1. http://www.xmind.net/share/DoubleWhitehouse/what-professional-financial-officers-need-to-know-in-order-t-1/
2. Lecture "Take Homes"
   1. Increasing the efficiency and effectiveness of DC plans, including 457 plans, immediately increases public employee retirement income (PV) by tens of millions of dollars
      1. Failure to address the old paradigm of record keeper control of investments out of which these opportunities arise, is a breach of fiduciary duty
         1. A 457 plan is tax sheltered only because 457 plan monies are held in trust
            1. Trustees of IRC trusts must act exclusively in the best interest of plan participants
            2. A trustee's fiduciary duty under an IRC trust includes the prudent management of expenses
   2. Appropriate and effective DB / DC plan design is not a fiduciary obligation
      1. Rather, plan design is evaluated based solely on whether, and the extent to which, it supports the mission of the government plan sponsor
   3. Every DB and DC pension plan needs a funding policy; but funding policy objectives are largely the purview of the government plan sponsor
   4. A trustee fiduciary has an obligation to create and manage plan investments in support of that funding policy
      1. For example, if a DC plan sponsor pays for adminstrative expenses, the trustee fiduciary is largely precluded from using mutual funds that pay revenue sharing to the plan
      2. In a DB plan, an investment policy set by the trustee fiduciary must establish investment volatility constraints consistent with the plan's funding policy objectives, given:
         1. The current funding status of the plan
         2. Reasonable expectations as to the level and timing of future contributions and expenses
         3. Expected benefit payment obligations in the current year, and for each future year
   5. Efficient and effective plan administration is a fiduciary obligation
      1. Fiduciary and "management" audits, and/or properly constructed RFIs and RFPs, are valuable and often necessary fiduciary tools
      2. Waste is a breach of the public trust as well as a breach of fiduciary duty
3. By Darlene Maleney and Herb Whitehouse FGFOA Annual Conference, Orlando, FL, May 6, 2012
4. Or: "How to sucessfully develop and implement alternatives to defined benefit pension plans."
5. Case History Paradigms
   1. Orange County Florida 457 DC plan
      1. Three vendors, each offer funds consistent with vendor profit objectives
      2. No fiduciary oversight of investments
      3. No working "path to portfolio" for employees, and no "outcome" orientation to participant services
      4. $1M a year in waste
   2. Infirmary Medical System, Mobile, Alabama
      1. DB plan frozen
      2. Higher contribution to DC plan for new employees
         1. Topic
      3. Many highly skilled essential employees eligible to retire in 7 to 15 years
      4. Enhanced DC plan inadequate to either recruit or retain mid-career employees
      5. Demand for skilled care services and skilled staff to provide that care, were projected to rise significantly over that same 7 to 15 years
   3. We will discuss the evaluation of each situation, and the design, governance, and administrative solutions provided for each
      1. Orange County
         1. A fiduciary governance structure and ongoing fiduciary oversight
         2. Key to administrative savings, to enhanced participant services, and to fiduciary investment oversight was the use of a single record keeper and participant service provider with fiduciary rather than vendor control of investments
         3. Enhanced participant services
      2. Infirmary
         1. Reopen modified (cash balance type) DB plan
         2. Reduced DC plan contributions
         3. A "TRO" structure established to jointly serve DB and DC administration and participant services, as well as actuarial funding policy and contribution and expense support
            1. Increased level of and coordinated participant and plan sponsor services
            2. Key was using coordinated single data feed to support DB and DC administration, combined participant services and communications, and actuarial work, including reduced annual "data scrubbing"
6. Pension plan design must be ordered to meet City, County, and other Constitutional government entity "Mission Obectives"
   1. A government's mission objectives are achieved largely by people with the right mix of experience, education, and longevity/consistency of tenure
   2. The tax advantages of "qualified" deferred compensation enhance the recruiting, retention, and reward aspects of DB and DC pension plans
   3. Younger employees overwhelmingly value DC type benefits
      1. This is less true in tenured and career employment employment
   4. Recruiting and retention of skilled and educated mid-career employees is highly constrained without a DB pension plan
7. We will cover this subject in three ways: Approximately 30 minutes for each segment
   1. Expository "lecture"
   2. Examples from our personal experience
   3. Dialog and ducussion of audience issues and concerns