Fund OKs new Wilshire contract

The NMI Retirement Fund board of trustees has approved a new contract for its investment consultant, Wilshire Associates, with an expanded service but at a reduced price. From the previous service fee of about $195,000 a year, Wilshire will now be paid at a lower $165,000.

The decision to approve the contract was reached yesterday after board members received the final draft of the agreement from Wilshire agreeing to the contract’s provisions.

Wilshire was first hired in October 2010 to replace Merrill Lynch as the agency’s investment adviser. The enactment of the Beneficiaries Derivative Act in September prompted it to terminate its contract as the law increased its exposure to potential liability. That law has since been repealed, persuading Wilshire to return.

Board chair Sixto K. Igisomar told Saipan Tribune that they asked for a lower service fee because of the decline in the Fund’s investment portfolio, currently valued at $256.7 million.

He described the new agreement as an open contract, subject for termination by either party. Wilshire’s responsibility is expanded to cover the agency’s defined contribution plan.

The board also approved yesterday the decision to stop the liquidation of the Fund’s assets and its transition to CDARS, or the certificate of deposit account registry service.

Fund administrator Richard Villagomez said that $105 million has already been transferred to CDARS while $145 million is still in mutual funds.

“We need to stop this process [liquidation and transition to CDARS] because there are costs involve in transitioning,” said Villagomez yesterday.

Saipan Tribune learned that the money will be kept at both sources for the meantime until Wilshire is officially back onboard and could advise the board on its next action. Pursuant to law, the Fund cannot make any decisions on its investment without the advice of an expert.

The board also cancelled its advertisements for both investment consultant and actuarial consultant positions.

Villagomez said that Buck Consultants also sent its draft contract yesterday to the Fund, subject for board review and approval. Igisomar could not immediately confirm if there will also be some changes in the contract for the actuarial consultant post.

Besides the investment and actuarial consultants, Igisomar said the position of external auditors is also key to the Fund’s resumption of normal operations. He said the advertisement for external auditor will continue until a qualified firm is chosen to do the agency’s financial audit.