2013 was a good year to be invested in financial markets. And 2013 made up for some poor years for the city’s pension investment portfolios.
But, as Mayor Scott Avedisian made clear last Thursday, good people are at the root of the 17 percent return of the Municipal Pension plan and the $387.4 million total market value of the city’s four pension plans.
Speaking of the Municipal plan, Avedisian said members with good financial backgrounds direct the plan. The plan is run by the Municipal Retirement Board, chaired by Alfred Marciano of Charland, Marciano & Company CPAs of Providence.
“There are really good minds in the city, let’s use them,” he said.
Avedisian said the board is in the market for long-term returns and doesn’t change its policies based on market highs and lows.
“Our group has never chased the money,” the mayor said.
Marciano looks at it that way, too.
“We are conservative and looking at the long range,” Marciano said Friday in a telephone interview.
According to information released by Avedisian, the city’s pension portfolio manager, Fiduciary Investment Advisors, reported investment returns of all four of the plans outperformed benchmarks.
The Windsor, Conn.-based advisory company recommends funds for investments with the retirement board playing the role of setting an investment strategy, overseeing the fund’s performance and conducting quarterly reviews.
Marciano credits Anthony Tranghese of Fiduciary Advisors as being the key player.
“It’s thanks to him,” he said of the fund’s performance.
The shining star is the Municipal plan. It outperformed the Police II plan with a 16.8 percent return; Police I/Fire I at 16.3 percent, and Fire II at 16.1 percent. Investments in those funds are also managed by Fiduciary Advisors with City Finance Director Ernest Zmyslinski and City Treasurer David Olsen in oversight positions.
Marciano said municipal pension investments aren’t in individual stock. Also, investments are not made in hedge funds.
The returns take into consideration investment advisory fees.
For purposes of determining annual contributions and what is needed to pay future benefits, the city uses a 7.5 percent projected return on its investment.
Over the past five years all four of the plans have had 13 to 13.2 percent returns.
The 10-year picture, which takes into account the across-the-board market decline of 2008, put returns slightly below the expected 7.5 percent rate at 7.2 percent for Police/Fire I and Fire II, and 7.3 percent for Police II and Municipal.
Just two weeks ago, Avedisian touted the findings of Gabriel Roeder Smith & Company, consultants and actuaries, in their review of the city’s three law enforcement pension plans. In particular he focused on Police I/Fire I and how, because of agreements that freeze wages, which affect cost of living increases for retirees, a formerly forecast spike in city contributions had been leveled out. Also helping is the allocation of state incentive funds to the plan. As for Police II and Fire II, pension reforms enacted in 2012 will serve to level off city payments going forward.
“It’s a great group,” Marciano said of the retirement board, “they really do their homework.”
The board meets quarterly.