DATE: November 21, 2016
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Russell Truell, Assistant City Administrator
SUBJECT:
title
*Consideration of Resolution 2016-86, a Resolution Authorizing the Mayor to Execute an Agreement with the Tennessee Consolidated Retirement System for Pension Plan Co-Investment Services. (12/1/16 Finance Committee 3-0, 12-13-16 WS)
body
Purpose
The purpose of this memo is to provide information to the Franklin Board of Mayor and Aldermen (BOMA) concerning the co-investment of City of Franklin Pension Plan assets with the TCRS investments.
Background
The Pension Committee has made a recommendation to use the investment services of the TCRS staff to invest the assets of the City Pension Plan. Because of the tremendous size and expertise of the system, fees associated with investment transactions, professional investment advice, allocation decision making, and the custody of assets are substantially lower with TCRS than with the money managers currently employed by the City Plan. Additionally, a far greater degree of diversification and therefore risk aversion can be achieved by being part of a larger system.
The TCRS investment team has routinely delivered outstanding performance in investment return while maintaining a lower risk profile than most state pension plans. Because of their remarkable performance and the substantially lower fees for investment services, the City of Franklin can reduce the cost of service for investments, allowing more of the annual contributions to go to investment and less to professional service fees.
Financial Impact
It is estimated that investment manager fees will be reduced by approximately $500,000 in 2017 by moving investment activity to TCRS. Additionally, co-investment with TCRS will allow additional savings in other professional services, including pension counsel, financial advisory services, and custodial banking.
Recommendation
rec...
Click here for full text