NON-CERTIFIED EMPLOYEE RETIREMENT PLAN (NCERP)
COMMITTEE MEETING
February 9, 2011
MINUTES
CALL TO ORDER
Mrs. Vicki Lucido called the regular meeting of the NCERP Committee to order at 9:17 a.m. at
the Cosand Center, Room CC-212.
Members Present
Others Present
Vicki Lucido, Chairman
Ruth Lewis
Kevin White
Mike Wibbenmeyer, Vice Chair
Calla White
Ronald Nicoletti
Kimberly Mueller
Bruce Vogelgesang
Donald Schisler (Towers Perrin)
James Hayden, Plan Coordinator
Jim Wilkinson (Columbia Management)
JoAnn Barban
Tammy O’Brein
Carol Dismuke
Debbie Duane
Tim O’Neil
Pam Balloni
COMMENTS FROM PARTICIPANTS
No one signed up to speak.
APPROVAL OF MINUTES
Regular Meeting Minutes of November 10, 2010
Mrs. Lewis moved that the minutes of the regular meeting of November 10, 2010 be approved as
written. Mr.Wibbenmeyer seconded the motion, and the motion carried.
INVESTORS’ REPORT
Columbia Management’s Investment Presentation as of December 31, 2010.
Mr. Wilkinson opened by stating that the Plan has progressed well due to the diversified asset
allocation which is 64 percent equities and 36 percent fixed income. Initial jobless claims
improved to their lowest level in over two years and consumer confidence has risen. Markets
continue to improve and this month the Gross Domestic Product is up to 3.2 percent from 2.6
percent. Additionally, the unemployment rates continue to decline slowly, as the current rate is
9.0 percent down from 9.4 percent at the end of December 2010. There were 36,000 jobs added
last month, but 140,000 became unemployed. The current pool of those seeking employment has
declined and companies remain underemployed as the labor force reduces. Mr. Wilkinson feels
that 70-75 percent of companies earnings are exceeding expectations, but the expectations are
higher using less employees and companies are not interested in growing their labor force.
Mr. Wilkinson has expressed there has been an inflation rumble in the food markets and we
have seen obvious increases in the price of petroleum. Economic problems have continued
throughout the world including China’s drought and its effect on the cost of grain, the sovereign
debt in Europe, and the turmoil in Egypt and various other potentially hot spots in the Middle
East. Meanwhile, the US continues to support these nations as the federal debt continues to
increase. This affects tax payers in the area of state budget cuts, as evidenced by the recent 5
percent increase in Illinois state taxes.
Mr. Wilkinson finalized his report by stating the Plan’s assets increased from $57,161,779, as of
October 1, 2010, to $60,855,175 on December 31, 2010 for an increase of $3,693,396. The
quarter showed a 7.37 percent increase and 14.5 percent increase for year to date.
Mr. Wilkinson asked if there were any questions.
Mr. Vogelgesang asked how real the threat of inflation, and is the NCERP portfolio protected?
Mr. Wilkinson stated that there was more of an anticipation of inflation than an actual threat due
to increased interest rates. The Plan’s portfolio has proactively responded by adjusting the fixed
income and equity ratio and is better positioned to withstand turbulent times. In 2010 the fund
saw an increase of 14.5 percent and in January the fund increased to just over 61 million, this is
not common place, the Plan is projected to have increases in the single digit range to maintain
current funding.
REPORT ON NEW PARTICIPANTS/RETIREES/RETURN OF
CONTRIBUTIONS/DECEASED RETIREES
Mr. Hayden reported that during the period of October 1, 2010 through December 31, 2010 ten
(10) new participants were added to the Plan, three (3) employees separated from the College,
and their returned contributions and credited interest totaled $12,414.83.
During the same period, five (5) Plan participants chose to retire. One retiree chose the annuity
payments for life, two (2) chose the 50% Lump/50% Annuity Option, two (2) others chose the
Lump Sum option payment totaling $180,698.32. One retiree’s death was reported during this
period; Mrs. Susan Lagunoff, who worked at the Florissant Valley campus, passed on November
18, 2010, and was a monthly pensioner.
SUBMISSION OF BILLS
Mr. White made a motion, seconded by Mrs. Lewis, to ratify the payment of the seven (7) bills
presented to the Committee during the reporting period. The motion carried. The bills included:
Towers Watson – Actuarial Services (10/01/10 – 12/31/10)
$16,500.00
Columbia Management Investment Services (10/01/10 – 12/31/10)
$32,272.00
State Street Bank and Trust Company (10/01/10 – 12/31/10)
$ 1,401.14
State Street Bank and Trust Company (10/01/10 – 12/31/10)
$ 11,668.31
Treat America (11/11/10)
$
St. Louis Community College – Auditing Fees, November 15, 2010
$ 7,000.00
St. Louis Community College – Auditing Fees, November 7, 2010
$ 2,000.00
76.05
Mr. White made a motion, seconded by Ms. White, to approve the payment of the one (1) bill
presented to the Committee during the reporting period. The motion carried. The bill included:
St. Louis Community College – Human Resources Charges, 2/5/2011
$36,661.27
REPORT FROM ACTUARY
Mr. Schisler wanted to discuss their findings from the question raised at the meeting on
November 11, 2010 in which Mr. Kanterman raised the question concerning the averaging of
annual salaries used to calculate pension benefits utilizing the highest four years of annual
earnings in the last 10 years versus using the highest 4 years in the last 15 years. Mr. Schisler
stated at the time that the main con of this issue is the additional administrative time and cost.
Mr. Schisler looked at the affected Plan participants’ last 20 years annual earnings and 75
percent of the participants had their highest earnings in the last 4 years and 10 percent of the
participants had their highest earnings in the last 5 years. Mr. Schisler also looked at the data for
a specific employee who had questioned the current practice because they had experienced a year
in the past with high earnings, and this year would not be included in the final average if the
employee works beyond the normal retirement age. He determined that, if the employee,
receives an average pay increase of two percent increase per year, the final salary will be larger
than the highest earnings year in the past. It was also noted that, when we calculate a
participant’s benefit additional service credit also increased the benefit. The intent of the current
definition of average annual earnings, the highest 4 year average during the last 10 years, is to
protect the employees against inflation and that pension benefits are determined based on
earnings near the time of retirement. This was not implemented to guarantee the highest 4 years
of earnings would always be used, but to allow the participant to live at the same standard of
living they had during their final working years.
Ms. Balloni stated that 85 percent of affected participants may be fine, but 15 percent of
over 600 participants is still a large number of people.
Ms. Lucido stated that this examination was based upon the last 5 years and the Plan
covers the last 10 years so a larger percent would be covered, probably almost everyone.
Ms. Balloni stated that basing the review on a 2-4 percent increase in salaries is fine, but
we have not seen a pay increase for almost two years.
Ms. Schisler stated this is an average of 2 percent over the next ten years, which certainly
does not seem like an aggressive expectation.
Ms. White asked if there is a percent associated with each additional year the employee
works.
Mr. Schisler stated if the employee has been with the college 20 years, 5 more years
would increase their pension by 25 percent since the formula is 1.55 percent for every
year of service. Even if the employee’s pay does not increase, the credited service does,
thus increasing the benefit.
Ms. Barban asked how the lump sum payment versus monthly payment affects someone
over the age of 60. She stated she is still contributing; perplexed the lump sum isn’t
increasing, however; the lump sum seems to be decreasing? How is the NCERP
participant made aware of the decreasing lump sum?
Mr. Schisler stated that the monthly benefit continues to increase after the age of 60 but
the lump sum may not. The lump sum is the expected value of all future payments and
the life expectancy for someone over the age of 60 is less than someone younger. This
may result in a lower lump sum even though the monthly benefit continues to increase.
Ms. Lucido stated while they are working longer and the additional credited service
increases the benefit, they are older and will not live as long therefore their lump sum
benefit is diminished incrementally by the lump sum factor.
Ms. Barban wanted to know where this information is posted.
Mr. Hayden stated that it is discussed with each NCERP participant on an individual
basis when they ask for a retirement assessment.
Ms. Lucido suggested that this be published in the NCERP newsletter.
Ms. Barban stated that every time she received a retirement estimate her lump sum
benefits continue to drop and has happened each year after she attained 60 years of age.
Mr. Hayden suggested looking at a pragmatic view – If a participant wants to know when
it is best to retire then request a retirement assessment and if you don’t appreciate the
lump sum option, then take the annuity payments for life.
Ms. Barban stated that she continues to invest her own money and cannot see how this is
lawful.
Mr. Schisler stated that the Plan is designed to protect the monthly benefit not guarantee
an increase in lump sum benefits. This is also the focus of the pension regulations – to
protect the monthly benefit.
Ms. Barban stated that she is in the same position and contributes the same amount of
money but her lump sum payment is less.
Mr. Wilkinson stated that monthly benefit payments will be more due to the suggestion
of retiring at age 60, but the lump sum is based on the number of payments she is
expected to receive and that decreases over time because the end date is set. There is
math behind it.
Ms. Barban stated that this has never been spelled out until she inquired about it.
Mr. Hayden stated that the lump sum had been explained to her but after the fact – she
was already 60.
Mr. Schisler reiterated that the monthly pension does not decrease after age 60, but
continues to increase.
Mr. Hayden stated that perhaps the 50% lump/50% annuity would be an option for those
who are not pleased with the lump sum option or the annuity option.
Ms. Lucido stated to wrap up that clarification for NCERP employees needed to be
published in the newsletters on how the lump sum vs. monthly pension is affected when
an employee hits a certain age to avoid the shock factor.
UNFINISHED BUSINESS
All retired participants receiving annuity payments, eligible for the COLA increase, has received
the increase and many retirees were appreciative of the 1.1 percent increase.
While NCERP assets continue to rise, some future losses can be expected based on an increase
of projected participant losses due to the college’s restructuring process. As we enter fiscal year
2012 more employee losses are anticipated and some relief can be anticipated end of 2012 fiscal
year.
Ms. Barban asked on behalf of the employees who have lost their jobs and are not near the full
retirement age of 60 years, will they be able to leave their funds until the full retirement age?
Mr. Schisler stated that the employee can leave their pension until the full retirement age of 60
years, or can begin collecting at age 55, but because this would be considered an early
retirement, benefits will be decreased.
NCERP’s Operational Budget – Ending September 30, 2010 – James Hayden
The original Budget for the 2010-2011 fiscal year was $393,175.00. As of today, 02/09/11, with
the payment approval of all bills presented today, the balance for the operational budget is
$224,914.38. Mr. Hayden feels that this budget is sufficient and anticipates the completion of
the remainder of the fiscal year under budget.
NEW BUSINESS
Mr. Hayden announced that Ms Lucido tenure on the NCEPR committee will end June 30, 2011.
An election committee from the Non-Unit work group has been formalized and by the next
committee meeting in May, 2011, we will know if she will remain on the NCERP committee or
if she will be replaced.
ADJOURNMENT
There being no further business, a motion was made by Ms. White and seconded by Mrs. Lewis
to adjourn the meeting. The motion carried and the meeting was adjourned at 10:02 a.m. The
meeting of the next NCERP Committee will take place on Wednesday, May 11, 2011 at the
Florissant Valley campus beginning at 9:15 a.m.
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Chairman
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Administrator
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