Lincoln establishes investment advisory board; seeks applicants

Lincoln establishes investment advisory board; seeks applicants

LINCOLN - Two Lincoln residents will now have the opportunity to help officials oversee the town's investments of pension funds, which currently amounts to controlling about $28 million in assets of the Town of Lincoln Employee Retirement Plan that covers all police officers and some of the non-teaching School Department staff.

Town Councilors unanimously approved an ordinance amendment on March 18 that increases the Investment Advisory Board's membership from three to five to make room for two finance-minded individuals who do not work for the town.

One is to be appointed by the Town Council, the other by the town administrator, for an initial term of three years, followed by a two-year term. The appointees chosen "based on his/her knowledge of, and expertise in, investments and finance" will join the finance director, personnel director, and either the School Committee chairperson or a designee.

The board is to meet at least quarterly and report back to the Town Council annually by June 30, the end of the fiscal year.

The ordinance was proposed by Town Councilor John Flynn, who said he worked with Finance Director John Ward to draft the language. Originally, the plan was to create an advisory committee for pensions, but Ward said the decision was made instead to create supports for all town investments.

"I thought it would be prudent to have more than just a pension advisory board," Ward told The Breeze.

He said that investment decisions had been left up to him as of late after an internal investment committee dissolved. It originally consisted of the finance director, the director of human resources, and the public works director who had a background in banking, Ward said.

The Lincoln Retirement Plan currently includes 233 members, according to the audit report, who are town and school employees not covered by other plans, as well as eligible firefighters in Lonsdale, Saylesville and Lime Rock.

The plan's funded ratio was 61.8 percent as of Jan. 1, 2013, the audit states, and 63.9 percent at the start of 2012. The annual required contribution for the town plan was $1.2 million as of June 30, 2013, with 85.3 percent contributed, according to the audit. Fifty-nine percent was contributed in 2012, 114.2 percent in 2011, and 93 percent in 2010. The plan's ARC was 100 percent contributed each year from 2006 to 2009.

Ward provided The Breeze with a list of the town's investments, which totals $27.97 million as of Feb. 28, 2014:

* The pension plan currently has $20.4 million in assets through fixed income assets and a guaranteed annuity contract with John Hancock Life Insurance, and equities and mutual funds and a diversified portfolio with UBS. John Hancock controls 40 percent of the investment, which totals $5.3 million, while UBS controls 60 percent, or $15.1 million.

John Hancock had all of the pension investments until 2003, when they were split to include UBS because John Hancock had "limited results," Ward said.

Over the course of 2013, the John Hancock investment generated 3.8 percent net of fees on the average fund balance, Ward said. UBS had "a pretty good year," he said, as net of fees, the investment grew in value 21.2 percent.

* The assets account for other post employment benefits, or OPEB, contains $878,771 through a mutual funds pool with the Ocean State Investment Pool. The total includes the town account, with $678,560, and the school account, with $200,210.

Ward said he is looking to move to a combined investment strategy because the account is "limited" and earns the town less than 1 percent each year.

* Surplus funds total approximately $6.7 million between a certificate of deposit program and disbursed CD purchase plan with Washington Trust and a secured money market with Webster Bank. Washington Trust accounts for $2.5 million, and Webster Bank accounts for $4.2 million.

These funds, which also earned less than 1 percent in 2013, are not intended to be high-eawrning, he said, because otherwise it could risk the loss of some principle.

Ward said he wants to go to bid for pension and OPEB consultant services, with the help of the new board once it is formed, which he said could be by late May or June.

At the Town Council meeting, Flynn touted the board and its eventual annual reports as an example of financial transparency.

"The town of Lincoln is a leader as far as pensions and investments go," Flynn said, adding that the town was one of the first to adopt a trust fund for other post-employment benefits. "I think it's a really good ordinance."

Those interested in applying for a board position should send a letter of interest with a resume or statement of qualifications to Town Clerk Karen Allen at Lincoln Town Hall, 100 Old River Road, Lincoln, RI 02865.