EXECUTIVE SUMMARY: Staff requests approval to remain invested in the Principal U.S. Property Separate account for the Defined Benefit, Defined Contribution and Deferred Compensation retirement plans, subject to the changes effective January 4, 2021.
NARRATIVE: The Airport Authority provides at no cost to eligible employees a Defined Benefit (DB) Retirement Plan for employees hired before October 1, 2007, and a Defined Contribution (DC) Retirement Plan for employees hired on or after October 1, 2007. The Authority also offers a voluntary Deferred Compensation (457) Plan for eligible employees. All three retirement plans are administered through Principal Financial Group and managed by staff with assistance from Principal Financial Advisors and LPF Financial Advisors.
Each year staff, Principal Financial Advisors, Inc. and LPF Financial Advisors meet to review strategic asset allocation selections, analyze retirement plan assets, and control investment risk by diversifying assets by class, style, and investment manager. Staff with recommendations from Principal Financial Advisors' Inc. and LPF Financial Advisors choose which investments to allocate the DB funds, while participants of the DC and 457 Plans make their individual choices in which investment option(s), they choose to invest their funds.
Changes to the Principal U.S. Property Separate Account ("Separate Account"), effective January 4, 2021 requires the Authority to either approve to remain invested in the Separate Account, subject to the changes, or disapprove the transaction by requesting a redemption of our Plan's units prior to December 15, 2020. As of September 30, 2020, 5.9% of the DB Plan investments were invested in the Separate Account by the Authority, 1.3% of the DC Plan and 3% of the 457 Plan investments were invested in the Separate Account by individual participants.
A brief summary of the changes:
While evaluating the Separate Account changes, staff worked with Principal Financial Group, the Authority's investment advisors as well as legal counsel specializing in pension benefits to understand the options and make a recommendation to the board.
The benefit in approving the changes and staying invested in the Separate Account is to avoid the possibility of a withdrawal limit, potentially providing greater diversification, higher quality properties, reduction in fixed costs and to allow participants in the DC and 457 plans to make their own decisions if they want to continue to invest in the Separate Account.
We currently have four (4) employees in the DC Plan, and six (6) current and one (1) previous employee in the 457 Plan invested in the Separate Account. To fulfill the Authority's fiduciary duty
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