There was not a lot of good news for the Board of Selectmen February 16 when consultants met to discuss the performance of Newtown's pension and other postemployment benefits (or OPEB) funds, and the company that has been managing it for years.View a copy of the FIA report detailing Newtown pension/OPEB past performance here.

On September 10, the Board of Selectmen unanimously hired Windsor-based Fiduciary Investment Advisors, LLC (FIA) to oversee the town's pension fund. At that meeting, Devon C. Francis, CIMA, and Christopher J. Rowlins AIF, managing partner and senior consultant, told selectmen that they believed providing oversight might help the town's current pension firm Westport Resources and its advisory board meet or exceed annual investment benchmarks.

Selectman Herb Rosenthal, who attended the meeting, has been affiliated with Westport Resources since 1987 as a financial planner and risk management professional according to the firm's website.

Contacted for comment on the matter, Mr Rosenthal issued a reminder that "to avoid any potential conflicts of interest, I gave a letter to Pat and Will at our first Board of Selectmen's meeting of the new term on December 7, indicating that due to my relationship with Westport Resources, I would not participate in any matters relating to Westport Resources performance, retention, or fees."

Selectman Will Rodgers did not attend the February 16 meeting.

Ms Francis said part of her responsibility to Newtown as a client was to review the stated benchmark, benchmark performance of these key employee benefit funds against peers, and evaluate the fees being charged to the town, and from the fund, for its management.

In the relatively brief presentation, Ms Francis said that in the past three years, across almost all frames, the pension fund's performance "is all negative," adding that the fund has delivered a five percent return versus a benchmark of eight percent on an annualized basis.

She said performance was similar on a five-year basis.

Overall, Ms Francis said, the fund has underperformed the benchmark ten of the last 15 fiscal years, and her firm's analysis has indicated that Newtown's investment manager decisions were responsible for the pension/OPEB funds' down-trending performance.

"Certainly this is a pattern of negative performance to the benchmark," she said, adding that based on the allocation stances of investments, returns "should have been beneficial, which means the investment manager's selection was the primary detractor from relative performance."

FIA also analyzed Westport's funds "planned performance relative to a group of peers."

All six public funds the firm compared to Westport, Ms Francis said, are clients of FIA, and represent municipal pension plans within $10 million of Newtown's, with five years or more performance experience with FIA.

"There was no cherry picking involved," Ms Francis said of the comparative funds. The FIA analysis on that front showed that the Newtown portfolio lagged "significantly behind" the other public plans in performance, she said.

Turning to an analysis of fees the town is paying to Westport to manage the Pension/OPEB investments, Ms Francis said FIA found the fees were "very high for an investment advisor."

"That $192,000 that you do pay is something you are writing a check for," she said.

Another approximately $200,000 in fees are generated out of plan performance, she said.

Ms Francis observed that over the years, Newtown's funds have been handled by "a multitude of managers," and that "some of the fees for those managers are quite high - above one percent," which she described as "relatively high" in comparison to their peer group.

Overall, Ms Francis reiterated that Newtown's pension/OPEB funds displayed a weak performance to benchmark, against their peer group, and were subject to "relatively high fees."

First Selectman Pat Llodra asked if the FIA findings were shared with the town's Pension Board. Ms Francis replied that they were at a meeting in late January.

She said the board agreed that "the numbers are disappointing," and requested FIA pursue ideas for a new investment portfolio.

Following the presentation, Mrs Llodra asked the FIA representatives to develop a body of recommendations the pension trustees can consider.

"We want to keep them as engaged as possible," the first selectman said. "We want to be careful and respectful of the work by our pension board."

The selectmen requested that the FIA representatives come back to Newtown on March 7 with members of the Pension Board to "decide what changes should be made."