Retirement board is financially prudent
This is in response to the Feb. 8 letter to the editor “D.C.’s fiscal health is more complicated.”
Although, as the headline indicates, the letter was focused on the District’s overall fiscal health, there was a paragraph that stated that “the D.C. Retirement Board believes in ‘active management’ and therefore pays large fees and underperforms simple benchmarking.”
To set the record straight, as of Dec. 31, 2016, 87 percent of the fund’s $7 billion total was invested in public equity and fixed income markets. Of that figure, 75 percent was invested in low-cost, index-tracking funds. In addition, as of Dec. 31, 2015 — our most recent benchmarking measurement — the total investment costs represented 0.525 percent of the fund, compared to the 0.621 percent benchmark cost that 15 similar public pension plan peers paid for the same asset allocation. Contrary to the letter’s assertion, by utilizing more passive investments than our peers, the board’s implementation style saved the fund about $5.7 million in investment management fees during calendar year 2015.
Further, the fully funded status of the District’s pension plan is viewed as a successful model for other state and local governments in that maintaining a viable pension program for police officers, firefighters and teachers preserves and protects the District government’s financing. The full funding of the pension plans has led to lower interest rates for D.C. government borrowing, resulting in lower costs for major projects like infrastructure improvements.
Information related to the fund’s investments is available online at dcrb.dc.gov.
Joseph M. Bress
Chair, D.C. Retirement Board