RETIREMENT PLANS COMMITTEE MEETING MINUTES

Transcription

1 OREGON PUBLIC UNIVERSITIES retirement plans RETIREMENT PLANS COMMITTEE MEETING MINUTES November 7, :00pm to 4:30pm Smith Memorial Student Union PSU Investment Committee: Investment Advisor: Administration Committee: Staff: Guests: Members of the Public: Roger Graham, Chair; Larry Dann; Richard Bailey; Karen Levear; John Becker-Blease; Michael Green (by phone) Howard Biggs and Stuart Payment, Arnerich Massena, Inc. Donna Chastain; Kerry Gilbreth; Ernie Pressman; Vicky Seger; Denise Yunker, Chair; John Craven (excused) Tara Bailey, David Parrish Alan Finn, ORP Trustee; Jamie Moffitt, UO/Sponsor Shawn Crosgrove, Tom Peller, Steve Milholen (Fidelity Investments) Cindi Peterson 1. Introductions, Announcements, and Minutes Administration Committee member Ernie Pressman (UO) will retire in June 2015 and was thanked for his service. UO Benefits Manager Cindi Peterson has been appointed to the Administration Committee effective January 1, No draft minutes were submitted for adoption. 2. Committee Appointments and Meetings The November 7, 2014 meeting is the first combined meeting of the Investment and Administration Committees, as recommended by the UO Board of Trustees. Chair Graham requested clarification on the meetings structure and processes for joint meetings of the combined committees. Chair Yunker noted that two combined, onsite meetings per year and two telephonic meetings per year dedicated just to investments are anticipated. Upcoming Investment Committee openings to be addressed at the May 8, 2015 meeting include: a. Nominations and acceptances for Investment Committee Chair and Chair-elect, effective July 1, b. Appointment end dates and call for nominations/renewals in May 2015: Current Member End Date of Appt Start & End Dates of Next Term Classified vacant 31-Oct Nov-2014 thru 31-Oct-2017 Unclassified Green 30-Sep Oct thru 30-Sept-2017 Faculty Dann 31-Oct Nov-2015 thru 31-Oct-2017 Chair Graham noted that incoming Investment Committee member John Becker-Blease and VPFA Jamie Moffitt spoke prior to confirmation of his membership. Moffitt has indicated that she would henceforth like to meet recommended Committee candidates prior to appointing them. 7-Nov-2014 Retirement Plans Committee Meeting Minutes_adopted

2 3. Third Quarter 2014 Performance Report Howard Biggs, Arnerich Massena, Inc. The Oregon University System 401(a) and 403(b) Plan Performance Review, September 30, 2014 presentation included a market overview, portfolio summary, and research reports for individual investment vehicles. Table 1. Manager Diversification Type & Cap 401(a) Mutual Funds 401(a) Annuities 403(b) Mutual Funds 403(b) Annuities Stable Value 56.8% 54.4% Money Market 3.6% - 2.7% Fixed 6.7% 17.7% 6.7% 13.1% Balanced 34.4% % Large Cap 27.9% 9.0% 14.1% 15.6% Mid Cap 8.5% 3.8% 5.1% 2.8% Small Cap 3.7% 3.7% 3.4% 4.2% International 8.8% 9.1% 7.8% 9.8% S-D Brokerage 6.4% - 5.0% Total 100% 100% 100% 100% Action Item: Chair Graham committed to putting a standing item on future meeting agendas for a committee to review of Watch Listed funds. 4. Manager Searches Howard Biggs, Arnerich Massena, Inc. Fund Action Outcomes a. Intermediate-Term Bond VOYA PIMCO Real Return (IPTSX) was removed from the annuity investment menu and replaced with VOYA Met West Total Return Bond M (MWTRX). This search was initiated by Arnerich Massena, Inc., based on manager turnover. It had not been previously placed on Watch List status. Action: Moved by Karen Levear, seconded by Larry Dann, and passed with 5 aye, 0 nay, and 1 abstention. b. Socially Responsible c. NBSTX was placed on Watch List status due to low participation and manager s environmental screens. Neuberger Berman Socially Responsible (NBSTX) was removed from the mutual fund investment menu and replaced with Calvert Social Index (CISIX). Action: Moved by Larry Dann, seconded by Karen Levear, and passed unanimously by the committee. d. Mid-Cap Value Artisan Mid-Cap Value (ARTQX) was removed from the mutual fund investment menu and replaced with Vanguard Selected Value (VASVX). ARTQX had been placed on Watch List status at the August 8, 2014 meeting due to underperformance and relatively higher fees. Action: Moved by John Becker-Blease, seconded by Karen Levear, and passed unanimously by the committee. 7-Nov-2014 Retirement Plans Committee Meeting Minutes_adopted

3 Fund Action Considerations a. PIMCO Real Return The returns were not compelling; duplication of MetWest on both the mutual fund and annuity menus was resolved by the agreements that the annuity version of MWTRX is a different share class than the fund that is on the mutual fund menu; and although MWTRX has a higher cost on the annuity platform due to the insurance wrap, it was agreed to be the best available product identified in the manager search document. b. Neuberger Berman Socially Responsible There was extended discussion of alternative funds identified to replace NBSTX. The committee directed this record to reflect that serious considerations were raised about how this change affects menu diversity and how the two plans benefit from a variety of funds through a diverse list of providers. Topics included: the use of the original Investment Policy Statement rule that watch status be assigned to funds that are 60 th %ile or below for 2 consecutive quarters, to which advisor Biggs responded that metric is not typically applied to indexes of funds; TIAA-CREF Social Choice was eliminated due to restrictions on administration by another recordkeeper; Calvert Social Index 1 appears to not have attracted dollars and investors, is a benchmark index, and includes exclusions for environmental screens that are not in NBSTX; both the advisor and committee struggled with selection of the replacement fund, settling on CISIX for its lower overall expense to participants. The committee specifically noted that participants had thoughtfully chosen NBSTX, and the change to Calvert s passive management and exclusion of environmental screens will force participants to take action if the replacement fund does not reflect their intent for socially responsible investing. CISIX provides no revenue offset to support qualifying administration expenses of the plans. c. Mid-Cap Value ARTQX was placed on Watch List status at the Q meeting. Points discussed in reaching the decision to replace it with Vanguard Selected Value (VASVX) included that in the mid-cap space 2 of the 3 available funds would be Vanguard funds and that VASVX has reasonable fees and returns. During the funds replacement process, committee members questioned whether they could vote or should abstain if they themselves were invested in a fund under consideration and if a fund must be put on Watch List status to be terminated. It was resolved that when acting on behalf of all beneficiaries committee members would not be required to abstain from voting on fund changes, and that a fund may be terminated at any time, when watch-listing it for a period of time before changing it may not be in the best interests of participants. Action: A response was requested by Fidelity s Shawn Crosgrove regarding whether or not the committee and investment policy statement permit Freedom Funds to make global changes target date funds age out and are replaced at with later target dates. 5. Administrator s Report Denise Yunker, Administration Committee Chair, UO Appendix A 6. UO Retirement Plans Committee Charter Regarding the roles of trustees and the Retirement Plans Investment Committee, Jamie Moffitt assured committee members that the functions of the Investment Committee under the UO Board of Trustees is intended to remain unchanged. The transition from OUS to UO went forward with the stated intent that there would be no structural or functional changes. 7-Nov-2014 Retirement Plans Committee Meeting Minutes_adopted

4 The Investment Committee, the Administration Committee, and the Trustees have certain enumerated fiduciary duties. The UO Retirement Committee Charter will be reviewed thoroughly and a discussion draft will be prepared to show the responsibilities of each. The charter was revised to reflect universities discussions about operating the plans under a structure similar to the shared services model, with the goal to not fundamentally change anything other than to create a new legal entity with the authority and responsibility to act as or delegate trustee and fiduciary roles. The key question is what responsibilities of Investment Committee and Administration Committee are fiduciary and what responsibilities are advisory or ministerial. In addition, clarification is needed regarding the Investment Committee s role vis-à-vis the UO Board of Trustees regarding management of the investment menu. Committee materials will be updated and brought back to the Committee. 7. Richard Bailey inquired about fees showing on members Fidelity statements. Shawn Crosgrove noted that the term fees is used to describe revenue credit allocations to participants accounts. These fees were additions that occurred when excess revenue credit funds were allocated to participants accounts at the ORP and TDI plans inventory date in late May Public Comment No member of the public requested to comment. ### 7-Nov-2014 Retirement Plans Committee Meeting Minutes_adopted

5 Oregon Public Universities retirement plans Date: November 7, 2014 To: From: Re: Retirement Plans Investment Committee Retirement Plans Administration Committee Administration Activity OUS/UO Staff and the Administration Committee activities since have included: 1. Completed transfer of ORP and TDI plans from OUS to University of Oregon (UO) as plan sponsor and fiduciary for the Oregon Public Universities, effective July 1, Transition activities included: Participation with university and outside counsel workgroups for: a. Plan assignment and transfer resolutions by the Oregon State Board of Higher Education and the Board of Trustees of the University of Oregon. b. Restatement of the 2008 OUS Optional Retirement Plan/Trustee Agreement and the 2009 OUS Tax-Deferred Investment 403(b) Plan to the Oregon Public Universities Optional Retirement Plan and Oregon Public Universities Tax-Deferred Investment 403(b) Plan. c. Development of retirement plan administration and governance agreements with the Universities Shared Services Enterprise (USSE) and Participating Employers (universities and OUS Chancellor s Office); d. Revision of the Retirement Plans Committee Charter; e. UO reappointment of ORP Trustees, Investment Committee, and Administration Committee. Project Management and employers representative for Consultant Services including: a. Vendor contract re-assignments and endorsements; b. Assessment of universities decentralized administration roles, training, resources, staffing capacity, and needs; c. Board, counsels, and university briefings; d. Interparty (participation) agreements; e. Plan documents development. Plan Communications, including: a. Redesign and transfer of retirement plans from OUS website to hosted by UO; b. July 1, 2014 revision and web posting of participants ORP and TDI handbooks and forms; c. Notification of plan sponsor and contacts address changes to current providers and discontinued 403(b) providers; d. Administrators resource materials & website updated and moved to opurp.org. 1

6 2. Implementation of SB 269 Changes a. Developed payroll code and reports to support administration and funding of ORP Employer Match contributions for Tier 4 members beginning in January b. Revised ORP Choices Guide and TDI Guide for Participants to include ORP Tier 4 details and changes in eligibility rules. Published two FAQs, one from an ORP Tier 4 participant s perspective and one from a TDI participant s to further explain consequences of selecting various TDI salary deferral amounts, ranging from failure to get full ORP Employer Match, to losing ORP Employer Match in months that no TDI contributions are made. c. Created and distributed an Administration Committee summary of SB 269 ORP changes to all campuses. d. Reviewed Initial Eligibility process map and scenarios; drafted administrative scenarios for training campus retirement and payroll administrators. e. Proposed and received universities approval to amend ORP definition of compensation for Tier 4 ORP Employer Match alignment with TDI compensation elements. f. Requested legal review of ORP Section 2.1 Initial Eligibility for Participation and SB 269 amendments to ORS Retirement Committee Support a. Provided 2014 restated ORP and TDI plan documents, ORP Trust Agreement, and Committee Charter/Appointments to Investment Committee and Administration Committee, Trustees, vendors, and university benefits officers; b. Organized an ad hoc Investment Committee meeting to consider Vanguard fund action scheduled for August 15, 2014; c. Prepared investment advisor contracts and retainer agreement through 6/17; d. Arranged program and meeting space at PSU for November 7, 2014 meeting, including a fiduciary education session for committee members, trustees and other plan officers. 4. Record Transfers and Retention a. Culled and prepared retirement plans administration electronic and paper files from transfer from OUS to UO. Initiated records imaging project for permanent (75 years) retention ORP election forms and TDI salary reductions forms signed during OUS sponsorship of the plans that ended on June 30, 2014 (OAR (20)). b. Confirmed preparation of OUS transactions record ending 6/30/14 for retention and scheduled 6-year disposal dates (OAR (7) Benefits Policy ) c. Confirmed retention periods and responsibility of UO as plan sponsor and Participating Employers under OAR sections (7) benefits policies and procedures, and (20) individual employee benefits information. Effective July 1, 2014, new sets of permanent retention ORP and TDI forms will be collected and retained beginning with UO s role as sponsor. 5. General Operations a. Met with Fidelity and TIAA-CREF representatives to receive annual reports, participant services and education updates, and market reports. b. Staff attended and confirmed campus benefits fairs attendance by Fidelity and TIAA- CREF representatives on the following dates: Wednesday 10/01 Portland State University Tuesday 10/07 Western Oregon University Wednesday 10/08 University of Oregon 2

7 Thursday 10/09 Oregon State University Tuesday 10/14 Southern Oregon University Wednesday 10/15 Oregon Institute of Technology / Oregon Tech Wednesday 10/29 Eastern Oregon University 6. Forward-Looking Schedule a. Recruitment for Shared Services Benefits Director to begin in November 2014 b. An ORP amendments list has been prepared for ORP Cycle E filing in c. Oregon Public Universities Retirement Plans Record Retention training and revised agreement to be presented to university administrators in January d. Oregon Public Universities Retirement Plans administrators training for SB 269 updated to be presented in January ### 3