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8.24.06 M.U.D. pension performance is good, board assured An independent analysis indicating that Metropolitan Utilities District's pension is in sound shape isn't quelling all concerns on the M.U.D. board. John Maginn told the board Wednesday that the district's pension adviser, DeMarche Associates Inc., has performed "very, very satisfactorily." Maginn is a retired chief investment officer from Mutual of Omaha and has formed his own consulting business, Maginn Associates Inc. DeMarche has been the district's pension adviser more than 20 years, and the district is exploring whether to change advisers when the current contract expires in December. Board members John McCollister and Mark Doyle voiced dissatisfaction with DeMarche's work. For the first six months of this year, for example, the fund has performed below its benchmarks. "My gut is that they're a little complacent," Doyle said. McCollister also faulted the fund's low overall earnings, which mirror the district's target of 7 percent. Maginn told the board that M.U.D. has an older work force, which means the adviser should take fewer risks with the money. A 7 percent target, he said, is in line with what corporations are forecasting for their pensions. After hearing Maginn's presentation, McCollister said he was somewhat reassured. He said the district needs to examine other options -- something Maginn will be asked to do. From 2000 to 2005, the fund slightly exceeded its target earnings with a return of 7.1 percent, Maginn said. Although performance is off this year, those earnings are above the 5.4 percent benchmark for similarly invested funds from 2000 to 2005. Maginn also said DeMarche made changes that protected the district during the bear market and slow recovery of the past several years. DeMarche charges M.U.D. $29,000 a year, whereas other consultants typically would charge $70,000 to $100,000, Maginn said. M.U.D.'s $224 million pension is fully funded, with a slight 1 percent to 2 percent surplus. |
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