In reference to your recent articles about the Employees? Retirement System?s performance and trustees? education travel, I want the opportunity to set the record straight.
The ERS is in the top tier of public retirement funds in terms of ability to meet our financial obligations. At the end of fiscal 2005, ERS was 95.7 percent funded, which places us among the strongest plans in the country.
When city employees retire, they will receive every penny of the benefits they have earned. A recent solvency test examined the ERS? funding program and determined that the plan is fully able to meet its long-term obligations to every retiree, beneficiary and terminated vested member.
Qualified employees? rights to retirement benefits are protected by law. Plan provisions provide a contractual relationship for membership, under which the benefits they receive when they retire cannot be diminished in any way.
The net assets of the ERS continue to grow. At the end of fiscal year 2005, net assets were $1.3 billion, an increase of 3 percent over the previous year?s $1.2 billion.
The plan?s rate of return was within seven-tenths of a percentage point of its benchmark. The plan saw a 9.07 percent rate of return in fiscal 2005, just barely below its benchmark of 9.81 percent. We are ahead of our composite benchmark over the past five years. The fund?s performance is based on several factors, including managers? performance and asset allocation.
ERS assets are fully vested in a diversified portfolio. The Board of Trustees, which serves as fiduciary and invests the system?s assets, adheres to sound and prudent investment objectives, policies and guidelines consistent with minimizing risk while maximizing long-term growth of the assets.
The ERS Board periodically implements a comprehensive managers search to ensure the continued long-term health of the ERS. It utilizes the resources of its investment consultants and proprietary state-of-the-art technology to analyze and screen for carefully crafted investment criteria. Our investment managers are regularly monitored for performance and compliance with the board?s policies, guidelines and investment objectives.
The ERS Board is well qualified, with expertise that is situated to address the diverse needs of the ERS. Trustee education is the foundation for ensuring that the ERS Board of Trustees execute their fiduciary duties. In today?s environment, where the needs of pension plans are changing and where there is constant flow of new and complex investment alternatives, it is necessary for trustees to obtain the required education.
Your scrutiny of the ERS Board?s education travel is myopic and in many cases inaccurate. All ERS trustee education is done in accordance with its education and expense policy and within its approved budget. There has been no breach of ethics as you have tried to insinuate. ERS trustees pay for attending conferences. Each ERS Board member is budgeted an annual educational allowance to cover, among other expenses, attendance at conferences, related certification or online educational courses, journals, books, industry publications and other related expenses.
Conference expenses are reviewed and administered by the administrative staff to ensure reimbursement of only appropriate expenses. Allowances not used during the year remain within the fund. Advance notification of all education conferences is required. The ERS trustees have always paid the plan sponsor conference rate.
Contrary to your April 24 article (“Discounts for city pension managers raise new questions”), no trustee attended a tailgate party or accepted tickets to a sporting event during the 2005 Public Fund Board Conference, and neither the Bank of Ireland nor UBS managed money for the ERS at that time.
Finally, it is important to note that in navigating through a global economy, where some of the fastest-growing investment opportunities and management talents are in other parts of the world, it is necessary to hear first-hand from overseas investment professionals and plan sponsors.
Roselyn H. Spencer is the executive director of the Employees? Retirement System and Elected Officials? Retirement System.
