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Olivette City pension board approves $500,000 reallocation after third‑quarter review
Summary
At its meeting, the Olivette City Pension Board reviewed third‑quarter investment performance, heard that net cash flows remain negative as benefits exceed contributions, and approved a $500,000 reallocation into the principal core fixed‑income account to replenish paid‑out funds.
The Olivette City Pension Board on an unrecorded voice vote approved a $500,000 reallocation recommended by its investment advisor after reviewing third‑quarter performance data.
Board members heard from the advisor that the plan is mature and running net negative cash flow because pension benefits paid out have exceeded contributions. The advisor said long‑term returns have been modest and that fixed income is below target because the board has paid benefits from that sleeve.
The advisor reported that a recent principal real estate redemption was increased to $1,000,000 in May and that about $720,000 remained outstanding; $77,000 from that redemption was received Oct. 15. The board was asked to approve moves to restore the principal core fixed income allocation.
The board authorized a $500,000 transfer into the principal core fixed‑income account and approved the specific source amounts recommended by the advisor: $230,000 from the Vanguard S&P 500 fund, $100,000 from the Vanguard mid cap fund, $50,000 from the Vanguard Total International fund, $50,000 from the Vanguard Emerging Markets fund and $70,000 from the Fidelity cash account held at Regions. The advisor said those moves would bring real estate back within policy guidelines if executed.
Board members discussed sustainability, liquidity and the tradeoffs of reducing equity exposure to shore up fixed income. One member asked whether negative cash flow was the result of paying pension benefits; the advisor replied that benefit levels are not the advisor’s decision. Another member urged the board to continue monitoring cash flow and consider options to bolster long‑term funding.
The board also approved the minutes from its previous meeting at the start of the session. Staff said they will draft the letters and transactions needed to implement the reallocation and report back at the next scheduled meeting.
The board set its next regular meeting for the first Thursday in February (noted as Feb. 6 for this cycle).
