Palatka pension board votes to move custody from Principal to Salem Trust

The Palatka General Pension Board voted to terminate Principal as custodian and hire Salem Trust to hold the plan’s assets, the board announced during its May meeting. Mitchell, the board’s investment presenter, recommended Salem Trust as the most cost-effective option and said Salem has handled transitions for “well north of” 50 other municipal plans in Florida.

Mitchell summarized three formal responses to the custodial request for proposals: Capital City came in with the highest fee (about 10 basis points), Fifth Third quoted roughly 4 basis points but with a $15,000 minimum fee, and Salem offered about 5 basis points with a $7,500 minimum (Mitchell estimated this plan would pay roughly $12,500 under Salem’s minimum structure). “From a cost standpoint they’re the most cost effective,” Mitchell said.

Board members moved and seconded a motion to terminate Principal and engage Salem Trust, aiming to complete the transfer before Dec. 31 so retirees receive only a single 1099 for 2026; Salem would begin paying benefits on Jan. 1. The chair declared the motion passed after an affirmative vote.

Mitchell said Salem charges minimal additional fees beyond the custody fee (noting a small share of the cash fund fee is remitted to the custodian) and emphasized Salem’s local presence and practical experience in Florida municipal custody transitions. He also offered to work with the plan administrator to coordinate the transfer schedule to avoid duplicate tax documents for retirees.

What happens next: staff will notify Principal and coordinate with Salem Trust to structure the transition and timing. The board approved the quarterly report and moved on to other agenda items.

Sources: Board presentation and votes at the May meeting; quotations and fee figures taken from the custodian RFQ summary presented by Mitchell.