The Dirty Dozen

The Top 12 Mistakes We Believe Many Relief Association
Boards Have Made Regarding Their Pension Plan

  1. They have no investment policy statement, an outdated investment policy statement, or their investments don't coordinate with their investment policy statement.
  2. They have dysfunctional boards, frequent conflict, and a few vocal, opinionated board members dominate discussions.
  3. They react emotionally to major swings in the investment markets, often adding to equity securities at market tops, and becoming too conservative after market declines.
  4. They don't demand superior service from their financial advisors.
  5. They don't pay attention to details or keep good records. Meeting minutes, forms, statements, statutes, and bylaws are not kept in a centralized location.
  6. They don't seek ongoing continuing education with regard to investing and don't demand that their financial advisor provide it.
  7. They raise pension benefit levels too aggressively in good years, which then create actuarial funding issues following difficult market periods.
  8. They are either too conservative or too aggressive with their investment portfolios.
  9. They are not proactive in creating a positive relationship and effective communications with the city finance director or city council.
  10. They don't benchmark their advisory relationships to find out what the competitive landscape looks like from time to time.
  11. They favor certain professional relationships, creating a conflict of interest, rather than attending to their primary loyalty, what is best for the current membership and retirees.
  12. They have difficulty making critical decisions in a timely way.