Submitted By: Finance and Administrative Services
Prepared By: Brian Brower, Assistant City Manager
Matthew Schmelzel, Senior Management Analyst
Subject:
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CONSIDERATION OF A RESOLUTION ADOPTING A REVISED PENSION INVESTMENT POLICY NO 202-2
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Summary:
The City Council is being asked to consider a resolution adopting a revised Pension Investment Policy No. 202-2 for the City’s legacy retirement plan, the City of San Clemente Employee Retirement Plan (CSCERP). The proposed revisions update the policy’s governance, investment oversight, and reporting provisions to reflect the plan’s current structure.
Background:
During the February 28, 2023, Long-Term Financial Plan (LTFP) meeting, the City Council approved changes to the Coastal Animal Services Authority (CASA) pension plan. As a result, pension administration services and participation for active CASA employees were transitioned from CSCERP to CalPERS. Since the transition, the remaining CSCERP plan no longer has active participants and consists solely of retired and inactive members. The City Council directed staff to update the Pension Investment Policy to address the changes to the plan and its ongoing administration.
Discussion:
The proposed revised Pension Investment Policy and Procedure incorporates the operational and governance changes resulting from the transition of active CSCERP participants to CalPERS. The proposed revisions address the following areas:
Responsibilities: Clarifies plan oversight and administrative responsibilities, including the role of the Pension Committee in ongoing administrative coordination and the role of the Investment Advisory Committee in investment oversight, investment selection, and periodic policy review. The policy also reaffirms the responsibilities of the investment manager, investment consultant, and custodian.
Reporting: Enhances quarterly reporting requirements to provide greater transparency and oversight of plan investments. Required reporting includes investment performance and rates of return, comparisons to established benchmarks, compliance with the approved asset allocation, and investment policy compliance.
Terminology and Clarifications: Updates certain investment-related terminology and makes other minor administrative and technical updates to improve consistency and clarity.
Considerations Identified by Staff:
The proposed revisions provide a clearer governance framework, define responsibilities, and establish reporting requirements to support effective oversight of the remaining CSCERP plan and its investments. The Investment Advisory Committee will periodically review the policy and make recommendations for updates.
Council Options:
• Adopt Resolution No. 26-145, which would repeal and replace Policy and Procedure 202-2 - Pension Investment Policy.
• Modify and adopt Resolution No. 26-145
• Continue the item and provide alternative direction to staff.
• Do not adopt Resolution No. 26-145
Environmental Review/Analysis:
Not a “project” under the California Environmental Quality Act.
Fiscal Impact: There is no direct fiscal impact associated with adoption of the revised Pension Investment Policy. The updated governance and oversight framework is intended to support prudent investment management and improve alignment with the City’s investment objectives.
Potential Action(s):
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If the City Council concurs with the information provided within this staff report, moving this item without modifications would result in adoption of Resolution No. 26-145, which would:
1. Repeal and Replace Policy and Procedure 202-2 (dated December 18, 2013) and adopt a revised Pension Investments Policy and Procedure.
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Attachment:
1. Resolution 26-145
Exhibit A - Revised City Pension Investment Policy and Procedure
2. City Pension Investment Policy and Procedure No. 202-2, dated December 18, 2013 (modifications in redline)
Notification:
San Clemente City Employees Association