MISSA's Investment Committee to start more proactive oversight of the Retirement Fund

Roles and Responsibilities

1.1 Acquire basic fiduciary knowledge:

Committee members do not necessarily need an investment background but should be committed to learning what they need to know to make informed decisions. It is the responsibility of the committee members to stay abreast of changes in ERISA regulations and legal rulings that affect the plan’s management. ERISA (Employee Retirement Income Security Act 1974) – a U.S. Federal law that sets minimum standards for retirement, health, and other welfare benefit plans.

1.2 Develop and maintain committee governance documents:

1. Create an investment policy statement (IPS) to include an investment philosophy and strategy. Due diligence procedures for selecting and monitoring investment options should be well-articulated. The IPS should include benchmarks for measuring plan performance. It should also include a process for selecting and evaluating investment managers, along with evaluation criteria and procedures for replacing them. The IPS should be reviewed annually to account for any inconsistencies in plan management, and revised as applicable.
2. Include in the IPS a long-term strategic plan that would increase the funded status of the Retirement Plan by:
   • Continuously seeking financial support from the RMI Government (e.g., annual request for appropriation/subsidy);
   • Maximizing the use of cash surplus by redirecting it to investments to build up the Fund;
   • Setting a targeted funded status in ascending order over a long-term investment time horizon (e.g., in the next 20 years). For example:
     

     Year	Targeted Funded Ratio
     2021	26% based on latest MISSA’s actuarial report
     2024	27%
     2027	28%
     2030	29%
     2033	30%
     2036	31%
     2039	32%

   • Establishing a certain percentage of yearly contributions, Government subsidy, or cash surplus that may be allocated for additional investments to grow the Fund.
3. Review the Service Agreement with Investment Advisor and revise, as needed.

1.3 Assess portfolio risk and key reserve attributes:

1. At least every two years, gather input from the MISSA Board regarding risk tolerance and key portfolio characteristics, such as expected return, volatility, liquidity, etc.
2. Evaluate scenario analyses prepared by Investment Advisor based on:
   • The projected future cash flow projections including any expected strategic investments requiring distributions from the reserves;
   • The operational risk and disaster risk scenarios and resulting projected cash needs;
   • The portfolio characteristics (expected return, volatility, risk factor analysis, etc.) of potential asset allocations as prepared by the Investment Advisor.
3. As a result of this feedback, evaluate whether changes need to be made to the Investment Policy Statement (including the Asset Allocation Policy), or other governing documents.
4. Look for local business opportunities on Majuro, Ebeye, and other atolls.

1.4 Monitor and evaluate investment performance, investment service providers, and costs:

1. Review the performance of the funds relative to their benchmarks on a quarterly basis.
2. Monitor and evaluate investment service providers (i.e., Investment Custodian and Investment Advisor) at least annually. The review should include an assessment of the service providers’ code of ethics and conflict of interest policies. Determine whether investment service providers should be retained or replaced.
3. Assess whether fees incurred by or on behalf of the portfolio are appropriate and reasonable on an annual basis.

1.5 Oversee implementation and ongoing operational execution of the Investment Policy Statement:

1. At least quarterly, ensure compliance with the Investment Policy Statement by verifying that reserve balances are invested according to policy.
2. Lead investment manager and fund selection as per the Asset Allocation Policy specified in the Investment Policy Statement.
3. Ensure operational functions such as rebalancing and reserve funding are performed appropriately by Investment Advisor.

1.6 Selection of Investment Advisor and Custodian:

1. Ensure that a Request for Proposal (RFP) for an investment advisor and/or investment custodian is issued once every five years, or earlier if deemed appropriate.
2. Evaluate RFP responses and engage a new (or retain the incumbent) investment advisor and/or custodian.
3. Annually, review the performance of the investment advisor and/or custodian, and determine whether each year’s contract should be renewed or the contract terminated.

1.7 Signing and submission of Investment Documents to RMI and US Regulatory agencies, and Investment Consultants:

1. Ensure that all investment documents are signed by the following authorized signatories:
   • Chairman of the Board;
   • MISSA Administrator;
   • A member of the Investment Committee.
2. Such documents are submitted in a timely manner and comply with RMI and US regulations on investments.

2. Reporting and Relationships

• Maintain minutes or other records of committee meetings, and provide to the MISSA Board upon completion.
• The Investment Committee will formally report to the MISSA Board after each meeting, as applicable and present its findings and recommendations to the Board for approval.
• The Investment Committee relies on the reports provided by management, the third-party investment consultant, and external investment service providers in order to carry out its responsibilities and duties.

3. Meetings

The Committee shall meet every quarter per year and additionally as required. Notice of meetings shall be given to all Committee members. Meetings may be held by conference telephone or other means. A majority of the voting members of the Committee shall constitute a quorum for a meeting, and the affirmative vote of a majority of voting members present at a meeting at which a quorum is present shall constitute the action of the Committee.

In a related development, a Request for Proposal (RFP) will soon be released to interested Financial Advisors and Investment Consultants for Investment Advisory Services. This is in compliance with Section 1.6 of the Terms of Reference (Selection of Investment Advisor and Custodian). Once received, proposals will be opened and reviewed in accordance with the procurement policies specified in MISSA’s Procurement Policy and Procedures and RMI Procurement Act, 2023. Strict confidentiality shall be kept until the awarding of the RFP. Any individuals, entities, or agencies offering a proposal in response to this RFP must agree that the RMI Procurement Code Act, 2023 Procedures are binding on them in this bidding process. MISSA will reserve the right to reject any or all bids and to waive any defects in bids if in its opinion the agencies’ best interests are served by doing so. Face-to-face presentations and interviews may be conducted with all or a select few of the respondents after the proposals are evaluated.