Office of Retirement Services staff presented the plan's annual comprehensive fee report, outlining management fees, incentive fees and operating expenses for the pension plan and the Health Care Trust.

Highlights presented by Ron and Harrison:
- Total fees and expenses for the pension plan in calendar year 2024 were reported at approximately $32.5 million, equal to roughly 103 basis points (1.03 percent) of plan assets for the year. That total includes management fees, incentive fees and operating expenses.
- The Health Care Trust's fees were under $1 million for the same period, representing roughly 6 basis points, reflecting a higher allocation to passive funds (about 74 percent passive reported for the trust).
- Management-fee ratio has declined since 2015 and has plateaued around 60 basis points over the last five years; private-market commitments increase management and operating expense contributions but staff reported continued negotiation of lower fees where possible.
- The staff reported negotiated fee savings of roughly $4.3 million for the year from manager negotiations, early-investor discounts and size-based discounts.

Trustees and staff discussion: Trustees asked whether incentive fees should be treated as expenses; trustees and staff clarified that incentive fees are paid only when managers produce excess returns and thus represent performance-based payouts rather than a simple (always-incurred) operating expense. Trustees noted the plan's high five-year returns (the plan's five-year annualized return was discussed as positive) while paying relatively modest staff/administration costs.

Why it matters: Transparent fee reporting helps trustees evaluate net performance and whether the board and staff obtain value from higher-cost strategies. Trustees emphasized that higher fees can be justified when active managers add measurable alpha, and staff provided peer comparisons and an analysis showing multi-year value add from active manager selection.

Ending: Staff said they will present the fee report to City Council as part of the annual transparency process and will continue to renegotiate fees where practical, monitor private-market expense contributions and return revised numbers as managers report audited data.