A stress test utilizing various economic events was presented to the Board of Trustees at the September 2017 Regular Meeting. The Board and staff utilize tests like this to develop the most fiscally prudent investment strategy.
A copy of the Stress Test can be viewed here.
A pension trust fund of the City of Chicago, the Fund is a single employer defined benefit plan established in 1921. Members of the Fund are employees of the City of Chicago, Chicago Board of Education, or the Municipal Employees’ Annuity and Benefit Fund of Chicago who are not participating in another pension fund. A board of (5) members constitutes a Board of Trustees authorized to carry out the provisions of the Illinois Pension Code. The Board consists of the City Treasurer, City Comptroller, and (3) elected employee contributors of the Fund.
The Retirement Board has the power and duty to invest the reserves of the Fund in accordance with the Illinois Pension Code. The Board invests Fund reserves under the "Prudent Person Rule", which states:
"A fiduciary with respect to a retirement system or pension fund… shall discharge his or her duties with respect to the retirement system or pension fund solely in the interest of the participants and beneficiaries and…" will invest Fund reserves "with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matter would use in the conduct of an enterprise of a like character with like aims..."
The Board takes necessary steps to set goals and objectives of the investment portfolio solely in the interest of the participants and beneficiaries of the Fund. Steps include:
- Determine an appropriate rate of return objective within an acceptable level of risk.
- Incorporate an allocation of assets focused on achieving the determined risk/return objectives over time.
- Ensure the necessary liquidity to meet monthly member benefits.
- Retain the necessary advisors and staff to implement, monitor, and evaluate the Board's investment goals and objectives.
Based on these steps, the Board set the following performance goals and objectives for the Fund's investment portfolio:
- Achieve, net of fees, an actuarially assumed annual rate of return over time.
- Outperform, net of fees, a policy benchmark over a market cycle (3 to 5 years) within an acceptable level of risk.
- Rank in the top half of the Investment Consultant's universe of institutional investors with similar risk/return parameters consistently over time.
- In conjunction with receiving the actuarially required contributions, to fully fund the actuarially accrued liability - entry age, over time.
The Fund is governed in accordance with the Illinois Compiled Statutes, Chapter 40 Pensions, Act 5 Illinois Pension Code, Articles 1, 8, and 20. The statutes can be viewed on the State of Illinois website www.illinois.gov.