Wednesday, January 23, 2019

City: Committee Has Final Say in Pension Investments, Not Mayor

Posted By on Wed, Jan 23, 2019 at 1:15 PM

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After being advised not to invest a portion the city’s $2.4 billion pension money in a local nonprofit’s investment fund, the city said the final decision will be up to the city’s pension investment committee.

The city was asked in December by the nonprofit Epicenter to allocate a portion of Memphis’ pension fund to a pool of money used to invest in entrepreneurs here.

Epicenter’s aim is to aid 1,000 entrepreneurs, including 500 new firms by 2025, while the nonprofit’s ultimate goal is to raise $100 million to fuel a 10-year strategy generating resources in and access to capital, talent, local customers, and technology commercialization.

The request by Epicenter for $10 million from both the city and county funds was reviewed by each administration's respective adviser.

After a preliminary review, the city’s Atlanta-based pension consultant, Segal Marco Advisors, recommended on Friday that the city not invest the money into Epicenter’s fund, as the nonprofit doesn’t meet the city’s rules requiring that money be handled by organizations with “demonstrable financial stability” and a “competitive record of performance.”

In a letter to the city, the consultant agency’s vice president Rosemary Guillette also said that per city rules, the city’s pension fund is to be “invested for the exclusive benefit of the plan participants and solely in their interest.”

“Our preliminary assessment is that the Epicenter Fund does not meet either of the guidelines listed above and does not meet the fiduciary standards of care needed for a pension fund investment,” Guillette said. “Therefore, Segal Marco Advisors cannot recommend this investment opportunity for the pension fund.”

In response to a Tuesday story in The Commercial Appeal entitled “Should city pension funds finance Memphis’ economic ambitions?," which reported that “it’s too soon to say whether Memphis Mayor Jim Strickland will follow Atlanta-based pension consultant Segal Marco Advisors recommendation,” the city said on its Facebook page Wednesday that the decision is not the mayor’s:

“As this reporter was told, the mayor has no input in any pension investment,” the post reads. “The reporter was also informed the pension investment committee has the sole authority regarding investment of pension funds, and that the mayor is not on the committee.

"In addition, based on the advice of the adviser, the chief financial officer will not present investment to the committee. End of story.”

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