Longtime police pension board advisor George Parry formally resigned Monday from the River Forest Police Pension Board following a difference of opinion on pension fund investment policy and other concerns. The action took place following a threat to do so after a July 16 pension board meeting.

Parry, who was spotted at village hall Monday morning, confirmed he had submitted a two-page letter informing pension board Secretary Jim O’Shea of his resignation as the fund’s assistant treasurer. He declined to make the letter public for the time being, saying he wanted to give pension board members the opportunity to read it first.

“I can’t comment any further until the pension board members have a chance to respond,” he said.

However, Parry expressed a number of differences of opinion with board colleagues at a July 16 quarterly pension board meeting. At that meeting, Parry, who has served on the board in one capacity or another for nearly 30 years, said he “strongly objected to” what he termed “market timing” or “limit orders.” He also argued with other board members over a departure from the longtime practice of maintaining a 55-45 percent debt instrument-to-equity ratio in addition to retaining an outside consultant to advise the board.
In particular, he blasted the market timing practice, which he said represented an irresponsible treatment of pension funds. “I will not be involved with any organization that deals in speculation,” he said, criticizing “speculative transactions and activities that don’t appear to be consistent with good management.” With three months between board meetings, he said, open orders could be financially disastrous.

“I don’t like to use limit orders, but when I do, I watch then constantly,” Parry told his colleagues. “You follow them hourly or even by the minute. It’s ‘fill or kill.'” He criticized what he said were unrealized gains due to the handling of some police pension funds, questioning why the board allowed a $600,000 market order filed April 16 to sit unfilled for months as the market changed, resulting, he said, in an unrealized gain of $75,000 to the pension fund, and suggesting the long-term loss would be much higher.
Parry called managed funds “rolling the dice,” and said 87 percent of them under-perform.

“You could take the money down to the [gambling] boat and get a better rate of return,” he said at one point.

Parry also questioned the need and wisdom of hiring an outside consultant to oversee and advise on the pension fund’s investments. At that meeting, the board voted 4-0 to approve bringing in Tom McShane of Greystone Consultants for a fee of 19 basis points of the pension fund’s full $15-million portfolio, which would come out to roughly $28,500 annually.

Tuesday, police pension board President Craig Rutz, who has known Parry for 20 years, said he respects the work Parry has done for the board over the years, but said the issue of an outside consult will likely soon be mandated by the state.

As for moving from the 55/45 percentage ratio, Rutz said that move was not intentional, but the result of historically low returns on equities.

“We’re not intentionally moving away from the 45 percent,” he said. “We do everything we can to have our money invested in the highest yield instruments.”

Rutz said voting board members Gerry Mann and Dan Zaldibar, who along with Parry have advised the board on investment decisions, simply disagree with Parry that limit orders are never useful.

“As Gerry Mann said, there’s nothing generally wrong with limit orders. You’re looking to take advantage of [market] opportunities.” With the market downturn, Rutz said, no opportunities presented themselves, and the order was never filled.

Investments, revenue down

The disagreements on the pension board come as the board struggles with a triple whammy of significant investment losses, decreased revenue from participation and what the pension board sees as underfunding by the village. Both the River Forest police pension and fire pension have suffered significant monetary loss on their investments since the 2008 economic downturn. As of June 30, Village Treasurer Chris Soriano said, the police pension fund balance is $14.988 million, down from a reported $17 million as of April 30.

Of equal concern to police pension board members is the fact, they said, that current pension financial projections are based on 30 officers paying into the fund. The actual number, they say, is 25.

“We’ve reached a tipping point,” said Zaldibar.

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