ELGIN POLICE PENSION FUND

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Cecily Mason
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1 Section 1 - Introduction ELGIN POLICE PENSION FUND REQUEST FOR PROPOSAL FOR INVESTMENT MANAGEMENT SERVICES The Elgin Police Pension Board is requesting proposals for independent discretionary investment management services for the Elgin Police Pension Fund ( the Pension Fund ). The purpose of these services will be to provide independent investment advice in conformity with all applicable laws including 40 ILCS 5/ Article 3 and the Elgin Police Pension Fund Investment Policy Guidelines. We are requesting each firm to furnish a proposal on the services to be provided and the applicable fees. If you have any questions regarding this Request for Proposal (RFP) please contact: Debra Nawrocki, City of Elgin Chief Financial Officer, Nawrocki_d@cityofelgin.org 150 Dexter Court, Elgin, IL (847) Questions must be submitted in writing via or the United States Postal Service. Proposals Those firms presenting, submitting or preparing proposals shall bear the sole responsibility for all costs incurred in this process. There is no expressed or implied obligation for the Elgin Police Pension Fund or the City of Elgin to reimburse responding firms for any expenses in response to this request. To be considered, seven (7) colored copies of the proposal must be received by Tuesday, July 31, 2018 at the above address by 2:00 PM. In addition, each firm must provide a color electronic copy (PDF) of the proposal by the deadline date. PDF copies of the proposal should be sent to: Debra Nawrocki, CFO, nawrocki_d@cityofelgin.org Proposals submitted will be evaluated by the Elgin Police Pension Fund Board and the Chief Financial Officer/Treasurer. The Pension Fund reserves the right to reject any or all proposals submitted and request clarification of information submitted. The Pension Fund Board may also call for new proposals. Elgin Police Pension Fund RFP Investment Services (1)

2 Section II - Description of Entity and Portfolio A. Description of Pension Fund The City of Elgin is a home rule community incorporated in 1836 under the laws of the State of Illinois. The City is located 35 miles west of Chicago and has a population of 108,000 as certified by the 2010 census. The Police Pension Fund is a Fiduciary Fund of the City for financial reporting purposes. The Pension Fund has 141 beneficiaries receiving benefits totaling $730, per month. There are currently 182 active sworn police officers contributing into the Pension Fund. The Fund provides retirement benefits and other benefits as outlined in the State Statutes to active, retired and former eligible sworn officers of the Elgin Police Department. The Elgin Police Pension Fund Board has five (5) members, two (2) are elected from the active members, one (1) is elected from the retired members, and two (2) are appointed by the Mayor of the City of Elgin. The City of Elgin has an appointed Chief Financial Officer (CFO) who is the Treasurer of the Pension Fund. The Treasurer is a non-voting member of the Pension Board. The Finance Department provides record keeping, accounting, pension benefit coordination and other support services to the Elgin Police Pension Fund. The Pension Fund also has an outside accounting firm, Lauterbach and Amen LLC, which provides accounting, tax and payroll services to the pension Fund. The Elgin Police Pension Board will be updating its Investment Policy Guidelines as of July 18, A copy of the new Elgin Police Pension Fund Investment Policy is attached. The Police Pension Fund is audited annually as part of the annual audit of the City of Elgin. The City of Elgin prepares an annual budget. This can be found at under the title of Government. An annual actuarial valuation is prepared by enrolled actuary, Timothy Sharpe. A copy of the most current actuarial valuation is attached. B. Cash and Investments The Pension Fund maintains an operating checking account from which the City of Elgin and member monies are received and from which benefits are paid. Excess funds accumulated from this account are transferred to the investment manager. At a minimum, the Elgin Police Pension Board requires all investments of the fund to be held in a separate custodial trust in the name of the Elgin Police Pension Fund. The current custodian for the Pension Fund is Wells Fargo. As part of this RFP, consideration may be given for separate custodial services. All current funds are invested in compliance with the currently adopted investment policy guidelines of the Pension Fund and applicable State of Illinois Statutes. The plan has assets totaling $117,496, as of May 31, Details of the investments are as follows: Elgin Police Pension Fund RFP Investment Services (2)

3 Fixed Income Manager Market Value Percent of Portfolio BMO TCH $18,734, % C.S. McKee U.S. Equity $18,745, % Vanguard Instl. Index Fund $24,245, % Vanguard Mid Cap Index Fund $7,574, % Kayne Anderson Rudnick $8,134, % Non-U.S. Equity Dodge & Cox Fund $4,360, % EuroPacific Growth Fund $4,551, % DFA Int. SCV Fund $5,864, % Harding Loevner EM Fund $5,911, % Real Estate Principle US Property $12,759, % Global Tactical PIMCO All Asset Fund $6,014, % Cash Equivalents Cash Account $41, % Checking Account $522, % Money Market Account $36, % TOTAL: $117,496, % Elgin Police Pension Fund RFP Investment Services (3)

4 Section III Scope of Services Required A. General The Elgin Police Pension Fund may engage the services of a qualified investment manager in the area of public employees pension fund management to provide discretionary investment advice and other related services as it deems in the best interests of the Pension Fund. The Pension Fund anticipates a three (3) year contract with provisions for an additional two (2) year agreement extension and an early termination clause as determined by the Board. B Scope of Work All services provided must be in compliance with the State of Illinois Statutes, specific to the Downstate Police Pension Fund and the Elgin Police Pension Fund Investment Policy Guidelines. C. Reports The Elgin Police Pension Board meets quarterly, and may call special meetings if needed from time-to-time. The Pension Board expects a written report supplemented by an oral presentation on the status of the Pension Fund s investments and activity, to the Pension Board at their scheduled quarterly meetings. The Pension Board also has an Investment Committee. This Committee meets as needed but often meets at least one time between quarterly board meetings. The Pension Board would also require a written report supplemented by an oral presentation on the Pension Fund s investments and activity. This oral report can be via tele-communications with the Pension Board s approval. Section IV Qualified Investment Manager The firm and all firm employees shall be in compliance and in good standing with all federal, state and local laws. All investment manager proposals must be in writing and must fully disclose both direct and indirect fees, commissions, penalties and any other compensation received including expense reimbursement. The Elgin Police Pension Fund investment policy guidelines must be a part of the contract. Also, the investment manager must acknowledge its fiduciary responsibilities in writing in compliance with State Statutes. In addition, the investment manager must acknowledge that they are at least one of the following: (i) A registered investment advisor under the Federal Investment Advisors Act of 1940, (ii) Registered as an investment advisor under the Illinois Security Law of 1953, (iii) Bank as defined in the Investment Advisor Act of 1940 or (iv) An insurance company authorized to transact business in the State of Illinois. Elgin Police Pension Fund RFP Investment Services (4)

5 Section V Proposal Submission Information A. Cover Sheet: Include the firm s name, address and telephone number. The name, address, phone number and title of the individual with the authority to bind the firm to a contract. Include the name, title, address, and telephone numbers (business & cellular) of the proposed account manager. B. Profile of the Firm: 1. Describe in detail the organization including the year it was founded. 2. The location of the office from which the work is to be done. 3. The number of professional staff (by staff level) employed at that office. 4. The number of investment professionals and their tenure with the organization. 5. How many employees/members of your firm have earned the Chartered Financial Analyst (CFA) designation? 6. Total tax-exempt assets under management for each of the prior seven (7) years 7. List of specific municipal or government accounts currently under management and total amount of plan assets. 8. List all investment professionals that have left your firm in the last seven (7) years and include their tenure with your organization. 9. A description of the range of activities performed by the office handling the engagement. 10. How often the firm is audited? Who is the current auditor and what are the qualifications of the auditor? C. Firm s Business Arrangements: 1. List brokers executing more than 10% of your dollar volume over the last 12 months and disclose their percentages. 2. List total value of soft dollars received over the last 12 months and their source. 3. List the custodians that your firm refers to its clients (if your firm does not offer custody services). Give a detailed description of each custodian including fees, and advantages and disadvantages of using the custodian. If your firm offers custodial services, please provide the same information. D. Specific Qualifications of the Firm: 1. The firm shall describe its qualifications, which shall include at least a list of each professional staff member to be assigned to the account, indicating staff levels by type, title and tenure with the firm. It is expected that each senior and higher level staff member assigned would have governmental, specifically Downstate Pension Fund experience, which should be noted. 2. Briefly describe the philosophy and methodology of your security selection for equities. 3. Describe the benchmarks that your firm feels the equity and fixed income portfolios should be managed against and why. Elgin Police Pension Fund RFP Investment Services (5)

6 4. Provide an example of your reporting format for quarterly meetings. 5. Provide a listing of returns, expense rations, manager tenure, AUM, standard deviation, alpha, beta and R-square for all mutual funds you recommend for municipal pension clients. 6. Submit composite performance data looking back from December 31, 2017 for the oneyear, three-year, five-year, seven-year and ten-year periods. Please provide equity and fixed income composite performance separately. The composite should only include Downstate Police and Fire Pension Funds managed by your firm. Specify if these returns comply with CFA Institute performance presentation standards. Fixed income returns should include accrued interest. E. Fee Schedule: 1. Proposals shall provide a description of the fee structure for each level or type of service being offered. 2. Include your proposed fee structure, including start-up fees, annual fees and any other fees. 3. Include a sample investment contract with fee schedule. 4. Include a list of electronic databases used for pricing data. 5. Identify the software used to implement investment decisions. 6. Include the source of bond pricing used by your firm and state under what conditions bond pricing maybe overridden by dealer quotes. F. References: Proposals shall include a minimum of five (5) references of Illinois municipal or governmental pension funds utilizing the firm for investment services for a minimum of three (3) years. Please identify a contact name, address, and phone number for each reference. Include a description of the scope of services provided, total amount of plan assets under management and duration of relationship. G. Other Information: 1. Provide a list of formal complaints, sanctions, lawsuits or litigations against your firm or its principal/owners/offers within the last seven (7) years. Did your firm or the individuals that would be working on this fund ever have to award damages to another party, specific to any of your firm s activity in the public pension fund marketplace? 2. Provide a list of any and all affiliates with financial institutions, insurance companies, mutual funds, and/or brokerage firms with a description of each affiliation. 3. Provide a list of all downstate police pension and fire pension funds that either terminated or did not renew their investment management relationship with your firm in the last seven (7) years. 4. State whether you are willing to acknowledge that you are a fiduciary of the fund as defined in the 40 ILCS 5/ , Illinois Statutes. Elgin Police Pension Fund RFP Investment Services (6)

7 5. Confirm that the firm has reviewed and understands the requirements set forth in the Illinois Pension Code (40 ILCS 5/3-101, et seq.), the Illinois Pension Investment Statute (40 ILCS 5/1-101, et seq.) and other applicable laws, as the same may apply to its fiduciary status including, but not limited to, permitted and non-permitted investments applicable for the Illinois Police Pension Fund Boards. Please state to the extent that the firm acknowledges that they will, at all-times, comply with the requirements of all investment laws, as may be applicable to its responsibility hereunder. 6. Describe your ability and willingness to assist the Elgin Police Pension Fund and the City of Elgin with information required to comply with Governmental Accounting Standards Board (GASB) Statement Numbers 67 and 68. The accounting standards require more information in the notes to the pension plans financial statements than has been required historically. Components of the required information revolve around the investing function of the pension plan. Accordingly, successful firms must be able to provide the information required by GASB Statement No. 67 and No 68 to the pension plan within two months of the plans fiscal year end (i.e., February 28 th each year). In addition, please note that GASB S-67 requires investments to be recorded on a tradedate basis. GASB S-67, paragraph 30 requires the following information to be disclosed related to the pension plan s investments: Pension plan investments: (1) Investment policies, including: (a) Procedures and authority for establishing and amending investment policy decisions (b) Policies pertaining to asset allocation (c) Description of significant investment policy changes during the reporting period. (2) A description of how the fair value of investments is determined including: (a) The fair value measurement as of fiscal year end. (b) The fair value hierarchy (level 1, 2, or 3) of input that was used. (c) Valuation techniques used (consistent with three approaches to measuring fair value per GASB 72 - market, cost, and income) or an investment valuation policy if available. (d) Changes in valuation techniques and the reason for the change, if applicable. (e) The reason(s) for nonrecurring fair value measurements, if applicable. (f) For investments valued at net asset value (NAV) instead of the fair value hierarchy: 1. A description of the investment s strategies 2. Redemption provisions 3. Redemption restrictions and period of lapse 4. Restriction on the ability to sell 5. Pending sale information Elgin Police Pension Fund RFP Investment Services (7)

8 (3) Identification of investments (other than those issued or explicitly guaranteed by the U.S. government) in any one organization that represents 5 percent or more of the pension plan s fiduciary net position. (4) The annual money-weighted rate of return on pension plan investments calculated as the internal rate of return on pension plan investments, net of pension plan investment expense, and an explanation that a money-weighted rate of return expresses investment performance, net of pension plan investment expense, adjusted for the changing amounts actually invested. Pension plan investment expense should be measured on the accrual basis of accounting. Inputs to the internal rate of return calculation should be determined at least monthly. The uses of more frequently determined inputs are encouraged. In addition, paragraph 31 requires the following: The assumed asset allocation of the pension plan s portfolio, the long-term expected real rate of return for each major asset class, and whether the expected rates of return are presented as arithmetic or geometric means, if not otherwise disclosed. In addition, paragraph 32 requires the following required supplementary information to be presented: A 10-year schedule presenting for each fiscal year the annual money weighted rate of return on pension plan investments calculated as required by paragraph 30b(4). Definitions of any of the terms used above are based on the glossary of Statement No 67. In addition, sample disclosures and required supplementary information can be found in Appendix C of GASB Statement No Indicate if your firm, its principals, and affiliates subscribe to the CFA Institute Code of Ethics and Standards of Professional Conduct. 8. Indicate the willingness of the firm to acknowledge that their employment authority, as may be delegated by the Board of Trustees of the Elgin Police Pension Fund, shall be limited to that of financial investment adviser/manager of the Pension Fund s assets. Also state the willingness of the firm to acknowledge that custody of the Pension Fund s assets shall be properly segregated as required by Statute, and that pursuant to its fiduciary status, it shall not engage in proposals and/or sale to the Pension Board, of any other products other than those which may directly pertain to its investment/management authority, such as the distribution of products for the sale of Elgin Police Pension Fund RFP Investment Services (8)

9 fiduciary insurance, actuarial services, legal services or other collateral services, which do not involve investment advise or management of the Pension Fund assets. Section VI Selection Criteria Firm s qualifications to provide the services described in this request for proposal, (as determined by responses to this request, references, and oral interview), shall be a factor in determining the successful firm. However, criteria may include, but are not limited to: compliance of proposal with request for proposal, price, ability to do the work, the firm s character and reputation, quality of other services performed, proven performance history, and any other criteria that the Pension Fund, in its judgment, represents the best and most favorable to the interests of the Pension Fund and the public. Selected vendors may be invited to oral interviews following an initial evaluation of proposals submitted. The Pension Board will review the proposals. The Board will then at the next regularly scheduled quarterly board meeting on October 17, 2018 interview selected firm(s) or will hold a special meeting at an earlier date to interview selected firms. Section VII Proposal Period and Contract Award As stated at the beginning of this RFP, seven (7) color copies of the proposal shall be marked Elgin Pension Fund Investment Advisor Proposal and submitted no later than 2:00 PM on Tuesday, July A colored PDF copy of the Proposal shall also be sent to CFO Debra Nawrocki. Proposals that are presented after the due date may be returned, unopened, to the firm or held by the Pension Fund and then discarded. Proposals submitted in accordance with this request for proposals shall be binding upon the firm if accepted by the Pension Board no later than 120 days from the submission deadline date. The contract will be in a form agreed to by the successful firm and the Elgin Police Pension Board and in accordance with State statutes. Section VIII Conflict of Interest No member of the governing body of the Elgin Police Pension Fund or the City of Elgin and no other officer, employee, or agent of this Pension Fund or City, who exercises any functions or responsibilities in connection with the carrying out of these services which this contract pertains, shall have any personal interest, direct or indirect in the contract. Elgin Police Pension Fund RFP Investment Services (9)

Park Ridge Firefighters Pension Funds Request for Proposal (RFP) for Investment Advisory Services February, 2015

Park Ridge Firefighters Pension Funds Request for Proposal (RFP) for Investment Advisory Services February, 2015 I. Introduction The Board of Trustees of the Park Ridge Firefighters Pension Fund (hereinafter