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Board of Pensions outlines investment-fee savings and staffing/cost drivers
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Summary
The Board of Pensions explained a lower assumed return rate to reduce risk, reported investment-fee savings below the national average and said local and diverse-manager participation remains a priority; board indicated projected professional-services costs tied to investment activity.
Francis (Fran) Bialy, representing the Board of Pensions, described investment and operational items for the board’s FY27 budget. Bialy said the board has reduced its assumed return rate to limit risk and that the fund’s investment-fee ratio is about 0.24%, below the national average of 0.73%.
"Since we've tweaked the fees that we pay for investments since FY2016, we've saved over $140,000,000," Bialy said, and noted the pension fund’s local contracting share is roughly 12% while diverse-manager asset allocations exceed 50%.
Council members questioned the board about the method for estimating professional-services spending (a projected $25 million figure tied to investment fees and asset management), staffing vacancies and the decision to budget money to fill positions. The board said the FY27 request funds existing positions and assumes filling a portion of a 14% vacancy rate to improve customer service and process terminal-leave payments more quickly.
Board and finance officials also reiterated that distribution decisions for the pension adjustment fund (a reported $45 million distribution referenced by council members) are determined by the pension board and that details would be available at the board’s next meeting.
