Pension Plans’ Investment Program
Program Oversight
The Board of Trustees has delegated the oversight of the investment program to the Finance Committee, a sub-committee of the Board of Trustees with the responsibility to oversee the Plans’ investment portfolios. The Finance Committee, with advice and support from the Pension Plans’ investment consultant, Cambridge Associates, and actuary, Venuti & Associates, determines the level of acceptable investment risk, and expected return goals, approves and reviews the allocation of assets, establishes the Plans’ formal Investment Policy and retains, monitors, and (if necessary) terminates investment managers and consultants.
With the advice of consultants, the Finance Committee also ensures the Pension Plans are well diversified by asset class and investment style. The Pension Plans are invested in a wide range of investment vehicles from highly liquid, separately managed investment accounts for stocks, bonds and other securities, to a variety of index funds and other pooled funds, real estate funds and less liquid private equity and hedge fund investments.
Cambridge Associates is a global independent investment firm that specializes in providing non-discretionary and discretionary services to pension funds, multi-employer funds, endowments, foundations, private families and other non-profit organizations. Cambridge Associates advises on nearly $390 billion dollars in assets and has a history dating back to the early 1970s. Cambridge Associates is not affiliated with any brokerage firm, does not sell any proprietary product and receives compensation only from its asset owner clients. Cambridge Associates’ expertise includes:
- Strategic Planning (Policy, Structure, Asset Allocation, Goals and Objectives)
- Manager Search and Selection
- Alternative Investment Management
- Portfolio and Risk Analysis
- Performance Measurement
- Capital Markets and Manager Research
Venuti & Associates is a benefits and actuarial consulting firm. They serve as actuaries and benefits consultants to multiemployer, single employer and public pension plans, with a special emphasis on multiemployer labor-management pension consulting. Venuti & Associates’ focus is to help plan sponsors provide secure, reliable pension income to plan participants and their beneficiaries. The firm’s responsibilities include:
- Setting reasonable assumptions for future financial and demographic events. These assumptions include investment return, longevity and other occurrences that impact the Basic Plan funding.
- Calculating the plan’s benefit liabilities based on these assumptions.
- Determining annual funding requirements.
- Monitoring the plan’s funded status and advise the Board and Committees of the financial impact of plan changes and other events.
The Finance Committee hires both active and passive managers. Active managers are free to buy and sell securities within the Pension Plans’ policy guidelines and employ a decision-making process that may include fundamental and/or quantitative analysis. Their objective is to outperform the benchmark they are measured against. Passive managers generally replicate an index and track the performance of their benchmark. Investment fees for passive managers are generally lower than for active managers.
The fees paid for investment management services are generally based on a percentage of assets under management and vary quite a bit from manager to manager and investment to investment. The amount of fees charged is one of the factors considered by the Finance Committee and Cambridge Associates when comparing investment managers and making hiring decisions (along with a number of other factors, such as expertise, management style, historical performance and risk characteristics). The overall average cost of the investment program is approximately 0.7% (70 basis points) per Plan including administration. Investment strategies, asset allocation and investment managers are continually monitored and subject to change at any time. Asset allocations and investment managers are reported “as of” a certain date (for example a calendar quarter). That measurement date may change from time to time.
For more general information on the Pension Plans, visit the Pension Plans Benefits Overview page here.
