Special Board of Aldermen 09-21-2021 Page 14
Marty Karlon, Director of Communications and Legislative Affairs
The auditors may have an issue with it as well.
Steve Bolton, Corporation Counsel
It seems like there's a willingness to deviate from that principle in the other direction. Thank you.
Alderman Dowd
Yes. | could be wrong and correct me if I'm wrong but it appears to me like you're making your investment decisions on
a very short term basis and because of a downturn in the market. The other thing that happens over that period of time
is spikes in the market. And if you look at the Standard and Poors the stock market over the last 40 - 50 years, it's ona
pretty even growth. | mean there are spikes one way or the other but it's growing. Same thing with the bond market. So
why are you not using the average return? You know, like 1% last year, 26% this year, somewhere in between because
the numbers that you're using and the goals that you're shooting for are hurting cities and towns. We can't take any
more hits like we've had in the last four years. | don't know if you have any plan but, you know, I'm hoping that things are
going to either stay the same or get better as far as the pensions concerned going forward.
Jan Goodwin, Executive Director of NH Retirement System
Mr. Alderman, | can assure you that NHRS is a long-term investor. We have a very long-term horizon for our
investments. And because we are a long-term investor rather than a short term investor, we can invest in assets like real
estate and private equity which have a long-term horizon so that we can get the excess returns that those investments
have. Stocks - you are correct. They have done very well over time, but they have had, as you noted, significant peaks
and valleys. That's why we are committed at NHRS to have a diversified portfolio so that when one type of investment
doesn't do well, another type typically does so we can have good risk adjusted returns over time.
Alderman Dowd
But across the board, how can you with $11 billion come up with 1%? To me that your investments should be drawing
far more than that. You can get 1% on a savings account. | mean, so why are we reflecting the 1% back on the cities
and towns for that year? And why aren't we now saying we got 26% in this past year, let's change with the cities and
towns owe now because we've made a lot more money?
Jan Goodwin, Executive Director of NH Retirement System
Well this year's valuation will be part of the next rate setting process. And so it will be included in that.
Alderman Dowd
But not til ‘23.
Jan Goodwin, Executive Director of NH Retirement System
Correct because we set rates on a two-year basis.
Alderman Dowd
That's one of the things that servings and...
Mayor Donchess
Do you adjust the assumed rate of return every two years or every four?
Marty Karlon, Director of Communications and Legislative Affairs
If it's going to change, it's part of an experience study which would be every four years. So we're not going to look at that
again short of, you know, major economic disruptions before Fiscal ’23 and the actuarial would make recommendations
in early ‘24 on any changes to assumptions they would recommend based on their study. | think Director Goodwin may
take me under the table and the actuarial certainly would but the return that we had this year is very favorable for rates
