Pension Fundamentals – Session #1 Fiduciary Responsibility
Fiduciary Responsibility – Your Role as a Trustee
INTRODUCTION
The following is intended to serve as a general overview of fiduciary responsibilities relating to the administration of public employee retirement systems.
WHO IS A “FIDUCIARY”?
The term “fiduciary” is derived from early Roman law and means “a person having the character of a trustee; one who has a duty to act for another’s benefit”. Those who have discretionary authority in connection with the administration of employee benefit plans, whether they are designated administrators or trustees, or simply members of the governing boards, committees or commissions, are “fiduciaries” and are charged with fiduciary responsibilities.
WHAT LAWS ESTABLISH FIDUCIARY RESPONSIBILITIES?
The law encompassing fiduciary responsibility is a complex network of federal and state statutes and case law, all of which define and delineate the parameters and rules within which a trustee must operate.
In the private sector, fiduciaries must comport with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA) which defines a “fiduciary” as any person who:
(1) exercises any discretionary authority or control over the plan assets;
(2) renders investment advice for a fee; or’
(3) exercises discretionary authority or responsibility for plan administration.
Trustees of public employee retirement systems in the State of Michigan must comply with the fiduciary duties as provided by Public Act 314 of 1965, as amended (“Act 314″) (which incorporates the amendments of Public Act 55 of 1982 and Public Act 485 of 1996). Act 314 defines “investment fiduciary” as one who exercises any discretionary authority or control in the investment of a system’s assets and/or renders investment advice for a system for a fee or other direct or indirect compensation. Section 13 of Act 314 in pertinent part requires that a trustee shall:
(1) Discharge his or her duties solely in the interest of the participants and the beneficiaries.
(2) Act with the same care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a similar capacity and familiar with those matters would use in the conduct of a similar enterprise with similar aims.
(3 )Act with due regard for the management, reputation, and stability of the issuer and the character of the particular investments being considered.
(4 )Make investments for the exclusive purposes of providing benefits to participants and participants’ beneficiaries, and of defraying reasonable expenses of investing the assets of the system.
(5) Give appropriate consideration to those factsand circumstances that the investment fiduciary knows or should know are relevant to the particular investment or investment course of action involved, including the role the investment or investment course of action plays in that portion of the system’s investments for which the investment fiduciary has responsibility; and shall act accordingly. For purposes of this subsection, “appropriate consideration” includes but is not limited to a determination by the investment fiduciary that a particular investment or investment course of action is reasonably designed, as part of the investments of the system, to further the purposes of the system, taking into consideration the risk of loss and the opportunity for gain or other return associated with the investment or investment course of action; and consideration of the following factors as they relate to the investment or investment course of action:
(i) the diversification of the investments of the system;
(ii) the liquidity and current return of the investments of the system relative to the anticipated cash flow requirements of the system;
(iii) the projected return of the investments of the system relative to the funding objectives of the system.
(6) Give appropriate consideration to investments that would enhance the general welfare of this state and its citizens if those investments offer the safety and rate of return comparable to other investments permitted under this act and available to the investment fiduciary at the time the investment decision is made.
(7) Prepare and maintain written objectives, policies, and strategies with clearly defined accountability and responsibility for implementing and executing the system’s investments.
(8) Monitor the investment of the system’s assets with regard to the limitations on those investments pursuant to this act. Upon discovery that an investment causes the system to exceed a limitation prescribed in this act, the investment fiduciary shall reallocate assets in a prudent manner in order to comply with the prescribed limitation.
Accordingly, a trustee has a duty to properly administer the provisions of the Plan and invest the funds of the Trust in accordance with Public Act 314 of 1965, as amended, (MCL 38.1132 et seq.).
FIDUCIARY STANDARDS
It is important to note that fiduciary duties are measured on an objective standard. As one court put it, “it is not sufficient that a trustee has a pure heart and an empty head”. Accordingly, a trustee should be aware of the following:
(1) Duty of Loyalty;
(2) Care, Skill and Diligence;
(3) Prudence;
(4) Diversity;
(5) In Accordance with Plan Documents; and
(6) Prohibited Transactions.
PROHIBITED TRANSACTIONS
Subsections 13(5) and 13(6) of Act 314 provide specific prohibited transactions which trustees must follow. Subsection 13(5) provides in pertinent part that:
“[A] trustee shall not cause the system to engage in a transaction if he or she knows or should know that the transaction is any of the following, either directly or indirectly;
(a) A sale or exchange or a leasing of any property from the system to a party in interest for less than the fair market value, or from a party in interest to the system for more than the fair market value.
(b) A lending of money or other extension of credit from the system to a party in interest without the receipt of adequate security and a reasonable rate of interest, or from a party in interest to the system with the provision of excessive security or at an unreasonably high rate of interest.
(c) A transfer to, or use by or for the benefit of, the political subdivision sponsoring the system of any assets of the system for less than adequate consideration.
(d) The furnishing of goods, services, or facilities from the system to a party in interest for less than adequate consideration, or from a party in interest to the system for more than adequate consideration.
A “party in interest” is defined in Section 12d.(4) of Act 314 as any of the following:
(a) An investment fiduciary, counsel, or employee of the system.
(b) A person providing services to the system.
(c) The political subdivision sponsoring the system.
(d) An organization, any of whose members are covered by the system.
(e) A spouse, ancestor, lineal descendant, or spouse of a lineal descendant of an individual described in (a) or (b). (f) An entity controlled by an individual organization described in (a) to (e).
Subsection 13(6) of Act 314 further provides that a trustee shall not do any of the following:
(a) Deal with the assets of the system in his or her own interest or for his or her own account.
(b) In his or her individual or any other capacity act in any transaction involving the system on behalf of a party whose interests are adverse to the interests of the system or the interest of its participants or participants’ beneficiaries.
(c) Receive any consideration for his or her own personal account from any party dealing with the system in connection with a transaction involving the assets of the system.
Notwithstanding the foregoing, a trustee is not prohibited from doing any of the following:
(a) Receiving any benefit to which he or she may be entitled as a participant or participant’s beneficiary of the system.
(b) Receiving any reimbursement of expenses properly and actually incurred in the performance of his or her duties for the system.
(c) Serving as an investment fiduciary in addition to being an officer, employee, agent, or other representative of the political subdivision sponsoring the system.
(d) Receiving agreed upon compensation for services from the system.
CONFLICT OF INTEREST
A fiduciary must act in the best interest of the plan and its participants. Fiduciaries should exercise extraordinary precaution to assure that decisions and transactions are fair to the participants and plan and such fairness is well documented. Independent advisors should be retained to advise the fiduciaries of their duties, the relevant factors which they may consider in making their decisions and their alternatives.
FIDUCIARY LIABILITY
Fiduciaries who breach their responsibilities shall be “personally liable” for any losses to the plans which they administer and shall be subject to other equitable or remedial relief, including removal from their positions. Further, fiduciaries cannot rely upon “exculpatory” provisions in the plan documents to protect themselves from liability, but the plan can purchase liability insurance which covers their acts and omissions.
DELEGATION OF RESPONSIBILITY
Fiduciaries are generally not liable for a breach of duty if that duty has been specifically allocated to another fiduciary. This defense applies only if the plan document specifically authorizes the allocation or delegation. Fiduciaries must exercise reasonable prudence in delegating responsibilities. The persons selected must be qualified and capable of adequately discharging the responsibilities delegated.
Public Act 314 specifically empowers trustees with the authority to retain investment and all other services necessary for the conduct of the affairs of the system and to pay reasonable compensation for those services from the income of the system.
Fiduciaries may delegate responsibility with respect to the management or control of plan assets only to another recognized fiduciary. It is essential that the qualification status and written acknowledgment of the fiduciary is well documented in the official records of the plan.
Prudence also requires the fiduciary to actively monitor the activities of the appointed fiduciaries. The review process should critically scrutinize the relevant issues and responsibilities.
Support Services. Many administrative functions are performed for fiduciaries by service providers whose level of responsibility and authority do not make them fiduciaries. Selection of support personnel should be carefully considered and all service providers should have clearly defined responsibilities and written contracts. Trustees should monitor performance of support personnel to ensure that policies and procedures are being timely and accurately implemented.
Legal Counsel. Qualified independent legal counsel should be consulted to ensure that trustee conduct is legally acceptable. Seeking legal advice further insulates trustees from being deemed to have acted in an arbitrary and/or capricious manner.
RISK CONTROL PROGRAM
1) Legal Compliance:
- Periodic review of plan documents
- Monitor changing legal requirements
- Review of communications to Plan participants
- Accurate and complete records
2) Education:
- Review plan documents
- Review duties and responsibilities
- Ongoing Trustee Education Program-Seminars/Conferences/Etc.
3) Board Meetings:
- Regularly scheduled meetings
- Accurate and detailed minutes
4) Participant Claims:
- Review record keeping
- Review communications
- Review service provider criteria
5) Plan Design:
- Review plan during collective bargaining negotiations
- Review potential funding effects
- Analyze potential long-term funding deficiencies
- Review potential conflicts of interest
- Carefully review “Social Investing”
6) Layer protections in the authorization of fund disbursements
7) Custodial relationships
8) Written and approved investment policies and guidelines
9) FiduciaryLiabilityInsurance
10) Document retention program
11) Compliance Audit -Third-party review
CONCLUSION
While Plan provisions and applicable laws define and establish the Board’s fiduciary duties, implementation of those responsibilities necessitates an ongoing process of review and evaluation by the Board. The retention of professional services under certain circumstances will reduce the Board’s exposure to liability. The maintenance of fiduciary liability insurance further insulates the members of the Board from liability. The Board, however, ultimately retains responsibility for exercising prudence and due diligence in all of its decisions.
The adoption of and adherence to procedures has become a key component of your prudence obligation. In many respects, that prudence obligation has evolved into a “procedural prudence” standard that focuses not so much on results but on the quality and thoroughness of your decision making process (although results remain an important factor in the equation). Having and following a procedure demonstrates that you did not approach your decision in a haphazard fashion but, rather, in a reasonable, responsible and thoughtful way. Moreover, it helps ensure that you do, in fact, consider and evaluate the factors that are important to the decision you are making on behalf of the plan. Finally, your procedure will ensure that you make an informed decision, based on all of the appropriate and necessary information available to you.
In dealing with your professional advisors, it is important to keep one fact in mind: there is no substitute for good judgement and common sense on your own part. Obviously, the advice of your fund’s professional advisors, based upon their expertise and experience with similar funds, can be very helpful. However, as trustees, your knowledge of your own business and local conditions is tremendously important. Thus, seek the guidance of professional advisors, but apply their input to your own knowledge of the issues involved. As noted earlier, do not follow their recommendations blindly. Remember that no matter how qualified your advisors might be, it is your fund and you bear the ultimate fiduciary responsibility for its successful operation.
NOTES:
Michigan Association of Public Employee Retirement Systems
2011 SPRING MAPERS CONFERENCE TENTATIVE AGENDA
DATE: SUNDAY, MAY 1, 2011 TIME: 2:00 P.M. PLACE: GRAND TRAVERSE RESORT – ACME, MICHIGAN ORDER OF BUSINESS: 1. OPEN MEETING 2. ROLL CALL 3. APPROVAL OF CONSENT AN D REGULAR AGENDAS 4. APPROVAL OF MINUTES 5. LEGAL REPORT
A. UNDERSTANDING PLAN PROVISIONS
CONSENT AGENDA
6. COMMUNICATIONS
7. PAYMENT OF BILLS REGULAR AGENDA
8. BOARD MEETINGS
9. RETAINING PROFESSIONAL SERVICES
A. AUTHORITY B. DUE DILIGENCE C. CUSTODIAN D. INVESTMENT CONSULTANT E. INVESTM ENT M ANAGER (S) F. LEGAL ADVISOR G. ACTUARY
10. COMMITTEE REPORTS
11. CITIZEN PARTICIPATION
12. TRUSTEE COMMENTS
13. ADJOURNMENT
Michigan Association of Public Employee Retirement Systems
2011 SPRING MAPERS CONFERENCE
REGULAR MEETING MINUTES
TRUSTEE DEVELOPMENT WORKSHOP SESSION I
SUNDAY, MAY 1, 2011
This meeting is being recorded for retirement board purposes only. This tape will be used solely for the purpose of preparing written minutes of today’s proceedings and in no way replaces the official written record. This tape will be erased upon approval of the minutes at the next regularly scheduled meeting.
1. The meeting was called to order at 2:00 p.m. at the Grand Traverse, Acme, Michigan.
2. PRESENT: Trustees and Plan Administrators
ABSENT: Golfers, Shoppers, Sound Sleepers, Late Arrivals
ALSO PRESENT: Michael J. VanOverbeke, Attorney Thomas Michaud, Attorney Jack Timmony, Attorney Frank Judd, Attorney Aaron Castle, Attorney
3. APPROVAL OF CONSENT AND REGULAR AGENDAS:
The following items were added to the regular agenda:
Motion by TRUSTEE, Supported by TRUSTEE, to approve the agenda as amended.
Ayes: All Motion carried.
4. APPROVAL OF MINUTES:
Motion by TRUSTEE, Supported by TRUSTEE, moved to approve the minutes of the meeting held _________________________ , 2011 with corrections stated.
Ayes: All Motion carried.
5. LEGAL REPORT
A. Understanding Plan Provisions
1. MI Constitution – Article 9, Section 24
2. Statute/Charter/Ordinance
3. Collective Bargaining Provisions
4. Past Practice/Establishing Precedent
5. Qualified Plan – Internal Revenue Code
Motion by TRUSTEE, Supported by TRUSTEE, to receive and file the legal report. TRUSTEES discussed the foregoing issues. Ayes: All Motion carried.
CONSENT AGENDA
6. COMMUNICATIONS
7. PAYMENT OF BILLS
Motion by TRUSTEE, Supported by TRUSTEE, to receive and pay the foregoing bills.
TRUSTEES discussed the foregoing issues.
Ayes: All Motion carried.
REGULAR AGENDA 8. BOARD MEETINGS
A. Minutes And Agendas
B. Motions/Resolutions
C. Forms And Procedures
D. Rules of Order
E. Presentations to the Board
Motion by TRUSTEE, Supported by TRUSTEE, to receive and file the foregoing information.
TRUSTEES discussed the foregoing issues.
Ayes: All Motion carried.
9. RETAINING CONSULTANTS AND ADVISORS
A. Authority
1. Plan Provisions
2. Act 314
B. The Due Diligence Process
1. Fiduciary Responsibility/Prudent Trustee Standard
2. Request for Proposals (Attachment D)
a. Purpose
b. Form
c. Publication
3. Proposal Review
a. Screening
b. Presentations
c. Interviews
4. Retaining Professional Services
a. Fees
b. Agreements/Contracts
c. Letters of Direction
d. Resolutions
e. Notification of Appropriate Parties
Motion by TRUSTEE, Supported by TRUSTEE, to receive and file the foregoing information.
TRUSTEES discussed the foregoing issues. Ayes: All Motion carried. C. Custodian
1. Types of custody arrangements
2. Custodial services
3. Due diligence questions/answers
D. Investment Consultant
1. Brokerage affiliation
2. Fee structure
a. Hard dollar/Soft dollar
3. Services
a. Asset Allocation
b. Investments Guidelines
c. Monitoring/Reporting
d. Manager Searches
4. Due diligence questions/issues
E. Investment Manager(s)
1. Types:
a. Balanced
b. Equity
c. Fixed
d. Specialized
e. Passive (ie. indexing)
2. Due diligence questions/issues
Motion by TRUSTEE, Supported by TRUSTEE
SAMPLE RESOLUTION
Re: Appointment of Investment Manager
WHEREAS, the Board of Trustees is vested with the general administration, management and operation of the Retirement System and has fiduciary responsibilities relative to the proper administration of the pension trust fund, and
WHEREAS, the Board has retained the services of an investment consultant, and
WHEREAS, the Board has reviewed with its Investment Consultant the Retirement System’s investment portfolio and asset allocation in light of: (1) the portfolio’s historical performance; (2) recent changes in the economic and financial market conditions; and (3) the Board’s goal of maximizing future gains without overtly increasing risk or volatility in the portfolio, and
WHEREAS, in light of the foregoing factors and upon recommendation of its Investment Consultant, the Board is desirous of making changes in its investment manager(s) and the structure of its current portfolio, and
WHEREAS, the Board’s Investment Consultant has advised that by hiring investment management firms of different management styles, the portfolio will have greater diversity and accordingly less potential volatility, and
WHEREAS, the Board’s Investment Consultant conducted an investment manager search and reviewed prospective investment managers on behalf of the Board , and
WHEREAS, representatives of three investment managers appeared before the Board to present their proposals, and
WHEREAS, the Board in performance of its due diligence, reviewed each managers’ investment, philosophy, strategy, historical performance, and fee structure and is of the opinion that Money Manager, Inc. meets the Board’s requirements, and
WHEREAS, the Board has received and discussed the report from its Investment Consultant, and
WHEREAS, the Board, upon the recommendation of its Investment Consultant, is desirous of retaining Money Manager, Inc., therefore be it
RESOLVED, that subject to approval of a final agreement by the Board and approval as to form by the Board’s Legal Counsel, the Board of Trustees enter into a written agreement with Money Manager, Inc. and that such agreement be executed by appropriate signatories on behalf of the Board, and further
RESOLVED, that Money Manager, Inc. be allocated approximately $10,000,000 from the Retirement System assets [from those assets currently in the ______account], and further
RESOLVED, that copies of this resolution shall be forwarded to Money Manager, Inc., Investment Consultant and Custodial Bank.
Ayes: All Motion carried.
F. Legal Advisor
1. Special Counsel/General Counsel
2. Due diligence questions/issues
G. Actuary
1. Duties
2. Due diligence questions/issues
SAMPLE RESOLUTION
Re: Approval of 50th Annual Actuarial Valuation Dated June 30, 2010.
WHEREAS, the Board is in receipt of the 50th Annual Actuarial Valuation dated June 30, 2010, which has been submitted by the actuary to the Board of Trustees for consideration and approval, and
WHEREAS, the Board of Trustees has the legal and fiduciary obligation to assure that employer contributions are in accordance with Article 9 Section 24 of the State of Michigan Constitution, and
WHEREAS, Section 1 of the Retirement System provides that the Board shall render a report to employer of the actuarial valuation of the assets and liabilities of the Retirement System, and
WHEREAS, the Board’s actuary has appeared before the Board and presented the Annual Actuarial Valuation which was reviewed and discussed by the Board, therefore be it
RESOLVED, that the Board hereby approves the 50th Annual Actuarial Valuation dated June 30, 2010, as submitted by the actuary, and further
RESOLVED, the Board hereby certifies to the employer the amount of employer contribution required for the fiscal year beginning July 1, 2011 (as reflected by the June 30, 2010 Actuarial Valuation), and further
RESOLVED, that a copy of this resolution and the June 30, 2010 Actuarial Report be forwarded to the employer.
Ayes: All Motion carried.
10. COMMITTEE REPORTS
11. CITIZEN PARTICIPATION
A. Member and Beneficiary Communication – (Attachment D)
1. Annual Meetings
2. Member/Retiree Seminars
3. Annual Report Statements
4. Member Handbook
12. TRUSTEE COMMENTS
13. ADJOURNMENT
Motion TRUSTEE, Supported TRUSTEE, to adjourn the meeting at 4:00 p.m.
Ayes. All Motion carried.
The next meeting will be on Sunday, September 18, 2011 at 2:00 p.m. at the Amway Grand Plaza Hotel, Grand Rapids, Michigan.
SECRETARY
GENERAL EMPLOYEES RETIREMENT SYSTEM
RESOLUTION
Adopted: Resolution No.
Re: Retirement Application of [Member’s Name] WHEREAS, the Board of Trustees is in receipt of an application for retirement from [Member’s Name] requesting an effective retirement date of [Date], and
WHEREAS, [Member’s Name] has a date of birth of [Date] and has been credited with [#] years, [#] months and [#] days of service credit, and
WHEREAS, it appears, based on preliminary information provided, that [Member’s Name] meets the retirement eligibility requirements of the Retirement System and any applicable collective bargaining agreement, therefore be it
RESOLVED, that the application of [Member’s Name] for retirement is preliminarily approved subject to the Board’s approval of the final actuarial calculations and receipt of all necessary forms, and further
RESOLVED, that the actuary prepare and submit a retirement estimate to the Retirement System as soon as possible, and further
RESOLVED, that upon receipt of the retirement calculation form from the actuary, a copy of the estimate be sent to [Member’s Name], along with an option election form, and further
RESOLVED, that following [Member’s Name]’s last date on the active payroll, a retirement data sheet be completed by the employer and submitted to the Retirement System’s actuary, and further
RESOLVED, that upon receipt of the completed election form by [Member’s Name] and the final actuarial calculations, the Board of Trustees will consider adoption of a resolution approving payments of the applicable benefit amounts subject to correctness of calculations and data.
GENERAL EMPLOYEES RETIREMENT SYSTEM
RESOLUTION
Adopted: Resolution No.
Re: Approval of Service Retirement- [Member’s Name] WHEREAS, [Member’s Name] has submitted an application for service retirement to the Board of Trustees requesting an effective retirement date of [Date], and
WHEREAS, [Member’s Name] has a date of birth of [Date] and has been credited with [#] years, [#] months and [#] days of service credit, and
WHEREAS, the Board has verified that [Member’s Name] has met the eligibility requirements to retire pursuant to the provisions of the Retirement System and any applicable collective bargaining agreement, and
WHEREAS, the Board has provided all the necessary personal and financial information to the Board’s Actuary relating to [Member’s Name] and the necessary reports have been reviewed and completed by the Actuary, which includes [a copy of marriage license and spouse’s full name], birth certificate[s] and social security number[s], and
WHEREAS, [Member’s Name] has reviewed this data and has elected to receive a [regular] [Option __ form of retirement benefit naming (Name of Beneficiary) as option beneficiary], and
WHEREAS, [Member’s Name] has requested an annuity withdrawal under the provisions of the Retirement System and applicable collective bargaining agreement, and
WHEREAS, the Retirement Board is in receipt of the final actuarial data, therefore be it RESOLVED, that the Retirement Board hereby acknowledges receipt of the final actuarial data, and further
RESOLVED, that [Member’s Name] is hereby granted a service retirement effective [Date], and further
RESOLVED, that [Member’s Name] shall be paid an annuity withdrawal of [Dollar Amount] and a retirement benefit in the amount of [Annual Dollar Amount/Monthly Dollar Amount], and further
RESOLVED, that benefits be paid consistent with the foregoing, and further
RESOLVED, that copies of this resolution shall be forwarded to [Member’s Name] and other appropriate parties.
POLICE AND FIRE RETIREMENT SYSTEM RESOLUTION
Re: Duty Disability Retirement of [Member’s Name] WHEREAS, the Board of Trustees is vested with the authority and fiduciary responsibility for the
proper administration, management and operation of the Retirement System, and
WHEREAS, the Board, at its [Date] meeting, acknowledged receipt of [Member’s Name]’s application for disability retirement and resolved to process said application, and
WHEREAS, [Member’s Name] has been examined by members of the Medical Committee, and
WHEREAS, the Board is in receipt of the medical reports from the members of the Medical Committee who have concurred that [Member’s Name] is incapacitated for the further performance of duty and that the incapacity is likely to be permanent and has recommended that a disability retirement be granted, and
WHEREAS, [Member’s Name] has a date of birth of [Date] and has been credited with [#] years, [#], months and [#] days of service credit, and
WHEREAS, the Board of Trustees has found the disability to be a natural and proximate result of causes arising out of and in the course of the member’s employment, and
THEREFORE BE IT RESOLVED, that the Board of Trustees hereby grants [Member’s Name] a service connected disability, effective [Date], and
FURTHER RESOLVED, that the benefits be paid consistent with the pension provisions, and FURTHER RESOLVED, that [Member’s Name] be periodically re-examined in accordance with Retirement System provisions until attainment of fifty-five (55) years of age , and
FURTHER RESOLVED, that upon reaching the age of fifty-five (55) years [Member’s Name]’s benefits will be recomputed consistent with the pension provisions and applicable collective bargaining agreement, and
FURTHER RESOLVED, that a copy of this resolution be provided to [Member’s Name] and all other appropriate parties.
Adopted: Resolution No.
POLICE AND FIRE RETIREMENT SYSTEM
RESOLUTION
Re: Disability Retirement Application – [Member’s Name] WHEREAS, the Board is in receipt of an application dated [Date] from [Member’s Name] [Member’s Department Head] requesting a disability retirement effective [Date], and
WHEREAS, pursuant to the pension provisions, a Medical Committee must be formed for purposes of medical examination of [Member’s Name] which medical committee consists of a physician named by the Board of Trustees, a physician named by the person for whom the disability application is made, and a third physician designated by the first two physicians, therefore be it
RESOLVED, that the Board of Trustee acknowledges receipt of said application and directs the processing of said application in accordance with the Retirement System provisions, and further
RESOLVED, that the Board of Trustees hereby appoints [Doctor’s Name] as its Medical Director to conduct a medical examination of said disability retirement applicant, and further
RESOLVED, that the Board of Trustees directs the Board’s Secretary to contact [Doctor’s Name] to set up an appointment for [Member’s Name] to be examined, and further
RESOLVED, that [Member’s Name] designate a physician to serve on the Medical Committee and provide the Board of Trustees with the address and phone number of said physician, and further
RESOLVED, that the Board’s Secretary, with the assistance of Legal Counsel, forward appropriate letters to the physicians relative to the responsibilities of the Medical Committee, and further
RESOLVED, that the Medical Committee fulfil its duties and report to the Board of Trustees its findings and certifications, and further
RESOLVED, that copies of this resolution be forwarded to [Member’s Name], [Medical Committee Doctors] and all other appropriate parties.
Adopted: Resolution No.
CONSTITUTION OF 1963
Article IX, Section 24 Sec. 24. Public pension plans and retirement systems, obligation
Sec. 24. The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be dismissed or impaired thereby.
Financial benefits, annual funding
Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities.
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It is well established that retirement benefits are a mandatorysubject of collective bargaining, under the Public Employment Relations Act, Public Act 336 of 1947 (MCL 423.201 et seq.) (PERA). Detroit Police Officers Association v. City of Detroit, 391 Mich 44, 58 (1974). The Michigan Supreme Court has consistently held that PERA must be viewed as the dominant law regulating public employment relations. Local 1383, Int’l Ass’n of Fire Fighters, AFL-CIO v. City of Warren, 411 Mich 612; 311 NW2d 702 (1981).
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In Reardon v. City of Allen Park, Slip Opinion Case No. 137091 (1993), the Court of Appeals addressed the relationship between collective bargaining and City Ordinance provisions in determining pension and retirement benefits. In Reardon, the Appellate Court held that the established past practice of the Retirement Board was controlling over the express terms of the City’s Pension Ordinance. The collective bargaining agreements contain “maintenance of conditions” clauses. A past practice which does not derive from the express terms of a collective bargaining agreement may become a condition of employment, attaining the same significance as other terms of employment.
TRUSTEE HANDBOOK INDEX-CHECKLIST
__ Charter/ Ordinance/ Statutory Provisions
__ Investment of Funds of Public Employee Retirement Systems Public Act 314 of 1965, as amended (MCLA 38.1132 et seq)
__ Freedom of Information Act Public Act 442 of 1976, as amended (MCLA 15.231 et seq)
__ Open Meetings Act Public Act 267 of 1976, as amended (MCLA 15.261 et seq)
__ Eligible Domestic Relations Order Act Public Act 46 or 1991, as amended (MCLA 38.1701 et seq)
__ Michigan Constitution of 1963 Article 9, Section 24
__ Fiduciary Responsibility Articles
__ Membership Forms
__ Service Retirement Procedures
__ Disability Retirement Procedures __ Services of the Actuary
__ Request for Estimates from the Actuary
__ 402 Notice
__ Statement of Investment Policy, Objective and Guidelines
__ Authorized Signatories Resolution
__ Retirement Calculation Form
TRUSTEE HANDBOOK INDEX-CHECKLIST
___ Retirement Estimate Form
___ Applicable Collective Bargaining Provisions
___ Freedom of Information Act Policy
___ IRS Plan Determination Letters
___ All Legal Opinions
___ Resolution Index
___ Actuarial Policy
___ Eligible Domestic Relations Order Policy
___ Contracts: Investment Manager, Investment Consultant
___ Service Credit Policies/Procedures/Forms
___ Verification of Retirement/Beneficiary Data Form
___ Retirement System Calendar
___ Certification of Earnings
___ Record Retention Policy
___ Election Procedures ___ Ethics Policy
___ Employee Benefit Handbook
___ Travel Policy
___ Final Average Compensation Calculation Policy
MEMBER HANDBOOK CONTENTS
I. Benefit Questions and Answers
II. Board Policies and Procedures
III. Retirement System Provisions (Statute, Charter, Ordinance)
IV. Relevant Collective Bargaining Provisions
V. Summary Annual Report to Members
VI. Annual Member Statement
VII. Union Contracts
VIII. Personal Financial
IMPORTANT NOTE: This summary is intended to be informational only and this session is intended to provide a general overview of the subject matter covered. This information should not be considered the rendering of legal, accounting, or other professional services and should not be used as a substitute for consultation with professional advisers.