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CS McKee briefed joint board on pension investment strategy and actuarial assumptions
Summary
New investment adviser CS McKee described a diversified 60/40 approach for the city's two pension plans and recommended actuarial review of the current 8% assumed return.
CS McKee representatives presented a brief on investment strategy for the city nd police pension plans, described the near-term posture for the funds and recommended working with the actuary to evaluate the current 8% assumed rate of return.
"For DuBois, between the two pension plans, we generally have a 60/40 portfolio," client-services manager Zach Niau said. He and colleague Jason Petner said the firm will seek global diversification and aim to meet actuarial assumptions while minimizing volatility.
Jason Petner explained that fund-level asset allocation will be coordinated with the plan actuary and that reducing an 8% assumption toward the national average (about 7%) should be considered gradually because lowering the assumption raises the required annual contribution.
"If your actuarial rate of assumption is too high, you're putting a significant burden on future taxpayers," Petner said, adding that CS McKee will work with the board and the actuary to develop a phased approach to any change.
CS McKee noted the recent market volatility and presented the transition timeline: the firm completed account transfers in December and will provide quarterly performance updates. The new advisers said they will be available for meetings and will coordinate with the city's actuary and other service providers.
Ending: Board members asked follow-up questions about timing for the next actuarial report and whether the firm would assist with multi-year financial projections; CS McKee said it would.
