Federated retirement board adopts revised investment policy statement after extended review

The Federated City Employees Retirement System board on June 26, 2025, approved an updated Investment Policy Statement (IPS) that trims highly prescriptive language, relocates implementation details to a separate procedures document and clarifies who sets benchmarks for individual managers.

Board members and outside consultants said the new draft seeks to make the governing document higher-level and more durable while preserving the board’s ultimate authority over strategic policy.

Consultant Eileen said the team “abbreviated the language to focus on the most important, which was the fact that you maintain the decision for setting the strategic asset allocation policy.” She told trustees the revisions move delegated authorities (manager implementation items) into an implementation procedures document so the IPS remains a clear, governing-level statement.

The revisions also change how frequently the board undertakes a comprehensive asset‑allocation study. The IPS now describes an annual review of capital market assumptions and portfolio positioning while recommending — as best practice — a fuller, more detailed asset‑allocation study every three to five years. Consultants explained that annual inputs from the general consultant and staff will still be presented to trustees, and the board can initiate a fuller study at any time.

Several trustees pressed for clearer language distinguishing an annual review (routine updating of assumptions) from the multi‑year process that evaluates alternative policy options. Trustee Vazquez said the change from an annual cadence to a longer study period raised concerns that trustees might “potentially go through that exercise once … or even never,” and asked for phrasing that makes the distinction explicit. Consultants responded that the draft includes language intended to preserve the board’s authority and to describe the multi‑year asset‑allocation “process” distinctly from the annual review of assumptions.

Other changes trustees noted include moving detailed implementation constraints and manager-level limits into the implementation procedures (so they can be updated through staff and the investment committee) and retitling Appendix C to reflect the plan’s current functional asset‑class classifications rather than an exhaustive list of possible classes.

The board voted to approve the IPS as amended. The motion carried unanimously: Trustee Abbott, Trustee Nakagawa, Trustee Avasti, Vice Chair Chandra, Trustee Faulkner, Trustee Linder and the chair all voted aye.

Trustees and staff said the implementation procedures will be reviewed by the investment committee on a regular cadence and that the committee will escalate any substantive changes or exceptions to the full board when appropriate. Consultants and staff also said minor formatting and editorial corrections will be completed outside the approval vote.

The board’s general consultant (Meketa), staff and outside counsel collaborated on the revisions over several committee meetings. Trustees thanked consultants and staff for the months‑long effort to consolidate prior committee feedback into the final drafts.

Less critical items discussed alongside the IPS included appendix edits removing asset classes not currently used by the fund and language clarifying how manager benchmarks are chosen. The IPS now distinguishes allocation‑level and total‑fund benchmarks (set by the board) from implementation or manager strategy benchmarks (selected by staff under delegated authority).

The board directed staff to finalize the IPS and present the implementation procedures and any remaining format edits to the investment committee as part of regular oversight.