Special Board of Aldermen 09-21-2021 Page 15
staying at least flat in the 24 — ‘25 rate cycle compared to ‘22 - ‘23. Whether they'll go down, we don't know because of
other liabilities.
The goal is trying to have relatively stable rates even if they're at a higher level than they had been in the past. You
didn't see that this year. You had a 20% increase, you know, so but this is good news but one year doesn't make or
break the pension system. The 1.1% last year, that was lower than a lot of our peers, you know, which is not usually the
case but that's a June 30" of ‘20 number, you know, three months into the pandemic and the economy and the markets
really recovered in the second half of 2020. If you had a calendar your 401k statement versus a June 30", you'd see
those single digits, you know, with other plans.
One of the reasons why our assumed rate of return is where it is and a lot of plans are we're not probably been at least a
half a dozen maybe 10 plans that have lowered it since last year since we did, is fixed income, which is about 25% of our
portfolio. Some plans it's more some or it's less by a few points, but you're not getting any interest on, you know, bonds
and fixed income anymore. Back in the ‘80s, you could have bonds paying 10 - 12% and so you have this floor and you
think you can manage the volatility in the equity markets because you know you were making X from fixed income and
that's not the case anymore. That's what's been driving rates down over the past decade for pension plans is the interest
rates have just remained near the bottom.
Alderman Dowd
| wasn’t quite sure of your answer on the - so you say that the 26% is going to be reflected and as far as our 2023
budget. So the amount we pay to the State is going to be less than we're paying in
22?
Marty Karlon, Director of Communications and Legislative Affairs
24 —’25.
Alderman Dowd
Well cities can't wait that long. You know you shouldn't be doing it that far out. You know it ought to be looked at a lot
closer because, you know, we shouldn't be paying the millions of dollars that we're paying in ‘23 when you don't need it.
| mean, you can say you need it because you're gonna add it to your $11 billion but cities like Nashua, Manchester,
Portsmouth, Dover, you know, there's a lot of things that can't be done in the city budget because we're covering for a
low percentage rate that was estimated a year ago or two years ago instead of what you're getting on a return now. That
to me seems very unfair.
Alderman Lopez
So to Alderman Dowd’s point, I'm getting the sense that we're the long-term investment. At some point, the State said
let's get all the municipalities on board and then when we're not able to invest effectively, they'll carry it. That's causing
problems for Nashua particularly. When we talk about generational equity, I'm sorry Aldermen Laws but it looks like your
daughter is going to be a voter before we actually manage to carry this 0% philosophy thing that we're looking at for a
debt. This is causing real problems for Nashua citizens today. We have to look at how we're keeping fire stations open,
whether we can keep schools open, what services you can offer because there's that interest in getting to that O%
unfunded number.
So my question is, is who's determining that number? Is that the State legislature and as a collective act of governance,
or are you determining that number? And is there any transparency in terms of what you're investing in? Because
there's some pretty big investment funds that are very long term and they do much better than what it seems like what's
happening even with the 1% return? It's not a unique situation to New Hampshire's retirement fund. Everybody's
investments recovered and were able to report that so what's different and how does the average taxpayer look at how
New Hampshire retirement invests and say that's what | want to advocate for?
Marty Karlon, Director of Communications and Legislative Affairs
We have annual reports and quarterly reports sort of listing the managers by section, you know, with historical and
quarterly returns. So the information is out there in our annual investment report. All the managers that we employ are
listed. The Independent Investment Committee typically meets monthly and in public session to review the investments
interview. Newmont managers make decisions on terminations, things like that. You know its portfolio is consistent with,
you know, most public sector investments. In some ways, you know, we don't go into hedge funds or anything like that
