DATE: August 17, 2015
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
SUBJECT:
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Consideration of Resolution 2015-72, A Resolution to Adopt Amendment Number 3 to the City of Franklin Employees’ Pension Plan (09/08/15 WS)
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Purpose
The purpose of this memo is to provide information to the Franklin Board of Mayor and Aldermen (BOMA) concerning Resolution 2015-72 which amends the Pension Plan to allow investments with money managers in the form of a “collective trust.”
Background
At the August, 2013 meeting of the Pension Committee, Loomis Sayles was selected from a group of potential money managers to oversee the investment of a portion of the City Pension Plan. Because of the extensive documentation required for pension money managers, several delays were incurred in completing the paperwork. Despite approval from the Board of Mayor and Aldermen, the transfer from one bond manager to Loomis Sayles was never completed.
After a thorough review of the updated documentation, our new pension counsel advises that an amendment to the Plan Document is necessary to consummate the Loomis investment. The amendment proposes to allow a “collective trust” as a form of investment, in addition to the current types of investment (mutual fund, separate account, partnerships, etc.) Counsel advises that the amendment is required to satisfy Internal Revenue Service stipulations that apply to governmental trusts.
Financial Impact
There is no direct financial impact to the City. Approval of the Amendment simply allows the use of “collective trusts” as a legal structure to hold certain investments, thereby allowing the City to complete the transfer of bond investment from one manager to another manager as previously approved by the Board.
Recommendation
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Staff recommends approval of the Resolution.