IMMP: In July 2012, you succeeded Walter Stampor, longtime executive director of the Retirement Systems of the City of Detroit. Did he offer any guidance or advice for leading the two multi-billion dollar retirement funds going forward?
Thomas: Absolutely! During the eight years Walter spent as executive director, I was the director over the Police and Fire Retirement System. The last two years of his tenure was spent as a training period where I was included in more issues that affect both Systems. Actually, the best advice he gave me was to “chill out”. Recognize what you can and cannot change and don’t stress yourself about it. There is always tomorrow.
IMMP: Wilshire Associates is currently the investment consultant for the Police and Fire Retirement System (PFRS) and the General Retirement System (GRS) utilizes NEPC as its consultant. How can using different investment consultants for the two separate pension plans help or complicate effective management?
Thomas: The Systems are dissimilar in several ways; non-economic assumptions, funding requirements, benefit provisions, etc… Having different consultants ensures each System is receiving service unique to their specific needs as opposed to a one size fits all approach. It also allows the staff the expertise of two high quality institutional consultants and the ability to leverage it to both Systems. We have doubled our research capabilities and alternative investment coverage.
IMMP: With more than 30,000-members, the Retirement Systems have faced some fiscal unrest lately with Detroit’s Chapter 9 bankruptcy filing. If approved toward the filing’s next steps, which could possibly take months before final answers are offered, what does this mean for active and retired city workers that are planning their retirement?
Thomas: It is business as usual. The emergency manager stated that he had no plans to make changes that might affect pensions or active pay before January 2014. We cannot offer advice on the unknown.
IMMP: Days before the Chapter 9 filing, the pension plans filed a civil action urging Ingham County Court Judge Clinton Canady III to approve an injunction to prevent Detroit’s Emergency Manager Kevyn Orr from proceeding with the bankruptcy status. The parties moved that both Orr and Gov. Rick Snyder’s actions were overstepping state law and would “result in the impairment of the City of Detroit’s pension benefits.” Does the pension office maintain this stance given the last few updates regarding the fiscal measure?
Thomas: The Retirement Systems maintain the position that the governor is required to uphold the Michigan Constitution which provides for the protection of accrued benefits.
IMMP: Right now, can you disclose some investment returns, funded ratios and liability numbers that the two pension funds are maintaining? What are some goals you hope to achieve during your tenure as the systems’ leader?
Thomas: The most recent actuarial valuations, June 30, 2012 show the General Retirement System as 77% funded, and the Police and Fire Retirement System as 96% funded. Preliminary returns as of March 31, 2013 show the GRS returns as 4.5% and 9.6% for the quarter and year, and PFRS returns as 5.7% and 7.1% for the quarter and year.
I came into this position with a few goals. Although we are considered advanced for a mid-sized fund, I would like to incorporate even more technology into servicing our members, financial and accounting preservation and board governance. We were one of the first Retirement Systems to utilize imaging technology. I would now like to evolve into becoming more green and reducing waste. Our staff has experienced tremendous turnover and attrition not to mention the uncertainty with the current state of affairs. I would love to restore employee morale to ensure the overall goal of providing excellent customer service to the members and beneficiaries of the fund.