Retirement Board: seeking to improve asset earnings

The Brookline Retirement Board met Tuesday, June 24, at 4:30 pm, and Monday, July 28, at 2:00 pm, in the basement conference room at the Health Center. Both meetings focused on performance of Brookline’s retirement assets. Brookline began appropriating toward a long-term retirement fund in the early 1970s and increased its appropriations in the 1980s, when the state began to regulate retirement systems more strictly.

Brookline continues to maintain a locally managed retirement fund, while a majority of the 351 Massachusetts cities and towns, plus several counties and other jurisdictions, have placed all their retirement assets in state-managed Pension Reserve Investment Trust (PRIT) funds. Counting state agency and employee funds, there are now only 106 retirement funds for public employees in the state that are managed outside PRIT. Long-term returns for PRIT funds have rarely been beaten by those for the other retirement systems.

Considering cumulative returns since the start of the state-managed fund in 1985, only seven of the current 106 independently managed funds have done better than the PRIT average: Haverhill, Malden, Needham, North Adams, Taunton, Wellesley and Weymouth. The cumulative average return for PRIT was 9.84 percent. Those for the top seven communities ranged from 9.90 to 10.35 percent. Brookline’s fund ranked 46th in this long-term comparison, just above the middle, with a cumulative return of 8.90 percent over 28 years.

Recently, Brookline’s retirement fund fared poorly, with a return of 12.13 percent for 2013, ranking 103rd among 106 funds. Other retirement funds ranged from 11.36 to 21.82 percent. Brookline’s lower performance will be made up by more contributions from its budget in the future, resulting in higher taxes, less services or both.

After seeing disappointing results early this year, the Retirement Board brought in a new asset manager: Russell Investments of Seattle, WA, a subsidiary of Northwestern Mutual. Near three-quarters of Brookline’s fund assets, totaling about $250 million, are now in funds managed by Russell. Their client representative for Brookline, Steve Flynn, reviewed performance and strategies on June 24.

The board has also recently hired Raymond Depelteau, who serves as chief investment officer for Holyoke and for Westfield, to provide strategic advice about other assets. Attending his first Brookline meeting on July 28, Mr. Depelteau presented options to improve Brookline’s asset performance.

Westfield and Holyoke retirement funds have been performing better than the Brookline fund recently, ranking sixth and eleventh among the 106 Massachusetts funds as measured by the 2013 returns: 20.27 and 19.64 percent. If Brookline had matched performance of Westfield and Holyoke, it would have had earned nearly $20 million more for 2013.

The state’s Public Employee Retirement Administration Commission publishes profiles of the Massachusetts retirement systems for public employees. Assets of all independently managed systems totaled about 60 percent of long-term liabilities, as of the first of this year. Brookline assets totaled about 56 percent of long-term liabilities.

– Beacon staff, Brookline, MA, August 5, 2014

Annual Report for 2013, Massachusetts Public Employee Retirement Administration Commission

Independently managed Massachusetts retirement funds, 2014, information from Massachusetts Public Employee Retirement Administration Commission

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