Retirement Plan Advisory Committee
November 20, 2012
A meeting of the Retirement Plan Advisory Committee (RPAC) was held on November 9, 2012 via video conference between the Las Vegas System Administration Office and Western Nevada College.
Present: Michelle Kelley, Chair, Benefits Manager BCN; Kent Ervin, UNR Faculty Representative; Pat La Putt, Benefits Manager BCS; Spencer Stewart, NSC Faculty Representative; Mike Hardie, WNC Faculty Representative; Alan Schlottmann, Faculty Senate Representative
Also Present: George Dombroski and Cynthia Hunt (NSHE); Dan Pawlisch (Hewitt EnnisKnupp)
The meeting was called to order at 2:10 pm.
Michelle Kelley welcomed the members and reminded the Committee that the purpose of the meeting was to review the performance of the Retirement Program’s investment funds. She pointed out that this was to be the first time that the full Committee performed an investment review and that previously this had been done by the now dissolved Investment Management Subcommittee.
Before beginning the investment review, Kelley referred the members to the RPA Asset History report, the Plan Statistics report and the calendar of faculty senate and town hall meetings that had been provided. There was a question about the large disparity in defaults into QDIAs between North and South. The Benefits Managers explained that in the South new enrollees are more aggressively encouraged to make an affirmative investment election than in the North.
Dan Pawlisch informed the Committee that Fidelity Investments had announced the closure of the Mid Cap Growth Fund and the planned merger of that fund into the Stock Selector Mid Cap Fund on January 11, 2013. He reported that Hewitt EnnisKnupp’s advice to the Committee was to refrain from adding the Stock Selector Mid Cap Fund to the investment lineup due to discomfort with the investment structure of that fund and that instead, existing funds in the Mid Cap Growth Fund be mapped to the appropriate QDIA. He explained that the safe harbor protections of ERISA do not apply to fiduciaries when funds are mapped from one fund to another similar fund but that they do apply when funds are mapped from one fund to a QDIA.
MOTION: Kent Ervin moved to recommend to the Chancellor or his delegated authority, as appropriate, to direct participant asset balances in the Fidelity Mid Cap Growth Fund, and future deferrals, to the Plan’s Qualified Default Investment Alternative (QDIA). Mike Hardie seconded. The motion passed unanimously.
Dan Pawlisch presented the capital markets report for the third quarter of 2012. It was generally a positive quarter for equity and fixed income markets. Pawlisch explained that understanding the capital markets backdrop provides important context for understanding the performance of the Plan’s investment funds.
Pawlisch presented the third quarter investment performance report for the NSHE Retirement Program. The Committee asked for the following revisions to future reports:
· Inclusion of a new column in the Total Plan Top Ten schedule indicating the number of participants actively contributing to the funds
· Addition of a new schedule of the top ten funds as measured by the number of people actively contributing
· Addition of an analysis of the number of participants actively contributing to underperforming funds.
Pawlisch explained to the Committee the performance monitoring system that the Investment Management Subcommittee had developed. He then took the Committee through a detailed review of the performance of each of the three vendors’ funds. There was a discussion about what the Committee should do with regard to funds that earned red codes for quantitative and qualitative measures. Kent Ervin explained that the Subcommittee had previously adopted a view that these individual fund underperformances will be addressed through the investment lineup redesign.
There was a discussion about the differing points of view on the part of HEK and TIAA-CREF regarding the benchmarking of the CREF Stock Account. Pawlisch explained that HEK believes that a global benchmark is appropriate while TIAA-CREF prefers a domestic benchmark. Pawlisch was asked to do some further investigation into an appropriate peer group universe for the CREF Stock Account.
There was a discussion about whether or not to publish the third quarter investment performance report as provided (with the color coding) on the NSHE website. There was agreement that the report could be published with color codings if the website could be modified to present educational materials for participants so the color coding could be understood in the appropriate context. George Dombroski was asked to draft helpful changes to the website.
The meeting was adjourned at 4:50 pm.
Prepared by: George Dombroski, Retirement Plan Alternative Manager