Pompano Beach General Employees Retirement System

Pompano Beach General Employees Retirement System

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Chairman's Message

Is Your Pension Plan In Trouble?

A Message from your Chairman

The short answer to the above question is “No”, your pension plan is not in trouble. Much has been written in recent months about the alleged ‘State of Pensions’. While in some instances these articles mention private enterprise and private pensions, for the most part the articles are about public pensions. Most of these articles harp on the exorbitant costs and how generous these benefits are. In Florida the issues have been raised principally by comments and concerns regarding the Florida Retirement System (FRS). The participants in that plan consist of employees of the State of Florida, Counties and Municipalities which have chosen to join the FRS because of a perceived notion that they cannot afford their own plan or do not possess the knowledge or expertise to manage their own pension plan or both. The participants in FRS have never contributed to their pension plan. They are suffering from financial shortfalls and the ever increasing costs are being borne by the taxpayers throughout Florida.

When the Pompano Beach General Employees Retirement System was created, nearly 40 years ago, your City Fathers had the foresight and wisdom to develop a plan which required participants to contribute a percentage of their salaries into the plan. Total contributions to the plan come from three sources. The largest source is from investment income from those investments made by your board of the funds available, generally about 75% - 80%. The employee contributions are added to the fund and the City has a commitment to make up the difference of what is required, each year, by an Actuary to make the fund actuarially sound. Unfortunately there are many public bodies, (States, Cities and Counties) which deem that obligation to be too much and decide that rather than pay into the pension plan they will delay their contribution until later, sometimes years later, if at all. Those are the pension plans which are in trouble. You are fortunate that our City Fathers live up to their commitments and make their required contributions and do so on a timely basis.

Your pension board is obligated to do its best to ensure that its funds are properly invested with assistance and advice of an Investment Consultant and following generally accepted guidelines regarding asset allocation. Our portfolio is well diversified and we are constantly reviewing our fund allocation and the performance of our money managers. We also research other investment opportunities both domestically and internationally. All of your trustees participate in very healthy discussions regarding the types of investments and the amount of money that goes into each type of investment.

Many of the articles regarding pension plans make general statements about the plans being unfunded or underfunded. A couple of years ago the department of Management Services came up with a program that would require plans that were not fully funded to close down and join FRS. Their definition of fully funded was that the plan should have on hand, at all times, sufficient funds equal to 115% of the ultimate required to pay off all participants through retirement, even though that may well be 30-40, or more years from now. That would be the equivalent of a mortgage company or bank lending you $200,000 to buy a home and then saying you must have $230,000 on hand at all times to pay off the loan. I know, I know, it doesn’t make any sense, but that is the kind of thinking that comes out of Tallahassee and that your Board has to deal with on a regular basis.

Your pension board meets regularly once a month and sometimes more frequently. Our meetings last anywhere from two to four hours, maybe more. There are a lot of public plans that meet quarterly or even less frequently. Your trustees are dedicated to doing a good job and doing it the right way. There are no time restraints on doing the right thing. Your trustees as well as the staff are also well educated in matters relating to public pension plans. This includes a good working knowledge of general accounting matters relating to public pension plans, understanding financial statements, actuarial reports, the State of Florida Sunshine Law, Robert’s Rules of Order and a myriad of other documents. There are continual classes, schools, conferences and other programs which provide opportunities to expand our level of knowledge and understanding of these important matters. Your trustees avail themselves of many of these opportunities to further their education. I have often said that the three most important factors in maintaining an excellent pension plan are education, education, education.

Madelene Klein, Our Executive Director and Lindsay Koehler, Assistant Administrator are second to none in Florida and are among the very best in the country. As always they welcome your inquiries regarding your pension plan and your benefits.

You pension plan is NOT in trouble. To better see how we keep it that way you are invited to attend any of our meetings. We regularly meet on the third Tuesday of each month at 1:30 p.m. at the pension offices. Our very knowledgeable and professional staff is there to help you.

Respectfully Submitted

Reg Watkins, Chairman

March 15, 2011

Subsequent articles will be posted on our website www.pompgers.org from time to time.