Submitted by Susan Hardee Steger
October 2, 2014 11:29 p.m.
On October 2, 2014, the Florida Times Union reported that the Leroy Collins Institute has ranked the City of Fernandina Beach pension plans as an “F.” In an article entitled “Jacksonville corrections pension plan gets ‘F’ grade; Fernandina also scraping bottom,” 151 Florida municipal pension plans were evaluated. The previous assessment was done in 2011. “A” rated municipalities included the city of Paltaka and St Augustine.
Click here to view the Collins Institute report for 2014. The Fernandina Observer will provide more information on the City’s pension plans at a future date.
To view Dave Lott’s previous pension articles, click below.
Fernandina Pension Plans – Part 1 of the basics
Fernandina Pension Plans – Part 2 of 4 – Investment performance
City Pension Plans – Future Options Part 3 of 4
Fernandina Beach Pension Plans Part 4 – Moving forward
Suanne Thamm’s Commission Meeting Coverage on Pensions
Who administers the plan? Who does the administrator answer to? The appendix shows worsening marks over the last 6+ years. Looks like time to change administrators.
Bruce, my understanding is that The Bodgahn Group is the overall administrator of the Plan with a variety of investment firms managing the assets of the program. The Administrator reports to the Pension Board who has the authority to change administrators. As noted in my earlier articles, both pension boards use the same administrator. Reading the minutes of the Pension Board meetings and reviewing the performance reports, although performance has improved as the economic recovery continues, albeit at a slow pace, many of the funds selected for the City’s pension program have underperformed the overall market for those types of portfolios. At least the 4 year rolling average has now risen above 8% which will slow some of the bleeding. As noted in my articles, there is no silver bullet solution and it will be interesting to see how the City Commission addresses this issue. I suspect the “F” grade is primarily due to the level of unfunded liability but would have to go back and look at the latest performance reports and compare them to the Collins scoring methodology to verify which were the key drivers.
If the administrator is under-performing, the Pension Board should be active in monitoring its performance and considering replacement.
I just read an article where the California Pension fund moved the management of their funds into “Passively Managed Index Funds” (Computer managed funds) which appear to be get better results. Maybe City needs to look at this.