1995/12/07 l •
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MINUTES RECEIVED FOR FILING
PENSION COMMITTEE MEETING 95 RFr 1 3 AM I I: 05
DECEMBER 7, 1995
A Meeting of the Pension Investment Committee was held on Thursday,
December 7, 1995 in the Town Hall.
Present were: Gary Clinton, Nick Chirico, Jean Conway, Nancy Lockwood,
Scott Baker, Stanley Shavers, JoAnn Budzinski.
The meeting was called to order at 2 : 30 P.M.
Mr. Gary Clinton, Chairman of the Pension Investment Committee, stated
that this committee has funds of $765, 000 in cash (which is earning
interest) , and $11, 284, 000 invested with ICMA and also $627, 000 and
231, 000 with CIGNA.
Mr. Clinton noted that since interest rates have been going down, he
would like the Pension Investment Committee to reexamine the U.S.
Treasury Fund for possible investment.
Mr. Stanley Shavers, Vice-President, Fixed Income, in charge of invest-
ment strategy for ICMA-RC (International City Managers Association -
Retirement Corporation) stated that the Town of Berlin has been with
ICMA-RC since December ' 93 .
He distributed a package which reviewed the Town' s history with the
Plus Fund.
Mr. Shavers noted that interest rates have been falling and that
inflation is lower and in his opinion these trends have a positive
outlook for earnings. It noted that this is a perfect environment
for earnings growth.
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Mr. Clinton stated that December 19th of this year is the key date to
act on moving any funds because the Federal Reserve Board will be meet-
ing on that date, and if they reduce the interest rates as all signs
indicate, then the Pension Committee will realize an investment gain
if it places some funds in the U.S. Treasury Bill Fund.
Mr. Shavers noted that this committee could diversify and place a certain
percentage - like 60o Plus Fund and 40o U.S. Treasury Bill Fund -
and then meet again in six (6) months to reexamine their strategy.
Mr. Shavers noted that in an declining interest rate market, the
principal value of the Treasury Bonds will increase and then the total
return of these bonds would exceed the rate of the funds presently in
the Guaranteed Plus Fund.
Mr. Scott Baker, ICMA Representative, noted that if the interest rates
do tightened again, this committee can jump out of the Treasury Bonds
before the Federal Reserve Board moves to act.
Mr. Shavers noted that the expected rate of return for the Guaranteed
Plus Fund will be 7% on an annual basis, whereas, the U.S. Treasury
Bill Fund will yield 8% and possibly a higher rate if more than
75 basis points is reduced from the interest rates over the next six
(6) months.
Mr. Nick Chirico suggested that this committee place 50% of our assets
in the Guaranteed Plus Fund and 50% in the U.S. Treasury Bill Fund.
MOTION was made by Mr. Nick Chirico, seconded by Jean Conway
and VOTED to transfer $400,000 from the cash account to the
Guaranteed Plus Fund and to transfer $6, 000, 000 from the
Guaranteed Plus Fund to the U.S. Treasury Bill Fund.
ALL VOTED IN FAVOR.
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Mr. Clinton noted that he will send a memo to the Town Council
notifying them of the action taken today and ask them to act upon
this motion at their December 12, 1995 meeting.
The next scheduled meeting of the Pension Investment Committee is
scheduled for June 13, 1996.
The meeting was adjourned at 3: 45 P.M.
Respectfully submitted,
01"\l\v\ tiOtsijsiVcti(
JoAnn Budzinski
Recording Secretary