opposes. >> so q m a is the ink3wu7b9 manager. >> replaces them with van guard. >> can you use one word sentences thank you very much. >> a recommendation. >> excuse me. i'd like to make a recommendation for an entertainer. >> i'd like to open up for

public comment for item 11 seeing none, all in favor, say i. of adoption>> i. >> passes unanimously item 12 please. action item review and recommendation to offer loans in the compensation plan. >> good afternoon, commissioners in during labor negotiations in 2013, the labor unions and city agreed to present to the retirement board a request that the f d c p offer loans in a plan and staff and other folks in junction we've done research there's there's burdens in having such programs and definitely administrative work that will be added but despite that we had recommended and the committee has approved

bringing to you for approval a loan program large items part of the loan program include the only active participant would be eligible for loans a written repayment agreement is required and collateral requirement and under the internal ref reviewing revenue no more than 50 percent of your balance $50,000 for all loans combined ass and the reasonable interest rate is required we're recommending prime plus one percent and the alongside you must be repaid within 5 years unless the irs they have strict rules if you

qualify those are loans can be repaid within 15 years a participant firemen's their employment before the term their accelerated and one of the personality to insure repayment no benefits can be paid until the loan is repaid prudential has the capacity to have the plan it was contemplated in the plan when negotiated there would be a one time application fee of $50.25 directing fee annually for the life of the loan those are the principle items i don't know if you have questions. >> what additional we're going to limit the loans to. >> yes. >> that's the extension of the recommendations the staff feels strongly they can have two

active loans no more than two active loans. >> right. >> leslie i'll only audio that just to underscore it is very unusual for large plans to find this is over 10 thousand participant not to have loans upward of 90 percent due it is very common and evidence and i intuition of the option to have a loan is different so people can know that i can get my hands on this money before i am a retiree promotes higher participation that will be a benefit needs to be accompanied with good education to people there is an opportunity clause in the loan you don't have an

investment loan build up but it can be a positive thing. >> thank you having i have a couple of questions the term that you laid out here for the proposed loan programs clearly lace out f what happened then in a person is fired or device while their employment how. >> it is the same thing termination for anything terminates the loan. >> another thing it says something about it you default open the loan you know if you're fired from city employee you have a to pay off the balance of the loan thirty days.

>> generally speaking what do you mean by the terms accelerated you want to have the loan repaid immediately we'll put thirty days within the loan document and policy document but a practical manner we're saying you don't get fund from the plan until it's repaid in full. >> okay. so there's some teeth thirty to this policy i'm trying to figure out. >> how are the the beneficiaries of the loan taxed so you take out a loan and take money are you take into considerationed on that transaction. >> i imagine the answer is no. >> but the payment is post tax. >> you've paid on those fund.

>> okay. >> it's exact same. >> so thank you one final question do we have the software to begin to regulate this plan the staff will be responsible for the payroll is correctly processed and coordinate the dediscussion do we need to purchase of software. >> we need to work with emerge. >> the citywide payroll. >> we'll have to have them to add to the tax dediscussion that's available for completed paychecks we're approached it once we're looblthd it and confident we can get it done in

two or three months. >> we're going as fast as we can we're hoping that the board will be passing this tempo we've got an idea of the issues that are out there and i mean the board approves this we're ready to start of the work. >> what's the costs of the merger. >> it's not a cost to emerge it is just a matter of programming. >> does the real administrative burden and in house staff needs to monitor the repaymentup to that time and important for the plan to remain as well as the participant not to have the progressive traktsz so our staff will look at this at every pay

period to make sure that the payment are made and no one is trying to stop the payment you don't have an option to say i can't do it the burden is on our staff to make sure the repayment is made. >> the repayment is to a payroll deduction. >> correct. >> employees have hardships and want to stop the payroll sdukdz this is one that can't be stopped. >> another final question some questions and really questions the interest rate a fixed rate equal to the prim rate bus one percent at the time the loan is made what are we talking about. >> it - so when the participant

is taking a loan whatever the prim interest rate we take prudential would pack that rate busing plus one percent fixed into the loan document so - >> my question is what give me a range the fixed rate. >> 3 and a quarter. >> plus one percent and so that means that the loan would be somewhere around four or five. >> a quarter of a cent. >> variable. >> subject to market. >> fixed at the time of the loan so my loan today is 4 and a quarter but you're in a few years is 5 and a quarter. >> thank you colleagues i

understand. >> staff i think this is a great idea i'm excited thank you for your hard work. >> i have a followup to 4 and a quarter first. >> that's for the participant. >> bottom line account. >> sorry one question yeah. when you also read the proposal it talks about there's some kind of is of a co-regulates between an individual has in my account if i only have 5 thousand dollars your got going to let me borrow $50,000. >> that's correct. >> can i borrow all my $5,000. >> we're proposing 50 percent maximum the minimum of a thousand dollars. >> it's in there. >> okay. >> all right. thank you that's it for now. >> commissioner driscoll.

>> i think staff has thoroughly presented this to consider a few main features one maintain the plan the government was nice fwhuf to give the tax incentive programs the next big issue to the lineal of the plan hopefully, people voted to pay themselves back for their own secure retirement but unfortunately people borrow money perhaps when we do it for whatever reason, however, an issue of the lamenting on the overall plan in the borrowing got to an extreme extreme level all of a sudden prudential collects 42 base points on assets when the assets come out they're only two basis wants does the annual fee cover that

basically, it didn't but other costs fall into the other participants it takes a long time but we can look for the benefits of the total costs one of the issues. >> there's a data point and presentation for the plans that are government plans that average balance is less than $8,000.07 to $962 we're probably not talking about you know really large numbers it is something we should be watching in the de facto plan it is a relative plan. >> i have a practical question. you i'm a city employee and take out 5 grand for my kids to go to college and number two i take a

second loan out in year two can i pay them off and borrow again and pay off the first loan you'll eligible for that a third loan you can't have more than two active loans >> they can also pay off and rehe file. >> is there a penalty in paying off the loan. >> no. >> no. >> it's your money. >> okay your borrowing your money. >> i make a motion we accept that fantastic recommendation. >> okay. >> open up for public comment on item 12. >> seeing none close public comment all in favor, say i. passes unanimously president chiu thank you, everybody.

>> call item 13. >> item 13 the discussion sf pc. >> commissioners you have the monthly activity i wanted to let you all know this goggling yard has established the credit beginning april 1st 1.3 percent up from 122 percent last quarter do you have any questions i'll be happy to take them. >> commissioner driscoll. >> i have a question on the updates to goldberg for the companies to prepare for retirement it gives a quick summary. >> well, the retirement board approved gold maker sometime ago it was launched last year and the committee looked at the numbers and got feedback they felt perhaps the launch 80 -

could have been more robust we're developing a communication to releathern gold maker and hopefully improve the snubs the numbers have improved significant in the last few months i've noticed when i go downstairs to the 5th floor an active discussion and the benefits of gold maker and the new participant in particular a signing up for gold maker. >> fantastic open up for public comment on item number 13. >> i'll close public comment. >> i have a question or two. >> on the report that you have you showed the market rates of various fund when i get a

statement i don't see the unit values or shares that is different from any other upgrade usually at the end of the reporting period i see the permits per share i don't see that here can you tell me why that's not here. >> you're looking. >> let me repeat the question most definitely. >> are you asking about page one of the report that prudential prepared monthly and why the number of shares does not appear. >> per share and for there or my individual account as well. >> shared will be only in certain areas bias the target date is multiple areas not done in shares. >> you know i will add that as a

member of the deferred compensation committee if you look at page one and look at the deferred compensation program as a whole we've talked about the ways to track the pattern and generally the committee has a whole is interested in the dollars value not against an individual share values like commissioner driscoll said that it gets complicated with the target it is comparing apples to apples but correct me if i am wrong i do believe that my deferred compensation statement shows the average costs per share yes quarterly correct. >> correct. >> but you know to commissioner meiberger to your point we never looked at at that level of the summary page we ask a lot of questions that was not one of

the things we've focused on. >> let me take a crack at this the question should be directed if you want to talk about how we present our monthly statement i think we should call that out as a separate item. >> we can dpo do it off-line or calendaring item i don't want to just make a statement no one has it in front of them. >> thank you. >> millennial? arrest all right. thank you very much call item 14 please. discussion item presentation of the sf dr sshlths financial statements requiring the information communications for the years june 2014 and june 30th, 2014. >> the commission will accept the reports as submitted i'll open up for public comment - for

commissioners. >> this is our independent audit hired before the controller's office we cannot ask them to change the audit it is their financial statement obviously we can answer any questions or they can this was calendaring for a second month because last month we in the second degree to put in the finances so really jenny was here la month and can repeat her report it's been september as no material management issues to report pleading financials and can't change the report but definitely can ask questions regarding what was recorded in

the statements. >> this is a discussion item it is suggestion for an approval. >> no. nothing for approval it is their audit report. >> questions? i thinkhave the auditors if there are things to address anything that is important to brings to your attention any description sisters >> no disagreement in the report to the board and in terms of the significant items i'm going i'd like to bringing this to our attention one change in terms of the financial reporting the retirement system has a new financial report for the accounting principles required to be used by the entity if they

create significant change for all government plans invading and really it changes the measurement the actual scenarios that are required to be used in murray the pension liability for the participating employers now the terms as on the retirement financial statements no impact in terms of the liability the liabilities are 40 employers that participated in the pensions plan but the partnering employers will for 2014-2015 they'll set the numbers recorded by the pension plan and report the liability open their financial statements that is as a relates to the preparation benefits. >> that's on page 38 of the financial statements it is new jargon that is introduced the

net pension liability and you'll see with this remunerate we the it is yourries report was 95 percent recorded under the definition for gadsby we come out under 92 percent still a very health and very strong fund percentage even from theth profession point of view that is basically putting out standards how they believe that liability and funded status should be recorded so i'm very pleased we recorded when we did the literally must test the test to find out if we had enough money to pay off the bends there was anything that was not fund had to be valued at 5 percent return

rate and we had no significant difference between the 7.58 and the 7.58 determined through the test that was more than 3 did he give e decimal places and strong indication that this plan as carefully funded over the years. >> just a followup question to make sure i understand so the new gadsby rules have a new position for the liability snashlg. >> it if matter how you calculate there before this standard that is based on a long term prospective so if the past it is 7.5 and higher in the past years under the new standards the actuary are required to past a test what they call the

propose over date they looked at the future they see to pay past benefits as they come due from that point on the discount rate has to be lower around 5 percent now, when the up to the timeries did their report they didn't see that was to jay's point matt haney the actualries project the plan as of the valuation date. >> i think to answer my questions yes to the discount rate and 5 percent. >> yes. if the calculation. >> this the long term rate. >> yes. it is defined within the. >> it is a 20-year bond rate and 20-year bond rate what

percentage of the liability are you using that lower discount rate. >> you're not you're actually using the higher rate. >> that's what you were saying. >> no whatever our current assets will not pay the liability that's where we cross over if we didn't have enough money for $2 billion liability we'll have calculate that in lower rates therefore we didn't have what we did for a very, very small piece the lower rate but as rounded up it is 7.58. >> 3 decimal places away. >> i see our actuaries talking the coordinator and while she

steps up jeanette can you answer that. >> as shown in note 10 b on page 40 the cross over point was 2082 and 23 that is so far into the future that did difference within at discount rates used on 4.58 and 4.31 the difference is so small rounded they're the same because it is so far into the future. >> is the health of the plan due to the fact compared to other cities in the country our city is putting in so much money of contributions compared to

others. >> we're required to fund one hundred percent it is not our current assets that will moot even though benefits karen is looking at the future contributions and calculating this cross over point when they project anti benefits and include the future tricks and because of city has a history of transcribing one hundred percent of the actuary contributions they get to consider it when they're looking at it in the future. >> another public system has not been able to do that they may not have stronger funding like the city of san francisco. >> the thing i'll say that distinguished san francisco from any other plan all the benefits increases have to be voter approved you'll notice others plans the board of supervisors no offense to the board of supervisors or the retirement board no offense to mia any

members the boards have the authority to increase the benefits when times are good they generally have a need to or reason to but this is a slow process we've been years behind trend so statewide as far as approving benefits we've not had to unwindlysis like other plans have this is the distinguishing feature long term to convince the voters they're entitled to the increases so the history of improvements is you know fraction of what you see. >> thank you. great open up for public comment on item number 14. >> none i'll close public utility public comment thank you, everyone please call item