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Defined-contribution investments reviewed; committee told no changes recommended now
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Summary
Tyler presented the retirement plan’s defined-contribution menu, said most participants use target-date funds, noted T. Rowe Price’s glide path and long-term performance, and said private equity or crypto are not recommended for the plan at this time.
Tyler reviewed the town’s defined-contribution (DC) plan investment menu, including target-date funds, active and passive bond and equity options, and capital-preservation vehicles.
He told the committee the default option is the target-date suite and that utilization data show the majority of participants in target-date funds. Tyler said the plan’s menu aligns with industry practice and that T. Rowe Price’s target-date lineup has taken a slightly higher equity position in its glide path; he noted that while that has affected near-term relative performance, the T. Rowe Price funds have performed well over longer horizons.
On emerging options, Tyler said the ‘‘short answer is no’’ to adding private equity as a stand-alone option for the defined-contribution menu, citing cost, illiquidity and capital-call features that typically do not match participant needs. He also reviewed the Mission Square stable-value vehicle versus money-market alternatives and noted stable value’s longer-term smoothing benefits.
Tyler reported growth in plan balances across the town plan, the Board of Education plan and other defined-contribution vehicles, and recommended no changes to the core menu based on current utilization and performance.
The committee had no further requests and the presenters will appear before the Board of Finance in October to discuss the fee illustration for OPEB.
