Fisher, Richmond also break ties with Fund

Two more service providers of the NMI Retirement Fund terminated their contracts with the agency, citing the ill effects of the newly signed Public Law 17-51 or the Beneficiaries Derivative Act.

Fisher Investments and Richmond Capital both submitted their resignation yesterday to Fund administrator Richard Villagomez.

This brings to six the number of contracts cancelled and terminated with the Fund, just over a week after the law’s passage on Sept. 5.

Money managers Stralem & Company and BlackRock Inc., actuary consultant Buck Consultants, and investment consultant Wilshire Associates preceded the resignations of Fisher Investments and Richmond Capital.

All four money managers gave the Fund 30-day notices while Wilshire Associates promised to assist the Fund during the transition period.

Wilshire was hired only in October 2010, replacing Merrill Lynch. The former was sued by the Fund board for allegedly giving it “bad advice,” resulting in significant losses in the program’s investments.

Jeff Silk, vice chairman of Fisher Investment, tendered the company’s resignation effective Oct. 13, based on its letter to the Fund yesterday. The others also postdated their resignations to next month.

Public Law 17-51 was tackled during a House session yesterday, after a bill was offered proposing to repeal the newly enacted law.

Fund administrator Richard Villagomez, in an email yesterday, said he was pleased to see the presence of retirees at the House session and is hopeful that the Commonwealth Retirees Association can get together and collectively voice their concerns.

He disclosed that the remaining eight money managers may also end their relationship with the Fund, with the exception of the Fund’s custodian, Bank of Hawaii.

The Fund is thinking of transferring its liquidated assets to mutual funds.

Money managers will be gone anyways

Meantime, a supporter of the newly signed law and lawyer for some retirees, Michael Dotts, voiced his opposition to the proposed repeal of the measure.

“It is right for retirees to be concerned about the money managers quitting the Fund this week. But the legislation that became P.L. 17-51 has been under debate in the Legislature for a year. It was no secret. Yet not a single money manager ever spoke to my law firm or the Hawaii or Florida law firms I am working with about any concerns they had with the bill. Those money managers seemed to have only spoken to the Fund. If there are concerns with certain provisions of the bill that the money managers have, maybe those provisions can be fixed without taking back from the retirees the right to protect their own retirement payments. There is no need to throw out the entire law that gives real rights to retirees if there is a problem that can be fixed,” he said yesterday.

Because of projections that the pension plan will only last three more years, based on its current asset value, Dotts said in three years all money managers will be gone anyhow.

“If the rebate is reduced that might get stretched to five years. There were 12 money managers last week and now the Fund is down to eight and perhaps next week it will be down to four. But the assets of the Fund have also dropped from over $500 million to $271 million. Those assets are going to continue to slide down to zero over the next few years,” he added.