March 29, 2013 RPA Minutes
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Nevada System of Higher Education

 

Minutes of 

Retirement Plans Advisory Committee Meeting

 

March 29, 2013

 
 
The Retirement Plan Advisory Committee (“Committee”), the fiduciary committee for the Nevada System of Higher Education Defined Contribution Savings Plans (“Plans”), met pursuant to notice on March 29, 2013 at the System Administration Office in Las Vegas, Nevada. Present were voting members Michelle Kelley, Kent Ervin, Mike Hardie, Pat La Putt, Carla Henson, Patricia Hughes, Paul Thistle, and Spencer Stewart. Frank Daniels, Steven Streeper, Robb Bay, and Alan Schlottmann were not in attendance. 
 
Attending the meeting by invitation were Henry Stone and Cynthia Hunt of the Nevada System of Higher Education. Also in attendance were Daniel Pawlisch, Sean Carlin, David Rose (via teleconference), Steve Shepherd, and Jan Raines of Hewitt EnnisKnupp, Inc. (“HEK”).
 
The meeting was called to order at 8:30 a.m. PST by Chair Kelley. 
 
Ervin led a discussion in regards to the recent participant survey. He noted that while results indicated that participants generally like the vendor they currently have, they appear not to distinguish between administrative service providers and investment managers. It was also noted that many participants appeared confused about their social security benefits. After a thorough discussion, Henson asked how the results would be distributed more broadly. Ervin indicated that he would consolidate the findings in conjunction with Hardie who indicated that he would go through the comments and summarize responses to in regards to areas, specific number of responses, and type of responses. Upon completion, the consolidated findings will be placed on the NSHE website. 
 
Pawlisch introduced Carlin from HEK’s Global Investment Management Research Team and provided an overview of the investment manager search process. Carlin led a discussion in regards to the proposed intermediate bond fund manager candidates. He compared and contrasted the investment process and styles of the Dodge & Cox Bond Fund, the JP Morgan Core Bond Fund, and the PIMCO Total Return Fund. After a thorough discussion of the merits and drawbacks or each approach, Carlin asked for a motion.
 
MOTION:
Henson made a motion to utilize PIMCO as the intermediate bond fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by Hardie. The motion passed unanimously.
 
Carlin led a discussion in regards to the proposed inflation protected bond fund manager candidates. He compared and contrasted the investment process and styles of the Blackrock Inflation-Protected Bond Fund, the Dimensional Fund Advisors Inflation Protected Securities Fund, the PIMCO Real Return Fund, and the Vanguard Inflation Protected Securities Fund. After a thorough discussion of the merits and drawbacks or each approach, Carlin asked for a motion.
 
MOTION:
Ervin made a motion to utilize Dimensional Fund Advisors as the inflation protected bond fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by La Putt. The motion passed unanimously.
 
Carlin led a discussion in regards to the proposed high yield bond fund manager candidates. He compared and contrasted the investment process and styles of the Loomis Sayles High Yield Bond Fund, the MacKay Shields High Yield Opportunities Fund, the Neuberger Berman High Income Fund, and the Shenkman High Yield Bond Fund. After a thorough discussion of the merits and drawbacks or each approach, Carlin asked for a motion.
 
MOTION:
Ervin made a motion to utilize Neuberger Berman as the high yield bond fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by Henson. The motion passed unanimously.
 
Pawlisch introduced Rose from HEK’s Global Investment Management Research Team. Rose led a discussion in regards to the proposed real estate fund manager candidates. He compared and contrasted the investment process and styles of the JP Morgan Real Income Fund, the Morgan Stanley Instl. U.S. Real Estate Fund, and the Cohen & Steers Realty Shares Fund. After a thorough discussion of the merits and drawbacks or each approach, Rose asked for a motion.
 
MOTION:
Hardie made a motion to utilize Cohen & Steers as the real estate fund manager as part of the Plans overall transition to an open architecture plan design. The motion was seconded by Thistle. The motion passed 6 to 0 (Ervin not voting).
 
Shepherd led a discussion in regards to various fixed annuity and income annuity options. He provided an overview of the types of offerings along with the various investment structures of each (general account vs. separate account). He also explained the crediting rate methodologies used by each product and highlighted the liquidity restrictions associated with each approach. Shepherd then provided a detailed analysis of a hypothetical payout strategy for the TIAA Traditional fixed annuity compared to two alternative income annuity options. He illustrated how long participation in TIAA Traditional has yielded higher payouts due to the products unique “vintage” system and the recent falling interest rate environment. He also noted how a consistently rising interest rate environment could create the opposite scenario. After a thorough discussion, Kelley asked the Committee if the TIAA Traditional was something that participants should invest in going forward. 
 
MOTION:
Hardie made a motion to utilize the TIAA Traditional in a GRA/GSRA contract as the fixed annuity option as part of the Plans overall transition to an open architecture plan design. The motion was seconded by La Putt. The motion passed unanimously.
 
In order to utilize TIAA Traditional, Shepherd noted that TIAA-CREF would need to be the System’s sole vendor or that a “master” administrative structure would need to be implemented given that TIAA Traditional is only available through TIAA-CREF. It was also noted that the CREF Stock Annuity and Money Market Annuity would need to be offered due to GRA/GSRA contract provisions. Hardie requested that Raines include questions in the administrative service provider RFP regarding alternative fixed annuity options. Shepherd indicated that he would draft the necessary RFP questions and send to Raines for revision/input. These questions would then be sent to the Committee to review as part of the draft RFP.
 
Pawlisch formally introduced Raines who will be assuming Schau’s responsibilities and working to assist NSHE with the administrative service provider RFP. Raines provided the Committee with an update in regards to the RFP. She highlighted the proposed timeline and provided the Committee with a status update. Kelley noted that future discussion topics included performance guarantees, fee structure, small balances (force outs), and web tools/page requirements.
 
There being no further imminent business before the Committee, the meeting was adjourned at 4:00 p.m. PST.
 
 
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Signature
 
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Date signed
 
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Concurring
 
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Date signed