Meeting Thursday, the board unanimously approved a 3 percent raise in pensions on the first $14,000 of pension income. Board members said state guidelines allow annual hikes of up to 3 percent. The amount of income to which the increase applies is limited to target lower-income retirees, often the surviving spouses of former city workers.
Executive Director Karen L. Lanto said there are 757 city retirees in the pension system, 341 of whom receive less than $14,000 annually. In recent years, the board has continued to offer a 3 percent annual hike despite a recessionary economy. The board also met with its investment consultant, Christopher F. Kachmar of Fiduciary Investments Advisors, LLC, and with Paul Todisco from the statewide Pension Reserves Investment Management system. The Pittsfield system placed more than 90 percent of its investment portfolio with PRIM in 2007-08 following losses during the depths of the recession. PRIM manages 90 percent of the city system's investments. That allows the system's investments to be pooled into a much larger statewide fund, where it might expect a higher rate of return. That fund now stands at $52 billion.
Berkshire County Retire ment System investments also are managed by PRIM, along with 20 other entities in the state, according to the website. For the calendar year ending Dec. 31, the PRIM fund and Pittsfield system's portfolio showed modest but solid growth, Kachmar said. The "tailwinds" of a growth year in the markets was reflected in the system's investments, he said.
"It wasn't a great year in the markets, but it was OK," he said, with growth at 2 to 2.5 percent overall.
The Pittsfield system assets stood at $91.1 million at the end of December, Kachmar said. Pittsfield's remaining investments, less than 5 percent, are in other funds invested for a set number of years.
Todisco said that among recent investment changes at PRIM were a wider diversification of assets among a range of investments, which has served the fund well during the current economic and investment climate. The S&P 500 level in recent years, he pointed out, has been one of sharp peaks and valleys.
A new management structure at PRIM, with more involvement by the executive director Michael G. Trotsky, and a close focus on studying risk scenarios - like the "fiscal cliff" and other government-related crises - and preparing for various eventualities is now in place, Todisco said. In hiring firms to make investments, PRIM staff members are taking a more active role, he said, and there is a strong effort to attract more firms to bid for contracts with the board.
Closely resembling the PRIM fund performance, the Pittsfield portfolio has shown a better than 13 percent gain over the past year and 9 percent over three years.