2014-05-12
Minutes – Pension Committee Meeting – 1st Quarter Review
May 12, 2014
Attendees: Pension Committee members Denise McNair and Jim Wren; union
representatives Debbie Dennis, Donna Slimskey, Bill DeBlasio
Absent: Gail Erickson, Denise Parsons, Patty Murphy, Todd Lentini, Kate Wall
Tyler Polk and Peter Nadeau, FIA
Laura Hancock, ICMA
Meeting was convened at 2:05 PM.
There was follow up on the last meeting. 457 Roth is completed after a few payroll
glitches. Templeton share class has been changed and ICMA has sent out
communication.
First quarter focus is on fees and related disclosures. There was a brief discussion of
ERISA requirements on fee disclosures which the Town is not required to follow. Fee
disclosures are done but not at the level of what is required by ERISA which is confusing
to most lay people.
A review was done of recent litigation as related to plan fees and fiduciary responsibility.
(Refer to attachment).
The full fee disclosure statement was reviewed. Fees are made up of a part that pays for
the investment management and the rest goes to cover ICMA fees and the balance goes to
revenue sharing which is utilized to pay investment advisor fees in Berlin. Berlin’s
record-keeping fees are slightly higher than average; however, the average account
balance of $91,086 for the 401(a) plan is almost double the average account balance FIA
has seen, so the higher fee is proportionate to the higher account balance. The average
balance for the 457 plan is $53,601, which is more in line with average and the average
fees are proportionately lower than the 401(a) fees.
There was some discussion of charging for record-keeping services on a “per head” basis
in which everyone would pay the same fee rather than paying based on the individual
investment percentages (“bundling”). It was discussed that this would be unfair to new
participants with low balances. No other municipalities that FIA or ICMA works with use
the per head method. There is no recommendation to consider changing the method at
this point. It is not the desire of the committee to pursue a change at this point in time
until other methods show proven success.
st
There was a review of 1 quarter results (refer to detailed report attached). U.S. equities
outperformed international equities during the quarter due to instability in Russia and
China.
There were no big movements in the 401(a) plan during the quarter. There is still a lot of
money in the Plus fund (stable value). 40% invested in target funds, which is strong; most
new funds are going into the target funds. 457 plan was consistent with previous quarter.
There is not yet enough data on the Robert Wolf Fund to do a historical analysis.
PIMCO total return fund is on watch still due to major transition of one of the major
investment managers. This has underperformed a bit, but not a reason to be overly
concerned. Vantage Point Equity Income is also on watch due to a change in sub
advisors. T Rowe Price Growth Stock is also on watch due to investment manager
leaving (there was a good succession plan in this case). There was a bit higher turnover of
managers in the first quarter; this is not necessarily unusual following a period of high
performance; in some cases, managers leave before the market turns down. Refer to
attached document for further information including fund-by-fund analysis.
Target date funds are performing well overall. Quarter performance was down somewhat
due to underperformance of equities over the first quarter. The trend will continue to be
evaluated over time. There are no recommendations for changes in fund line-up for this
quarter.
Meeting was adjourned at 3:05 PM.