Committee hears pension investment review; auditors point to possible fee savings from coordination

The special committee on Duval DOGE on June 17 heard a financial-services update on the two main city pension systems and was told the plans may be able to reduce money-manager fees by coordinating investments and documenting selection decisions.

Committee auditors said the Police & Fire Pension Fund and the Jacksonville Retirement System use separate custodians and some overlapping investment managers, and that coordinated selection and documentation could reduce administrative costs. “The 2 plans combined for about $1,450,000,000 in the same and save a half million dollars per year by utilizing the same, money managers,” an auditor reported.

Why it matters: the city’s retirement portfolios represent hundreds of millions to billions of dollars; even modest reductions in fees can translate to material savings for plan members and the city’s budget over time.

Auditors provided specifics: Northern Trust serves as custodian for the police and fire fund and BNY Mellon for the city’s operating portfolios; the city pays about $175,000 for the custodian services referenced for each role. The auditor said both plans pay roughly $300,000 annually to a shared investment consultant and that some managers use tiered fee schedules where larger combined allocations reduce per-dollar fees. The auditor also said roughly $2,000,000,000 of plan assets are invested with managers without overlap, an opportunity area for potential coordination.

Committee members pressed on how the council could influence future manager selection. The auditor said investment policies must be submitted by each plan and suggested a documented rationale in plan procurement or investment-policy language: “If they're choosing something that is not utilized by the police and fire pension plan, maybe to document the rationale for why they think it's a you know, they need to get more diversification,” the auditor said. Council members asked whether legislation would be required to affect those policies.

No formal action or vote was recorded at the meeting. Committee members asked the auditors to draft possible language and follow-up options for how the council, the Jacksonville Retirement System and the Police & Fire Pension Fund could document or coordinate selections going forward.

The committee scheduled follow-up discussion during the summer budget and investment-policy work so members would have proposals when the funds’ policy cycles and the finance committee review occur.