has gone down in the
actuarial recently. Yeah. Well, as long as it fits for this, I mean, these people have lived into their 90s, which is a good indicator of how well they live or maintain themselves, genetics, whatever it may be. And so it's, it's really none of us. I mean, honestly, I don't know, Kevin doesn't know none of us really, at this table knows how long he'll live the actuary to say, four more years for a person to say age, which means we'll pay roughly $4 million to stay in the game. And see if we get that, you know, roughly $8 million, that. But there's a cost to that, right? I mean, we missed the opportunity of keeping the money invested, you know, earning the six and three quarters percent, I'm not sure with what you guys are shooting 4% return. And the risk involved in this because again, it's not really an investment in cash flow returns. These are these are cash flow returns, with a great deal of uncertainty in terms of when we get them.
So through the Chair, I mean, I know a lot about this industry, because I used to do forensic accounting, and there were a lot of frauds and life insurance funds. It is a legitimate industry, if I had a whole life policy, and I went to the doctor and said, you've got a terminal illness and three years to live. And I need the money to support my family. For those three years, I can go to an insurance company who will get my medical records because I'll authorize it. They'll confirm the diagnosis that John has an illness with three years to live. And they'll price it appropriately based on medical records. These policies weren't that this was remember, it was a failed fun, Derrick batts convinced the board to invest money, and he was going to make money off life insurance policies. And they went into senior citizen areas and said, Hey, let me take out a policy on your life. I'll give you some money up front, if you let me bet on the fact that you're gonna die. And these people are like, fine, they took the money. And then the reason Ryan had a problem with it is these were not people that willingly sold their policies in the free market. These were people where somebody took out policies on them, and they're angry about it and so you don't know the policies that are left they could very well be like the one where Ryan had the son of one of the people trying to hold the death certificate hostage in they might not file a death certificate because as Ryan told us when he ran this down, they were in a religious group that doesn't necessarily file death certificates. So then there's the question of well when you know someone's not on the planet anymore, but there's not a death certificate. And the insurance company says sorry, maybe they went on a long cruise give me a death certificate no pay it's just a bad it was a bad business from the get go and to be able to monetize it I know there's a sense of the end of oh man if I just hang in there these people don't have a long way to go you're betting on somebody it's an a crazy thing to bet on. You're betting on somebody dying quickly so that you win the present value game to me the you know these guys have worked hard come up with a reasonable offer that's the reason I'm in favor of
jimmie johnson I was just gonna say that it's not real for 3 million it feels like six engineering it's what is not a whole we don't get the whole point right
all right, well, we do have an open motion on the table Those in favor opposed to roll call if we don't have a pop out
oh yeah those the brown Yes. Yes. As the anchor Yeah. Yes. That's the nipple very
toxic of love the idea
is that Does that tickle your record? Thank you.
And moving on to general counsel's report,
no formal report for the board today, I just want to let you know that we are finally seeing some movement in Lansing with regards to the Open Meetings Act Amendments that I drafted and got introduced last year didn't go anywhere get reintroduced this year. We had a substitute Bill floating around 4346 Is the House bill number. It looks like it might come out of the house today, and then go over to the Senate, someone given an indication that it actually got out yesterday, but I haven't been able to find anything online about that yet. And that will apply solely to Public Employees Retirement Systems is a you know, a kind of a carve out for public employee plans, and would allow for trustees to participate remotely fully in the meeting, and be able to vote and be used for quorum purposes. So hoping that gets over to the Senate. And hopefully it gets through, I'm still participating in a broader house workgroup with a couple of the house representatives on that workgroup on massive overhaul of the Open Meetings Act. But if we can get our carve out in that beautiful, that's what we'd like to do. The big question is, is the governor has previously indicated she doesn't want one offs, like these carve outs in different types of entities. And so we're just hoping that she'll support it, because retirement systems are a little different than a lot of other entities related to governmental municipality. So that's all I had for today.
Do we have any old business?
Madam Chair, just in response to our public commenters, I wanted them to know and the public know, city council did have a hearing on pension matters last Wednesday, Councilmember Hall is introducing, introducing a resolution that I believe still is the past City Council for a pension taskforce to be formed that would include City Council, the administration to work on some of these changes. One of the ones that, you know, we talked about was reopening the window for people who may be wanting to pay off the annuity savings fund, looking at a possible 13th job or a partial 13th Chapter for legacy retirees looking at changing benefit provisions for for current current employees. So there's definitely movement, those that attended last Wednesday's it was a great hearing councilmember dirt Hall, and Councilmember young and it comes from Mara are very much and you know, wanting to work with us and weren't even happy with the administration saying, we'll come back to you as part of next budget. They wanted to have a taskforce that we worked on this together. So I just wanted the retirees to know their voices were heard. Counsel is, you know, thrown in and wants to work on this with us, which is great.
Thanks for the update.
That committee did with this form of Task Force. And yes. Any
other Madam Chair, I'm sorry. It's right now, Councilmember Hall has proposed a resolution establishing the task force. So I think what you'll see I'm going to watch today's bfma meeting, if he moves it out of that would then go to the full council. But that's that's his attempt, as he very much with his staff wants to work on this with the administration, which we welcome.
Any new business?
There's some seeking board's approval to attend the i international foundation of Employee Benefits. No trustee as to level one conference is affected worry and Orlando, I wasn't able to go deal with my mother when I became a trustee. So at this point, I'm going to travel out of state more to give a blanket approval for I think I'll make the motion.
Any state conferences you have to do one at a time. Oh, nobody talks, support.
Anything else to come before this board? Any committee reports? Of question.
When the presenter presenter, what did they end up filling up them? $60,000 a month.
When when the system goes it'll cost will come down. We'll always have a cost with them because they maintain the system. Yeah, and it seems, but once we go live, it'll come down because we're still in phases. winstep Oh, I told Kim earlier was we're hoping that by the end of October for internal stuff. Yeah. And then shortly after that for the self service portal and why it'll be the same thing because they're they're the project leaders on that so once it goes live then