Retirement Plan Sub-Committee Regular Meeting Minutes - May 20, 2015
Retirement Plan Sub-Committee
Regular Meeting
Minutes
Wednesday, May 20, 2015 at 7:30 A.M.
Board of Education Conference Room
Simsbury Town Hall – 933 Hopmeadow Street
- Call to Order
The meeting was called to order at 7:35 a.m. Sub-Committee members Peter Askham, Cheryl Cook, Paul McAlenney and Phil Schulz were present. Sub-Committee member Chris Kelly joined the meeting at 7:35 a.m. Also present were Thomas Cooke (Director of Administrative Services and Administrative Chair), Joe Mancini (Director of Finance/Treasurer), Burke LaClair (Business Manager/Board of Education), and Fiduciary Investment Advisor (FIA) representatives Chris Kachmar, Tyler Polk and Kim Collins.
- Review of Minutes
- Regular Meeting, November 13, 2014
Mr. Askham moved the approval of the Regular Meeting Minutes for November 13, 2014. Ms. Cook seconded the motion and it passed unanimously.
- Review of Town of Simsbury Retirement Plans – First Quarter, 2015
Mr. Kachmar began his review of a document from FIA entitled “Town of Simsbury Retirement Plans – First Quarter 2015.” He reviewed the Fiduciary Governance Calendar noting that the first quarter is devoted to fees. Upon questioning from Ms. Cook, Mr. Kachmar stated that the overall fees for the defined benefit plans were in the mid-60’s basis points. He also reviewed the performance of the funds over the first quarter noting that performance was positive.
Mr. Kachmar went through a market review noting a divergence among central banks with the Federal Reserve reducing stimulus efforts with short term interest rates expected to increase, at the same time that these efforts are being stepped up internationally. He noted that the IMF had reduced its global economic growth forecast from 3.8% to 3.5%.
Mr. Kachmar explained that international equities are starting to out-perform U.S. equities and discussion ensued as to the advisability of changing the defined benefit plan’s asset allocation to increase international equity holdings by 2.5 basis points and reduce domestic equity holdings by the same amount. Upon questioning from the Sub-Committee, Mr. Kachmar stated that international equities were likely to out-perform domestic equities for the near to mid-term. He went on to discuss the proposed modifications to investment holdings and stated that no new funds would be added. Upon questioning he also affirmed that there would be no dramatic effect on volatility or risk.
Mr. Schulz made a motion to amend the agenda to consider a change in the asset allocation at this point in the meeting. Mr. Askham seconded the motion and it passed unanimously.
Mr. Askham made a motion to change the asset allocation to increase target holdings in international equities from 20% to 22.5% and to decrease target holdings in domestic equities from 32% to 29.5%. Ms. Cook seconded the motion and it passed unanimously.
With respect to the performance of the funds, Mr. Kachmar noted positive performance versus benchmark for the first quarter with long-term numbers lagging in part as a result of legacy investments. He stated that the entire portfolio was rated as “maintain” and that none of the managers were on watch.
Mr. Kachmar reviewed the performance of the OPEB Trust and a discussion ensued concerning the possibility of introducing more active management in view of the size of the assets in the trust. At the request of the Sub-Committee, Mr. Kachmar agreed to provide a proposed allocation for the OPEB trust at the next regular meeting.
Mr. Polk undertook a review of the defined contribution plans. With respect to fees, he noted that the plan fees were higher than benchmarks largely due to the 4% guarantee option. He noted that plan participants have a large allocation of total funds in the 4% guarantee as well. A discussion ensued concerning the disclosure of fees, the ERISA standard for disclosure, the current practice of disclosing fees on the website and whether or not additional disclosures to participants should be considered. There was further discussion concerning the costs and benefits of maintaining the 4% investment option. After discussion with the Sub-Committee, FIA agreed to work with Town and Board of Education staff to prepare a request for information to determine whether lower fees could be obtained from the current and/or potential alternative plan administrators.
- Possible Action on Defined Contribution Plan BlackRock Investment Options
Discussion turned to the proposed replacement of BlackRock LifePath options with T. Rowe Price Retirement Funds. Mr. Polk reviewed information included in the document provided including the methodology, manager comparison and glide path comparison information. He repeated FIA’s recommendation to transition from the BlackRock LifePath to the T. Rowe Price Retirement Funds. Discussion ensued concerning the proposed transition, including the timing of the change.
Mr. Askham made a motion to replace the BlackRock LifePath investment options with the T. Rowe Price Retirement Funds option. Mr. McAlenney seconded the motion and it passed unanimously.
- Possible Action on Asset Allocation for Defined Benefit Plans
By motion of the Sub-Committee this action item was considered earlier in the meeting.
- Adjourn
Ms. Cook made a motion to adjourn the meeting. Mr. Schulz seconded the motion and it passed unanimously. The meeting adjourned at 8:55 a.m.
Respectfully submitted,
Thomas F. Cooke
Administrative Chair