Pension Investment Monitoring and Advisory Services

The Vendor is required to provide investment monitoring and advisory services in support of the city’s oversight of its independently managed pension systems: the system and the employees’ retirement fund (“ERF”). Both agency and ERF are single employer, contributory defined benefit plans.
- Responsible for:
•    Reviewing and evaluating the investment practices, policies, and performance of both agency and ERF;
•    Providing recommendations, as appropriate, to improve each system’s investment-related policies, procedures, and practices; and
•    Reporting findings and recommendations to the City and the pension systems.
- Must demonstrate deep expertise in the evaluation of defined benefit pension plans, including:
•    Asset allocation analysis
•    Risk-mitigation strategy evaluation and recommendations
•    Investment manager selection assessments
•    Cost and fee benchmarking
•    Development or refinement of Investment Policy Statements (“IPS”)
- Provide the City with findings, evaluations, and recommendations related to each system’s:
•    Investment policies
•    Governance framework
•    Asset allocation processes
•    Investment performance
•    Operational practices
- Investment Policy and Compliance
•    Policy Inventory & Review. Identify and review all existing investment policies, procedures, and practices—both formal and informal—relevant to investment decision-making and oversight.
•    Best-Practice Comparison. Compare existing policies and procedures against recognized industry best practices, noting gaps and recommended improvements.
•    Adherence Assessment. Evaluate whether the board, internal staff, and external consultants are adhering to established policies; identify any practices inconsistent with written policy.
•    Clarity, Roles and Objectives. Assess whether roles/responsibilities are clearly defined in the policy; confirm that policies set measurable manager outcomes and specify performance time horizons.
•    Integration with Plan Needs. Evaluate integration of policy with funding and benefit policies and determine if objectives are being met.
•    Stress Testing & Review Cadence. Test the sustainability of policies under historical stress scenarios (10/20/30-year periods) and review the frequency and rationale for policy updates.
•    Methodology Disclosure. Provide a detailed description of evaluation criteria, metrics used, and calculation methodologies employed. 
- Asset Allocation
•    Target Allocation Determination. Document the process and governance for setting target allocations, review cadence, and responsible decision-makers.
•    Risk Tolerance and Methods. Define how overall risk tolerance is measured (e.g., volatility, drawdown, tracking error) and the methodology used to evaluate strategic and tactical asset allocation.
•    Actuarial Alignment. Assess alignment between asset allocation and actuarial assumptions including whether allocation is chosen to meet an assumed rate or derived from prudent return/risk modeling.
•    Peer Comparisons. Compare allocations against peer systems to contextualize positioning and diversification.
•    Expected Risk/Return by Asset Class. Provide expected risk and expected rate of return for each asset class, including time horizons and assumptions; evaluate active vs. passive considerations.
•    Alternative and Illiquid Assets. Review appropriateness of alternative/illiquid allocations given system size/expertise; assess selection criteria, IPS limits, and valuation methodologies (and why selected methods are appropriate).
•    Cash Flow and Liquidity. Analyze future cash flows and liquidity needs, incorporate funded status, inflow/outflow dynamics, liability characteristics, and stress testing.
•    Asset-Liability Integration. Identify timing and results of the last asset-liability study; recommend updates and integration into allocation decisions.
- Investment Governance
•    Governance Structure and Transparency. Review governance policy statements and transparency practices (e.g., public availability of policies, agendas, and minutes); evaluate board meeting frequency and investment focus.
•    Board Expertise and Education. Assess trustee backgrounds, ethics/investment education requirements, onboarding/training cadence, and understanding of fiduciary responsibilities.
•    Delegation and Accountability. Evaluate delegation of authority among board, committees, staff, and consultants for asset allocation and manager decisions; review controls ensuring policy adherence and performance oversight.
•    Periodic Governance Review. Determine whether governance processes are periodically reviewed for appropriateness and effectiveness.