Episode 2, Understanding Tier 2 Benefits 1.23.24 CTPF Webinar

Director Carlton W. Lenoir Sr.’s reply, led to more unanswered questions, that I will present in another episode. For this podcast, I would like to shed some light on the fiduciaries who allowed this scandalous event to happen. Then end with actions that will help hold our fiduciaries accountable and end Tier 2 once and for all. 

The first paragraph of the Executive Director’s reply states, “CPS asked us to include their supplemental savings vendor in the upcoming Tier 2 webinar”.  My understanding is that the CTPF Board of Trustees governs our pensions, NOT CPS. In addition, during the webinar, Kristina Betke, member service representative and pension counselor said, “I’d like to thank Jack Silver for this important collaboration as well as the representative that we have here from Corebridge Financial David Oulvey.”  Jack Silver is the Chair of CTU’s Pension-Insurance Committee. David Oulvey per his linkedIn profile is District Vice President at VALIC Financial Advisors, Inc.

Second, why would we “hand-off” anything to (what all fiduciaries should know to be) the industry that has replaced many Defined Benefit pension plans?  As we researched the history of 403(b) and the like, we found that, over time, through regulation changes and plan design mandates, the three predominant types of defined contribution retirement plans: 403(b), 401(k), and 457(b) have grown more similar.

Third, if our Executive Director Carlton W. Lenoir Sr. is promoting “three-legged stool” marketing scheme, then he is doing a great injustice to our members.  Most working Americans are far behind in saving for retirement, not only in their supplemental plans but in terms of their total assets. We also know teachers have been negotiating to reinstate extended pay, so they are not struggling over the summer months. 

Our responsibility and loyalty are to the members. We must ensure that all contributors can, if they choose, live on the income they have saved for, and guaranteed when they retire in this Defined Benefit plan. Let’s NOT follow what private companies have done with the profit and nest eggs of hard-working Americans.

Actions: Attend the January 31,2024 Town Hall Meeting. Bring your questions and suggestions on how we can collaborate to end Tier 2.

Thank you for listening. Look for more news and activity from the Pension Advocacy Group on Facebook using PensionAdvocacyGroup@gmail.com, and on X (formerly known as Twitter). 

 This is Tina Padilla – until next time. Ciao, Ciao for now!

Recap of CTPF Bord of Trustee January 18, 2024 Meeting

 This podcast will educate you on how your pension plan at CTPF is being managed and what steps you can take to safeguard your "Defined Benefit." 

Good afternoon. Today is January 19th, 2024 and this is Tina Padilla, the founding member of the Pension Advocacy Group (PAG).

In this podcast, I will recap and comment on the monthly CTPF Board of Trustees meetings.  In addition, when the video recordings of these meetings become available, I will alert and direct everyone to the CTPF website where it has been promised, that they will be posted.  

In today’s episode, along with the updates from the January 18 Board Meeting, I will share ideas for some actions that you, the contributors, and beneficiaries of the Fund, may be interested in engaging in.

Let’s go, During the Lobbyist report, Mr. Clayborne, the Fund’s lobbyist, shared, that at this time, HB4098, a bill aimed at improving Tier 2, is in a holding pattern, and Tier 2 overall is under review. The number of that bill is likely to change when the cost and other language is negotiated.

That being said, I believe now is a perfect time, for PAG and the CTU’s  Tier 2 committee to work together to draft language supporting a  repeal of Tier 2, which  Trustee Washington the chair of the Pension Laws and Administrative Rules, and our lobbyist can present to legislators.

From the Executive Director’s report, we learned that the final collection of 2023 funds has been received from CPS. -------------The State of Illinois has also made regular payments for its 2024 obligations. However, multiple checks and balances need to happen for PAG to confirm the accuracy of this report.

As for the IT project named TITUS, a very expensive but needed upgrade to our IT infrastructure, and everything IT is on track and on budget.

Executive Director Carolton Lenoir Sr. reported that investment staff have been conducting regular due diligence to mitigate the risk of significant investment losses. However, the FOIA requests that I submitted for two of our investments were denied.  

It is in our statute and investment policy that trustees must participate in annual due diligence of all investment managers. 

#11 of the agenda which includes a report of the committee on Claims, MSU Jan 2024 Wrap-up Code Report, Board performance Report, Admin Expenses, FY 2024 Administrative Expense Budget Report, and 9 more items moved to the Omnibus, were approved with no discussion or explanation.

If you have any questions, please contact the trustees. You can find trustee email addresses by searching on the Fund’s website, CTPF.org.  

Dates to remember:

On January 23, 2024, CTPF will host a webinar, called Understanding Tier 2 Benefits. Tier 2 teachers are encouraged to attend and bring questions about how to repeal Tier 2, which is currently not compliant with the safe harbor rule and is economically unjust.

There is no monthly board meeting scheduled for February.

However, two important dates to remember are the First Friday/ Investment Committee Meeting on February 2, 2024, at 9:30AM.

On February 27, the Investment Committee will meet at 9:30AM, followed by Finance and Audit Committee meeting. All meetings will be conducted in a hybrid format, and signup information for virtual and in-person attendance is available on the CTPF website.

Thank you for joining me for our in-au-gu-ral podcast.  Look for more news and activity from the Pension Advocacy Group on Facebook, and on X (formerly known as Twitter).  This is Tina Padilla – until next time. Ciao, Ciao for now!

Dec. 14, Board of Trustee Meeting/Let's keep score: Good- 5 pt. Bad- 0 pt. Ugly -5 pt.

 

At the December CTPF board meeting, Fernando Vinzons CIO, made a board action request to approve $10 million with Farol Asset Management Fund III.  Why? 

 In 1996, CTPF began its private equity portfolio. The trustees, investment staff, and consultants agreed to follow a disciplined approach to implementing this investment vehicle. They conducted an annual pacing study which is based on a refreshed total plan, private equity portfolio cash flows, and valuations. Before making any investment commitment, full due diligence will be conducted, and successful legal negotiation will be carried out.

During the February 28, 2023 meeting, Gary Robertson, the Senior Vice President private equity consultant from Callan, provided an update on the private equity commitment pacing study. The study outlined the expected model commitment over 10 years. The portfolio is planned to be diversified by investment vehicle implementation, including 46% Fund-of-Funds, 43% Direct investment with MWDBE managers, and 11% Direct investment with Developed managers. Additionally, strategy-type diversification includes 8% Special Situations, 10% VC/Growth, 42% Mid/Small Buyouts, and 40% Large Buyouts. Geographically diversified investments include 1% in Emerging Markets, 10% in developed non-US, and 89% in the US. Robertson suggested reinvesting with five specific managers.

On December 14, 2023, I submitted a FOIA request, hoping to receive a full investment due diligence on the manager.  Unfortunately, I did not receive what I was expecting, which left me with even more questions, for starters, what is the opportunity cost associated with this plan and predetermined managers?

Reasons Warren Buffet advises public pension to beware of private equity, “little supply of great business to buy”, the reputation of private equity manager, is “typically very dishonest” and “it requires a very high level of expertise”. 

1.     KKR XIV named for the Developed Manager https://www.buyoutsinsider.com/kkr-is-expected-to-launch-next-flagship-fund-later-this-year-adviser/

2.     Mesirow IX-B Developed Manager Co-investment chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.sec.gov/files/litigation/admin/2022/34-95351.pdf

3.     Farol III Direct Minority Women Disadvantage Business Enterprise (MWDBE)  https://pitchbook.com/profiles/fund/22718-17F#overview

4.     NMS V (MWDBE)   https://pitchbook.com/profiles/fund/18215-56F#overview

5.     Turning Rock II (MWDBE)   https://www.prnewswire.com/news-releases/turning-rock-partners-closes-fund-ii-301599106.html

Happy Journey

It's hard to believe that a year has passed since I completed my service as a mathematics teacher for Chicago Public Schools, and my fourth term as an active Teacher Trustee on the Chicago Teachers' Pension Fund. Yesterday, as we were bringing in the new year, I was asked to share what I am most grateful for. The first thing that came to mind was, "I'm grateful and hopeful for having the opportunity to continue my fiduciary and socially impactful work in 2024." Retirement is a significant milestone in an educator's career. It marks the end of their teaching journey and the beginning of a new chapter in their lives. In Chicago, teachers usually retire after completing several years of service and reaching a specific age. Upon retirement, teachers may be eligible for various benefits when they are part of a Defined Benefit retirement plan. These benefits include a pension, healthcare coverage, and other benefits that are constitutionally protected. For more information on this, please visit the website. A Defined Benefit plan, more commonly known as a "pension," is crucial for teachers to ensure their financial stability during their retirement years. It involves saving our earned income as a community throughout your teaching career. It is a guarantee of retirement certainty and security. Unfortunately, laws were changed that affected those who started their teaching career with Chicago Teachers after January 1, 2011. In our work to restore CTPF, we are asking for this law to be repealed. Teachers may also consider making informed decisions about their supplemental retirement finances, such as 403(b) plans. (403(b)s are earmarked for non-profit organizations and certain government employers, while 401(k) plans are offered by for-profit companies). In addition to financial considerations, retirement can also bring about lifestyle changes. Many retired teachers choose to pursue hobbies, travel, or engage in volunteer work. Some may even continue to be involved in education by becoming mentors and tutors, or working as guest teachers in schools. Overall, teacher retirement is a well-deserved reward for their years of dedication and service in shaping the lives of students. Most importantly, it provides the well-earned and gold standards for teachers. What does retirement mean to you? As for me, it provides time to think about what I find purposeful and reflect on my other interests such as art. I created this piece with a broken lamp, unused candle holders, and Play-Doh. Even though the lamp was broken, it has not outlived its usefulness. Every time I flip the switch, it lights up the room.