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HomeMy WebLinkAboutPension & Audit Committee February 15, 2022 PENSION & AUDIT COMMITTEE COMMISSION CHAMBER February 15, 2022 1:00 P. M. PRESENT: Hons. Hardie Davis, Jr., Mayor; Odie Donald, Administrator; Donna Williams, Finance Director, members; Hasan, Commissioner; Lena Bonner, Clerk of Commission. ABSENT: Hons. B. Williams, Mayor Pro Tem and D. Williams, Finance Committee Chairman. 1. Presentation of Fourth Quarter ending December 31, 2021 investment reports for the 1945 and 1949 Pension Plans along with the January 2022 update. (Heather Seigler, Morgan Stanley) Ms. Seigler gave a presentation regarding the investment reports for the 1945 and 1949 Pension plans and the January, 2022 update. Mr. Donald: Most of the concern around volatility and some of the expectations that we have at least for the next quarter that the market will be volatile is strictly because we see the increased interest rate and we don’t know that’s going to affect things overall. Ms. Seigler: You’re absolutely correct and so when we look at going in historically and we’ve gone in to the first fed increase in a cycle the market is really volatile leading up to it and shortly after that. We take that combined with geopolitical concerns we have today and so you have a lot of things going on but I think a lot of it comes back to the fed and so you’ve seen a lot of volatility already trying to price in what will the fed do at their March meeting and so that concern whether it will be a quarter or a 50 basis point increase, there’s concern that the fed is a little bit behind the curve at this point. Mr. Donald: With that volatility as well as the, I guess the upcoming look at inflation because I know the feds are looking at making some adjustments as well. What timeframe would you say that your organization as well as Augusta should be looking at any potential adjustments that we should make? Ms. Seigler: The adjustments that we can make so normally we would have taken some of the cash that you see there, we’re a little higher than normal, we’re putting that to the side because we know we’re not going to necessarily make anything in the bond market. We know about volatility right now for that portion. Normally we would have put that back in and start reinvesting it so we’ve had a little bit higher cash, we’re waiting for the market to kind of settle out. We think that’s going to happen sooner than later and so there are adjustments that we’re making to the allocation trying to buffer the best hedge really against inflation are equities and so you have the exposure there. Mr. Donald: But still you’ve made some of those initial adjustments, you know, making us more cash heavy. At what point will you kind of reevaluate the (inaudible) that is the 1 appropriate method moving forward or there is kind of a reassessment period in quarter two or quarter three or have you already identified that? Ms. Seigler: We’ve already started working on that and so some of what we can do and what we think makes sense is we’re looking at some of our clients of our pension fund because they are the longest of long-term investments. We don’t necessarily need the liquidity in the fixed income market that everyone else may need today and so we’re looking at moving some of that exposure toward some of the private credit markets because it gives us less interest rate sensitivity. The downside to that is we have credit risks there and so we wouldn’t do all of our exposure but we think it makes sense to move some of the exposure in that direction. Ms. Williams: Motion to receive as information. Mr. Donald: Second. It was the consensus of the committee that this item be received as information without objection. 2. Receive as information the amount of 5.0% for the COLA for the 1945 and 1949 Pension Plans according to the plan documents. The index for all items CPI-U for the South Region as published by the Bureau of Labor and Statistics increased 7.4% for the 12 months ending December 2021. Plan documents limit the amount of annual cost of living increase to 5%. This 5% increase will be effective on March 1, 2022 benefit payments. Mr. Mayor: We’ll receive it as information without objection. It was the consensus of the committee that this item be received as information without objection. ADJOURNMENT: There being no further business, the meeting was adjourned. Lena J. Bonner Clerk of Commission 2