Retirement Plan Advisory Committee
February 21, 2013
A meeting of the Retirement Plan Advisory Committee (RPAC) was held on February 21, 2013 via video conference linking the Las Vegas System Administration Office, Great Basin College, Western Nevada College and the University of Nevada, Reno.
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; Paul Thistle, UNLV Faculty Representative; Robb Bay, CSN Faculty Representative; Frank Daniels, Great Basin College Faculty Representative; Patricia Hughes, DRI Faculty Representative; Carla Henson, Retiree Representative
Also Present: George Dombroski and Hank Stone (NSHE); Dan Pawlisch, Ruth Schau and Stephen Shepherd (Hewitt EnnisKnupp)
The meeting was called to order at 1:10 pm.
The Committee expressed a desire to have more time to review materials in advance of meetings. George Dombroski was asked to reschedule the next three quarterly meetings to allow HEK more time to develop and distribute materials for the meetings.
Dan Pawlisch reviewed the capital markets report for Q4 2012. He said non-US equity performed best. Mid cap did well. Value did better than growth. High yield was the best performing fixed income category.
Pawlisch presented the Q4 2012 investment performance reports for the NSHE plans. There was much discussion about a new chart in the report that tracks into which funds contributions have been flowing. It was observed that most of the contributions flowing into TIAA-CREF are going into funds that are not performing well.
Pawlisch discussed changes that are occurring in the Fidelity and Vanguard target date funds. He said there is no change in HEK’s “hold” rating on the Fidelity funds nor in the “buy” rating on the Vanguard funds.
Pawlisch reported that new reimbursement agreements have been finalized with Fidelity and TIAA-CREF that will result in an additional $950,000 in credits for 2012.There was a discussion about how to invest the funds resulting from these new agreements until they can be allocated to participants. Pawlisch recommended that the Committee focus on “return of capital” rather than “return on capital” in making the decision. Pawlisch’s recommendation was to hold the funds in a money market account. There was discussion about when the funds might be distributed to participants. Kent Ervin expressed a desire to distribute the funds as soon as possible.
Motion: Kent Ervin moved that the NSHE RPA revenue credits held by Fidelity should be held in the Fidelity Retirement Government Money Market Fund. Carla Henson seconded. The motion passed 8 to 1, Mike Hardie dissenting.
Pawlisch observed that a government money market fund is not available on the TIAA-CREF investment platform. There was a discussion about replacing a money market annuity with an institutional money market fund.
Motion: Kent Ervin moved that the NSHE RPA revenue credits held by TIAA-CREF should be held within the TIAA Institutional Money Market Fund. Carla Henson seconded. The motion passed 8 to 1, Mike Hardie dissenting.
Steve Shepherd was introduced as HEK’s insurance/annuity expert. Shepherd led a discussion about annuities which he described as “from a 50,000 foot level”. He explained in detail the difference between investment annuities and payout annuities. He said the market place is changing and he is seeing the market move towards offering the best of both.
He said the Committee needs to be thinking about the following considerations in selecting an annuity:
· Tradeoffs between general accounts and separate accounts
· Tradeoffs between guarantees and liquidity
· Insurer creditworthiness
Shepherd guided the Committee to be thinking about the following plan design choices:
· To have an investment annuity that promotes accumulation of assets over time
· To have an annuity that promotes purchasing pieces of income over time
· To have a combination of both
He strongly recommended that the Committee let the annuity design drive the vendor and not the other way around to avoid getting locked into having to take what the vendor offers.
The meeting was adjourned at 4:50.
Prepared by: George Dombroski, Retirement Plan Alternative Manager