Municipal Employees’ Annuity and Benefit Fund of Chicago

[Pages:137]Municipal Employees' Annuity and Benefit Fund of Chicago

A Pension Trust Fund of the City of Chicago Chicago, Illinois

2013

Comprehensive Annual Financial Report

For the Fiscal Years Ended December 31, 2013 and 2012

A Pension Trust Fund of the City of Chicago Chicago, Illinois

2013

Comprehensive Annual Financial Report

For the Fiscal Years Ended December 31, 2013 and 2012

Prepared by Administrative Staff of the Municipal Employees' Annuity and Benefit Fund of Chicago

321 North Clark Street, Suite 700 Chicago, Illinois 60654

Introductory Section

Table of Contents

Introduction Section

Certificate of Achievement

1

Retirement Board

2

Organizational Chart and Consultants

3

Administrative Staff

4

Letter of Transmittal

5

Financial Section

Independent's Auditor's Report

12

Management's Discussion and Analysis

14

Financial Statements

Statements of Plan Net Position

22

Statements of Changes in Plan Net Position

23

Notes to Financial Statements

24

Required Supplementary Information

Schedule of Funding Progress (Pension)

46

Schedule of Employer Contributions (Pension)

46

Note to Schedules of Funding Progress and Employer Contributions (Pension)

46

Schedule of Funding Progress (Post-employment Healthcare)

47

Schedule of Employer Contributions (Post-employment Healthcare)

47

Note to Schedules of Funding Progress and Employer Contributions

(Post-employment Healthcare)

47

Schedule of Funding Progress (Post employment Healthcare-Staff

Retiree Healthcare)

48

Schedule of Employer Contributions (Post employment Healthcare-Staff

Retiree Healthcare)

48

Note to Schedules of Funding Progress and Employer Contributions

(Post-employment Healthcare-Staff Retiree Healthcare)

48

Schedule of Administrative and OPEB Expenses

49

Schedule of Professional and Consulting Costs

50

Schedule of Investment Management Compensation

51

Investment Section

Letter from the Chief Investment Officer

54

Master Custodian's Certification

57

Investment Authority and Responsibility

58

List of Investment Managers

60

Portfolio Performance

62

Portfolio Summary (Fair to Book Values)

65

Portfolio Asset Allocation

66

Domestic Equity Portfolio Summary

68

International Equity Portfolio Summary

69

MEABF Comprehensive Annual Financial Report 2013 i

Introductory Section

Table of Contents (continued)

Investment Section (continued)

Fixed Income Portfolio Summary

71

Brokerage Commissions

72

Investment Fees

73

Actuarial Section

Actuarial Certification

75

Additional Disclosures Required by Actuarial Standards of Practice

77

Summary of Actuarial Valuation

78

Discussion of Valuation Results

80

2013 Experience Analysis

86

Components of Funded Ratio

88

Summary of Basic Actuarial Values

91

Statutory Reserves

92

Actuarial Accrued Liability Prioritized Solvency Test

93

Development of Actuarial Values of Assets

94

Annual Required Contributions of Employer and Trend Information

95

Retirees and Beneficiaries Added To and Removed From Payrolls

96

Active Participating Member Valuation Data

97

Actuarial Methods and Assumptions

98

Statistical Section

Changes in Plan Net Position

104

Summary of Changes in Plan Net Position

106

Additions to Net Position By Source

107

Deductions from Net Position By Type

108

Refunds By Type

109

Benefits By Type

110

History of Average Pension Benefit Payment to New Retirees

112

Average Employee Retirement Benefits Payable

113

Covered Employees By Age & Years of Service

113

Current Retirees By Range of Pension Amounts

114

MEABF Staff Retiree Healthcare (OPEB)

114

History of Retirees and Beneficiaries By Type of Benefit

115

Retirees and Beneficiaries By Type of Coverage - Health Insurance Subsidy

115

10-Year History of Plan Membership

116

10-Year History of Covered Employees

117

Legislative Changes in Plan Provisions 1993 Through 2013 (Appendix A)

119

MEABF Comprehensive Annual Financial Report 2013 ii

Introductory Section

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Municipal Employees' Annuity and Benefit Fund of Chicago for its 2012 Comprehensive Annual Financial Report. MEABF has received the award for each of the last twenty-four years.

MEABF Comprehensive Annual Financial Report 2013 1

Introductory Section

Retirement Board (as of June 30, 2014)

Timothy G. Guest President Elected Trustee

Dan Widawsky Vice-President Ex-Officio Trustee (Comptroller, City of Chicago)

Stephanie D. Neely Treasurer Ex-Officio Trustee (Treasurer, City of Chicago)

Anthony C. Clancy Recording Secretary Elected Trustee

Thomas J. McMahon Elected Trustee

A five-member Retirement Board is the governing body of the Municipal Employees' Annuity and Benefit Fund of Chicago (MEABF). By statute, the Retirement Board shall consist of two ex-officio members, the City Comptroller and the City Treasurer, and three members who are employees and elected by the contributing members.

The Retirement Board is ultimately responsible for the operation, administration and management of all the activities of MEABF. Having oversight of the investment activities, the Retirement Board sets investment policies and objectives, hires investment managers and investment consultants and reviews investment performance. The Retirement Board also approves the MEABF operating budget and approves or denies benefit claims. The Retirement Board meets monthly and holds special meetings as needed. As members of the Retirement Board, they receive no compensation.

The Retirement Board appoints the Executive Director, and retains consultants for investment, actuarial, audit, legal and other provisional services necessary for the transaction of business.

MEABF Comprehensive Annual Financial Report 2013 2

Introductory Section

Organizational Chart and Consultants

Investment Consultant Brian Wrubel James R. Wesner Marquette Associates Chicago, IL

Legal Advisor Mary Pat Burns Burke, Burns & Pinelli, Ltd Chicago, IL

Auditor Gerard J. Pater, C.P.A. Bansley & Kiener, L.L.P. Chicago, IL

Master Custodian Kimberly Miller The Northern Trust Company Chicago, IL

Actuary Alex Rivera, F.S.A., M.A.A.A. Paul T. Wood, A.S.A, M.A.A.A Gabriel Roeder Smith & Company Chicago, IL

Medical Advisor Terence Sullivan, M.D. Chicago, IL

Custodian Stephanie D. Neely City Treasurer Chicago, IL

Investment Managers and Investment Fees - are listed on pages 60-61 and 51-52 Brokers used by Investment Managers - are listed on pages 72

MEABF Comprehensive Annual Financial Report 2013 3

Introductory Section

Administrative Staff (as of June 30, 2014)

Appointed by the Retirement Board, the Executive Director and his staff are responsible for the day-today administration and operation. The administrative staff also implements the investment policies and decisions of the Retirement Board and the benefit provisions of the Plan. The administrative staff of fortyeight (48) employees serves 30,647 actively contributing members; 24,602 retirees and surviving beneficiaries; and 14,254 inactive members.

MEABF Comprehensive Annual Financial Report 2013 4

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