Miami Retirement Trust Responds to Auditor Accusation

September 8, 2010 ( – The City of Miami Fire Fighters’ and Police Officer’s Retirement Trust has responded to an auditor’s report saying that adequate internal controls were not in place to ensure that all possible investment strategies are being explored to mitigate excessive investment losses that create unfunded liabilities for the trust.

The Retirement Trust Board provided a memo to Victor Igwe, the city auditor, from investment consultant William Cottle, CFA from Milliman, which concluded that the Retirement Board has made reasonable and responsible investment decisions, including the termination of managers, when appropriate, and the addition of new asset classes.  

The memo stated that the Board is completing final implementation steps recommended in an asset/liability study it conducted during the two-year period covered by the auditor’s report. A new international equity manager structure has been approved by the Board and investment manager searches are commencing.  

Investment manager searches have already been conducted for the addition of high yield fixed income and Treasury Inflation Protected Securities asset classes. The Retirement Board also has funded two new fixed income portfolios.  

The memo listed ongoing analyses conducted by the Retirement Board, including quarterly watch list review’s of its investment managers, quarterly performance review reports on all investment managers and the total trust, quarterly transaction costs analysis of domestic and some international equity trades, and monthly cash flow analyses.  

Cottle noted that the Retirement Trust’s investment strategy is governed by an Investment Objectives and Policy Statement that limits actions it can take. 

Igwe’s report concluded that the internal controls policies and procedures in place at City of Miami pension funds, Employee Relations, and Risk Management Departments could be enhanced to address certain deficiencies (see Miami Pension Officials Lacking on Investment Controls).