2018-02-02
Pension Committee Meeting Minutes
FEBRUARY 2, 2018
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4 Quarter Review
Attendees: Pension Committee members: Jack Healy, Gail Erickson, Denise Parsons, Kevin Delaney; union representatives:
Debbie Dennis (Mid-Managers), Bill DeBlasio (Blue Collar), Kate Wall (Top Managers), Tammy Wright (Dispatchers); Laura
Hancock, ICMA, Tyler Polk, FIA and Greg Adams, FIA
Absent: Pension Committee member: Eva Gallupe (BOE); union representatives: Patty Murphy (Nursing), Ryan Gould (Police)
and Paula Poplawski (White Collar)
I. Kevin Delaney called the meeting to order at 10:10am.
II. Kate Wall moved to approve the minutes from November 1, 2017 meeting. Bill Deblasio seconded and the motion was
approved unanimously.
III. Laura Hancock, ICMA, reviewed the support participants receive and the engagement of participants in the different
vehicles. This topic is normally covered at the Q3 meeting, but a scheduling conflict required the move to Q4 for the
“Participant Focus” topic.
Laura mentioned the Town has 8 individual meeting days and 2 seminar days per year. Engagement was not very high
for the last seminar day. Denise Parsons commented that BOE members have a hard time participating in seminars
during the day – hard to get away from the classroom. Denise asked if Laura might be able to schedule a seminar later
in the day to accommodate BOE members, and Laura agreed to work with Denise to schedule. Tyler commented that
some of his other clients utilize webinars to provide members with different schedules the opportunity to receive the
information. Laura mentioned ICMA has webinars and online tools to help members and she would work on making
those available to Berlin members. Tammy Wright agreed that webinars would be helpful for members who work
different schedules.
Laura reminded the group that ICMA brought a Retirement tour bus to Town Hall last year and they could do that
again this year. The tour bus this year is larger and has more offerings than the bus last year.
IV. Tyler Polk, FIA, reviewed investments with a particular focus on Target Date funds. Target Date funds have become
an increasingly more popular investment choice within DC Plans and represent over 40% of the 401 plan, and a larger
percentage in the 457 and Roth plans.
Tyler reviewed what FIA does to select and monitor these funds. In a Target Date fund, the fund becomes less risky as
a participant approaches retirement. The Target Date funds in the Berlin plan are Vanguard Funds. Vanguard’s
approach is a little different than some other investment companies. Vanguard starts with a higher equity allocation
than its peers. All of the investments are passive (index) investments which also help maintain a lower cost relative to
peers. Vanguard utilizes a higher percentage of international investment than their peers. Each Target Date fund is
made up of 5 indexes.
Vanguard starts with a 90%/10% stocks/bonds mix and moves to 51%/49% stocks/bonds by retirement age. The
terminal point for the fund is 7 years after retirement. The mix at the terminal point and every year after is 30% /70%
stocks/bonds.
In addition to Target Date funds, Tyler reviewed the entire menu of funds offered in the Berlin plan. An average plan
has 18 funds to offer and Berlin offers 18 funds, so the Town has a diverse offering but not an excessive number of
fund options. Tyler pointed out only 8% of plans offer socially responsible funds, and commented that we will review
options in the socially responsible arena later in the meeting.
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V. Tyler reviewed 4 quarter capital market performance. The equity market continued to show positive results. Through
January, the S&P 500 is up 6%. This is the first time ever that the market was up every month in a year (2017). The
current market expansion is very long based on history – 102 consecutive months. Somewhat offsetting the length of
the expansion is the fact that the growth hasn’t been as steep as past growth periods.
Stocks outperformed bonds, international outperformed domestic and growth outperformed value in 2017. Valuations
are high right now versus 15-year highs. Five (5) stocks represent 15% of S&P – the so-called FAANG stocks –
Facebook, Amazon, Apple, Netflix, and Google.
Berlin’s 401 plan is up over $2 million driven by market growth and contributions. The 457 & Roth plans are also up.
Harbor International was on the watch last year, but improved so it was moved to maintain. Greg Adams, FIA,
explained that the fund has underperformed for the last 5 years in a row. $20 billion of assets have left because of
underperformance and FIA is losing faith in the management team. FIA recommends terminating the fund and
replacing it with one of two options.
Greg outlined the two options that FIA is recommending – American Funds EuroPac Growth and Hartford
International Opportunities. Both follow a bottoms-up approach. American has more rigid controls – they use mix
percentages in their security selection process. The expense ratios are: American Funds (.50%) and Hartford (.74%) –
this compares to Harbor which is at .74%.
Tyler reiterated that FIA is recommending changing the International fund option from Harbor International to
American EuroPac. Kate Wall moved, Denise Parsons seconded and the motion was approved unanimously. Laura
will work on a communication to participants alerting them of the change. This communication will go out to all
participants - not just those in the plan – because members may change their election.
VI. Tyler presented a blended fund Socially Responsible investment option based on a request made during the Q3
meeting. Tyler recommends a balanced fund and the Walden Asset Management fund specifically. A balanced fund
gets participants both stocks & bonds without having to purchase two funds. This fund makes decisions based on a
number of criteria, including gender diversity in the company management and the company Board. As a committee
for the entire plan, the Pension Committee needs to consider the entire portfolio. Based on the number of funds already
in the plan, limited interest (at this point) in a socially responsible fund option and the high expense ratio (1.00%), the
Committee decided not to add the fund at this time.
VII. Laura indicated that she brought paperwork to change the plan administrator name from Denise McNair to Jack Healy.
This was a request from the Q3 meeting.
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VIII. The next meeting was scheduled for May 9 @ 10am. Kevin will send out a meeting notice to all committee members.
IX. Kate moved to adjourn the meeting, Jack Healy seconded and the motion was approved unanimously. The meeting
was adjourned at 11:05 am.
Submitted by: Kevin Delaney