Sunday, February 08, 2009

Retirement Board - Feb 4

Wednesday's Retirement Board meeting was lively. I estimate the Town's pension plans to be approximately 2/3 funded at best. Here's a breakdown of the $40 million in assets:And the liabilities are probably at least $60 million.

Most of the discussion revolved around two of the ten funds... and whether they should be divested... with funds being invested elsewhere.

I mentioned that selling the old fund and buying a new fund were two different actions... and asked if the Board actually wanted to reinvest the money in this market. The answer was simple - the Board has an Investment Policy Statement. And generally-speaking, the IPS requires that funds be invested in something other than cash. But as a followup, the Board has been discussing revisions to the IPS. So maybe things will change later this year, allowing more flexibility. Dunno.

As an alternative to addressing market risk, the Council could work to move from offering defined benefit pension plans and to offering defined contribution pension plans. Sure, some Council members consider it too expensive. But the least we could do is simply eliminate DB plans for all future non-union employees. I'll keep working for that change.

The other comment that really stuck in my mind was when our consultant said something about the market now being below fair value. I'm tired of listening to this happy talk about how now is the time to invest. It may very well be. Or it may not be. Recommendations are necessary, but to talk only in terms of a best case scenario is fool hardy. I want to hear best-case and worst-case scenarios. Then give me your recommendation.

Tim White

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