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Retirement Board

Posted on: January 24, 2018

Board Chairman announces Pension Plan updates

TOWN OF

GREENWICH

January 24, 2018


PRESS RELEASE - FOR IMMEDIATE RELEASE

Greenwich Retirement Board Chairman Announces Pension Plan Updates

GREENWICH, CT - As we enter the Fiscal Year 2018-2019 budget cycle, I thought it would be

constructive to share some facts as they pertain to the Town of Greenwich Retirement System.

After Healthcare and Debt Service, the Retirement System is the third largest fixed charge in the

Town's budget at approximately $22 million per year. This represents approximately 5% of the

total Town budget. To the extent we have a healthy, competitive, and a high performing

Retirement Plan (the Plan), everyone benefits-the members of the Retirement System and the

taxpayers.

2017 was a year of change for the Retirement System. I would like to take a moment and share

with you the changes that have taken place, the performance of the Retirement Plan, and the

challenges ahead.

After extensive discussions by both the Retirement Board and the Board of Estimate and

Taxation (the BET), the Retirement Board selected Neuberger Berman to manage the assets of

the Plan using their discretion subject to guidelines (the Investment Policy Statement) established

by the Trustees of the Retirement System. The BET approved this decision unanimously, and

Neuberger Berman has been acting accordingly since the beginning of the current Fiscal Year

(July 1, 2017).

Concurrent with the change in investment management, the Retirement Board elected new

leadership, and shortly thereafter, a new member (Mike Wacek) was selected and appointed by

the First Selectman, the RTM Moderator, and the BET Chairman to join the Retirement Board.

Mike's background as an actuary and reinsurance executive has been a welcome skill set to the

Retirement Board's deliberations. In addition to the two appointed citizens, the Retirement Board

consists of the Town Comptroller, Peter Mynarski, and two employee-members elected by the

membership of the Retirement System-Captain Mark Kordick and Firefighter Kevin Coyner.

Both Mark and Kevin have given their time and talents to the Retirement Board for many years.

For calendar year 2017 the Plan Assets were up 15.8%. The benchmark against which we

measure performance this past year was up 14.7%, so it is fair to say the active management of

the assets added 1.1 % more value than would have been expected had they simply been invested

in passive indexes in accordance with benchmark weights for each asset class.

Looking back, the Plan Assets over the past three years are up 7.9% annualized compared to the

benchmark of 7.6%; and for the past five years the Plan Assets are up 8.7% annualized compared

to the benchmark of 8.6%. Where the Plan has been challenged, is when one looks back to a

longer period. For ten years, the Plan Assets are up 5.2% annualized compared to the benchmark

of 5.4%, and over this period the actuarial assumed return was 7.4%.

With a new Investment Policy Statement, which contains new policy benchmarks, and with

Neuberger Berman managing the day-to-day investment decisions for the Plan Assets, the

discussion now needs to move to the financial health of the Plan itself and future funding

requirements. It is the intention of the Retirement Board to lead this discussion in the months

ahead. A review of the underlying assumptions behind the Plan's assets and liabilities, the

appropriate rate to discount future earnings to meet future liabilities (the discount rate), and the

funding ratio (the relationship of asset values to liabilities) are some of the topics I expect the

Trustees to discuss with input from our actuary, investment manager, BET liaisons and RTM

representatives.

As it stands now, I believe the Town of Greenwich Retirement System is a model for other

municipal plans: we have one of the lowest municipal discount rates in the nation at 6.75% with

seasoned and consistent assumptions, and a funded ratio of assets to liabilities of 77.3%. And

our service to the members of the Plan is first class. While looking back a decade ago,

performance lagged expectations, it should be clear that in the most recent years, and last year in

particular, that is no longer the case. It is my expectation that a civil discourse on these topics

will lead to an even better Retirement System for all constituents-retirees, employees in the

Retirement System, and the taxpayers at large who fund the Retirement System-in the years

ahead.


For more information, contact Atiya Jones, Retirement Administrator to the Town of Greenwich

Retirement Board, at atiya.jones@greenwichct.org.


Respectfully,



Joseph L. Pellegrino, CF A

Chairman

Town of Greenwich Retirement System

cc:

Board of Estimate and Taxation

Board of Selectmen

Retirement Board

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