Financial investment returns are up considerably under a new investment structure in Bloomfield Township, financial advisors said on Tuesday, February 12, at the township's financial sustainability meeting.
The committee, which was formed in 2015 to assist the treasurer and trustees in making better informed financial decisions, is a non-decision making advisory board. The February 12 meeting was held to discuss finances related to its quarterly review and annual 2018 financial investments related to employee and township benefits.
“We have had a big transition from our former structure to our current structure, and we think we significantly saved in fees,” said Bloomfield Township Treasurer Brian Kepes. “It has made it much simpler and we have much more control, and it is easier for our employees to use. Our returns are very much market driven.”
The township's restructuring of a longtime contract with Prudential Retirement Insurance and Annuity, which holds the township's defined benefit pension plan, was done after trustees became aware in 2014 that the plan was drastically underperforming, and had been since about 2004. Prudential manages about $150 million in a guaranteed deposit account yielding about 2.5 percent, while the rest of the township's assets, about $65 million which is with AndCo, and has yielded about 18 percent, is invested in equities.
On the employee investment side, Kepes said investment options have been scaled down to a reasonable number, while investments on the township side have increased considerably over the past year. He said benefit plans now have reduced expenses for new police and fire employees.
“We had about 180 different investment options for an employee that could be in these funds, which was kind of crazy, and we weren't getting any efficiencies from doing it that way. Now we have about 28 funds,” Kepes said. “Comparing the old and new cost structure with actual pay, by the time a new employee retires they will have $200,000 more under the new advisors and fees. We will have reduced costs by about 50 percent and made it much easier.”
On the township's finance side, Kepes said returns are up when compared to yields from previous years.
“For reserves, if you look back four or five years, we made or lost about $50,000 cumulatively,” Kepes said about the previous investment structure. “We have taken that and have about $350,000 to $400,000 in returns in the year of our savings.”