HomeMy WebLinkAbout03.d. Presentation (Handout)Item 3.d. (Handout) Background Deferred Compensation Advisory 7,, Committee (DCAC) established by Board _ dj in 1982 Comprised of seven members appointed by department headsi DCAC membership designed to be representative of workforce, including�� both Local 1 and MSCG Finance Manager serves permanent term as Chair and Plan Administrator 3 Plan Composition • All full-time permanent employees • Voluntary employee contributions only • All full-time permanent employees • Employer contribution of 6.2% up to statutory social security income caps and terminal pay • All Tier III full-time permanent employees • Employer contribution of 1.5% of base salary • Management & Unrepresented at -will • Varying mandatory employee contributions, contingent on group, hire date, and income bracket 4 DCAC Scope Co -fiduciary to Central San Board over Plan Annual communication to Board Scope of DCAC defined in the Deferred Compensation Plan Board Policy (BP 047) Investment Policy Statement (IPS) and Education Policy Statement contained within Administrative Procedures Approval of Unforeseen Emergency Withdrawals can be delegated to recordkeeper 5 DCAC Membership BargainingDepartment I Group � Arellano, Grace** Administrative Services Operations MSCG 12/31 /24** ** Assistant 2 Cruz,Tricia Accountant Administration Local 1 12/31/26 1 3 Lawson, Dana Senior Engineer Engineering MSCG 12/31/25 ** 4 Mercerjustin InstrumentTechnician Operations Local l 12/31/26 2nd 5 Mizuno, Kevin Finance Manager 6 Niswander, Geoff Senior Household Hazardous Engineering Local 1 12/31/25 ** Waste Technician 7 Thomas, Christopher Accounting Supervisor Administration MSCG 12/31/24 2nd *Committee Chair position is title -specific and not employee specific. Finance Manager position serves as Plan Administrator and Committee Chair. Term limits do not apply. **Appointed to complete term of predecessor pursuant to AP 047. N�Nffifflwmn,_ � 1. DCAC Activities & Accomplishments • Quarterly plan Designed and Design and Conducted two performance approved efficient rollout of fiduciary training reviews fund menu participant sessions for conducted. investment lineup education plan DCAC members • Adoption of a for Plan which for 2023 on plan 2024 DCAC was rolled out Formation of a administration budget returning successfully in sub -committee and plan excess admin to June 2023 to test a new governance participants financial planning Sending DCAC • Execution of a tool for member to new 5-year term participants, annual NAGDCA record keeping expected to conference agreement. rollout in 2024 7 New Core Investment Menu S New structure in -line with best practices issued by National Savings to Association of Governmental participants •Higher Deferred Compensation Administrators (NAGDCA) benchmarked Reduces "decision paralysis" by funds for Alleviates participants cutting fund option choices in half fiduciary risk 26 remaining options still provides for diversity in and burden choice Reduces Projected to generate up to $1.675 participant million in savings to participants "Decision through lower expense ratios over 5 paralysis" years 8 M Overview of New Core Investment Lineup • New fund lineup inspired by 3(21) fiduciary advisor recommended structure (5-4-3-2-1-0) • Total of 26 options (including self -directed brokerage), compared to 50 offered previously • 22 basis point overall reduction in fund expense ratios • Self -directed brokerage option retained for participants outside of core lineup • Target Date Funds separated into 5-year retirement increment groups spanning 2010 through 2060 Large Cap Value 11 (Putnam LCV) Small Cap Value III 11 (PIMCO RAE) 0. Specialty (2) I. Active International (1) Large Cap Growth III 11 (AB Large Cap Growth) Small Cap Growth II 11 (AB Small Cap Growth) -o--6T CENTRAL SAN Passive /Index Funds Four funds offered in passive/ index fund category Each fund offered scored highest rating possible (10) by 3(21) fiduciary advisor 11 Other Funds Three funds offered in active fixed oncome fund category One fund offered in active international equity fund category Additionally, two specialty funds include: Real Estate Investment (Cohen & Steers Realty Shares Q Retirement Fixed Income Fund (MissionSquare Retirement IncomeAdvantage Fund IRS) 12 Value Blend J� E Growth Int.Value Int. Blend Int. Growth BlackRock J I: Vl Core Fixed Income Fixed Income Cash Equivalent Active Fixed Income Core Fixed Income Fixed Income Cash Equivalent Lord Abbeft Core MissionSquare Fixed Income R6 PLUS Fund Class Active International Equity Value Blend Growth International Equity 11 (Fidelity Intl Cap J •• IA E M Self -Directed Brokerage Option Will continue to be offered outside of core investment lineup Designed for knowledgeable investors who wish to invest outside of the core lineup Central San not fiduciarily responsible for investments held in self -directed brokerage accounts Minimum balances and administration fees apply 13 Annual Report Highlights Assets in 457b plan make up 57% of Plan assets, while 401a Plan is approximately 42% Largest share of plan assets is in U.S. Equities Assets in Balanced/Asset Allocation and Stable Value / Cash Management make up large portion of plan assets 14 SUMMARY DISTIBUTION BY INVESTMENTTYPE International/Global Specialty Stock 9.4% 3 g� !!! Stable Value/Cash _Management 213% U.S. Stock 32.9%, Bonds 7.2% Guaranteed Lifetime Income 3.3 % Balanced/Asset Allocation 21.9% i 7 Annual Report Highlights Market value of Plan increased approximately 16.73% from the prior year 2023 Events: New Core Investment Lineup that took into effect June 16, 2023 Federal Reserve interest rate hikes Total contributions into plan were $7.1 million 15 Annual Report Highlights US Equities consistently the largest asset class in Plan Decrease in relative proportion of Stable Value/Cash Management category offset by increase in Balance/Asset Allocation category Little change in Guaranteed Lifetime Income, Bonds, Specialties, or International Equities 16 Total Market Value of Plan Assets as of December 31 st $200,000,000 $175,257,995 $174,820,254 $180,000,000 $152,787,496 $160,000,000 $140,000,000 $149,761,621 $120,000,000 $126,296,802 $100,000,000 $80,000,000 2019 2020 2021 2022 2023 Ratio of Investments by Type: Central San's ICMA 457 and 401(a) Plans 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 5.00% 10.00% ■■n MEN ■ �� I on. I III 0.00% c� cas F� o° c c \� �o, 00 `o \° `rov So l ro Gros \� �P\o JS \o c,Q sse �\G \Je Jro \>y D aP oc \e ee �e cro0 S`ro 0�roc \c`ec GJroiroc ■ 2019 - 2020 _ 2021 2022 r 2023 go 2023 Education & Outreach Efforts A designated Retirement Plan Specialist held 91 one-on-one meetings with participants A designated Retirement Plan Specialist conducted 11 webinars on various financial wellness topics for participants Certified Financial Planners held 34 one- on-one consultations with participants 46 webinars were conducted by Certified Financial Planners on financial planning and wellness topics 17 What's on the horizon? Execute 2024 participant education and outreach program Consider plan amendment for revokable auto enrollments with default contribution percentages (new employees only) Assess impacts of Secure 2.0 legislation and recommend plan changes to board if appropriate Roll out WellCents financial planning tool targeted for new employees IN i_ da; \1 �� I CENTRALSAN a 19 10