Nevada System of Higher Education
Retirement Plans Advisory Committee Meeting
May 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 May 29, 2013 (via video conference) at the System Administration Office in Las Vegas, Nevada. Present were voting members Michelle Kelley, Kent Ervin, Mike Hardie, Pat LaPutt, Carla Henson, Robb Bay, Patricia Hughes, Paul Thistle, and Spencer Stewart. Frank Daniels and Steven Streeper were not in attendance.
Attending the meeting by invitation was Cynthia Hunt of the Nevada System of Higher Education. Also in attendance was Daniel Pawlisch (via teleconference) of Hewitt EnnisKnupp, Inc. (“HEK”).
The meeting was called to order at 1:00 p.m. PST by Michelle Kelley.
Michelle introduced Vice Chancellor Renee Yackira as the new delegated authority for the defined contribution retirement plans. Renee informed the Committee of Hank Stone’s decision to retire and
provided an overview of her background. She also announced Michelle Kelley’s role as Retirement Plan Manager. Following a brief discussion, the Committee congratulated both Renee and Michelle on their new roles within the System.
The minutes from Committee meetings held on March 28th, March 29th, and May 3rd 2013 were reviewed. Michelle asked that Committee members provide any edits to Cindy. The updated minutes will then be posted to the NSHE website within 10 days of today’s meeting.
Michelle provided the Committee with an update in regards to the RFP for the retirement plan recordkeeper(s). She indicated that the market’s response to the RFP was good. Written responses are due back from the vendors by Tuesday, July 2nd. The next Committee meeting will be held on Tuesday, August 6th in Las Vegas to determine those respondents who will be selected as finalists. Meetings with the finalist vendors are scheduled for August 13th and 14th in Reno. All Committee members are encouraged to be in person at the August 13th and 14th meetings. Paul asked that the RPAC meeting dates be distributed among the Committee members to ensure that all the dates are on everyone’s calendar. Pat requested that HEK put together a paragraph on the various ways administrative fees could be paid.
Dan Pawlisch summarized the 1Q13 capital market performance and provided an overview of the existing defined contribution plan managers over the quarter and trailing one-year periods. In the course of his discussion, he reviewed the Plans’ current asset allocation, participant contributions, fund returns, watch lists, and fees. He also discussed situations in which there were exceptions to the targeted performance or other relevant aspects of the funds offered against the Plans’ Investment Policy Statement. Mr. Pawlisch also provided an update in regards to the new investment lineup which will become active for participant investment on January 1, 2014. Mike asked if any of the proposed investment offerings were “on watch.” Mr. Pawlisch indicated that none of the investment offerings would be on watch. He also suggested that the Committee consider modifying the watch list discipline for the new investment lineup given the reduced number of offerings. Mr. Pawlisch will present this new methodology at the next regularly scheduled meeting. Robb indicated that he recently became aware that TIAA- CREF offers an S&P 500 Index mutual fund. He questioned the merits of adding the fund to the existing TIAA-CREF investment line-up to give participants an alternative to the Equity Index Annuity. Mr. Pawlisch indicated that he would review the fund but was keptical that it would be superior to the proposed offering from Vanguard. The Committee had no further questions or concerns.
Mr. Pawlisch distributed a flash report regarding the departure of Chad Meade and Brian Schaub from Janus Capital. He advised the Committee that the firm’s rating for the Janus Triton Fund has been moved from “Buy” to “In Review” as a result of these departures. Given this downgrade, the fund will likely be on the watch list for 2Q13. As such, Mr. Pawlisch indicated that the Committee may wish to identify an alternative investment offering as the small/mid cap stock fund offering in the new investment lineup. Following a brief discussion, the Committee agreed that it would continue to closely monitor the Janus Triton Fund but postpone making any changes to the proposed investment line-up until after the responses to the RFP for retirement plan recordkeeper(s) have been received and evaluated.
Mr. Pawlisch then distributed a memorandum entitled “Revenue Sharing and Plan Servicing Credit.” He provided the Committee with an overview of the fixed recordkeeping/administration fee agreements
that were established for the System’s Defined Contribution Retirement Plans and noted that approximately $1 million would be coming back to the Plans in the form of revenue reimbursements from Fidelity and TIAA-CREF. Mr. Pawlisch noted that the agreements provide the opportunity for the System to reallocate these surplus revenues back to participant accounts after paying for qualified plan expenses including legal fees, audit fees, consulting fees, etc. Mr. Pawlisch also reviewed various strategies for determining how the reimbursements would be distributed (i.e., per capita, pro-rata, etc.). Mike asked that Michelle determine how much is required for the System to pay the direct, reasonable and necessary expenses of the Plans which the System is authorized to pay. Pat, Paul and Kent asked Mr. Pawlisch to work with Fidelity and TIAA-CREF to determine their ability to support the following scenarios:
1. A plan level, pro rata allocation as of 12/31/12;
2. A fund level pro rata allocation based on participants investments in funds that provide revenue sharing as of 12/31/12
3. A fund level Pro rata allocation based on participants investments in funds that provide revenue sharing on a quarterly basis since July 1, 2010
Mike requested that Mr. Pawlisch work with TIAA-CREF to discover whether excess revenue credits could be paid to participants who have annuitized their account balances and are receiving ongoing annuity payments.
There being no further imminent business before the Committee, the meeting was adjourned at 3:30 p.m. PST.