In his report before the board of trustees on Thursday, Fund Administrator Richard Villagomez said the Fund had $134.2 million in cash.
Villagomez reported on Thursday that Richmond was still liquidating and was expected to complete the process by the end of October.
He said he received a report from Richmond stating the money manager was nearly completed with the liquidation process.
The administrator also reported that $46.5 million with Richmond would be reduced to zero by the end of the month.
He also said $82 million remains with PIMCO, another bond strategy. He said this used to be $100 million but the Fund had to liquidate a portion of this as it transitions to the modified Glidepath 2013.
Another liquidating fund, J.P. Morgan currently holds $1.6 million.
The Fund, Villagomez said, is heading to its modified allocation.
The Fund had already routed documents to the trustees to complete the documentation as they transition to Vanguard.
“We also contacted Vanguard yesterday [last Wednesday] if they can proceed doing the account openings while the documents are being completed,” he said.
Vanguard was the index fund that the Fund chose to replace Blackrock whose contact self-terminated with the enactment of PL 17-51.
“We anticipate to be in Vanguard by mid- or end of next week [this week]. It takes about a day for them to set up once they get all the documentation. We’ll move all the other assets around so we that fit into the 2013 Modified Glidepath,” said Villagomez.
As the Fund is moving to Vanguard, it is also transitioning to Certificate of Deposit Account Registry Service program and their documentation is almost complete, he said.
Villagomez told the trustees that the Fund had already communicated with CDARS to commence opening the accounts.
“In line with moving to an ultraconservative portfolio, we will be moving into the CDARS program as quickly as possible.”
He explained the constraints to this transition, pointing out that the program would not be able to accept $264 million upfront.
He told the trustees that this $264 million will have to be broken down into smaller amounts.
He said, “It is going to be broken down into little pieces and it depends on what is available in the CDARS program each week. But we are heading into that direction.”
Villagomez also clarified that the Fund has two cash accounts — a clearing account and a mutual fund account — with the custodian Bank of Hawaii — in Hawaii not in the CNMI.
The clearing account, Villagomez said, is a transitional account where the Fund gets its drawdowns because it is cash.
He said settlement proceeds from litigation, revenue from their previous participation in securities lending and the residual cash resulting from the transition from one manager to another went to this account.
As for the second account, Villagomez explained that Bank of Hawaii opened this account from an operational standpoint.
He said he had informed the bank that the Fund was moving to Glidepath strategy and BOH opened this second account for this purpose.
He said the money from liquidating their assets handled by Fisher and Stralem, the money managers that recently resigned owing to P.L. 17-51, went to this account in anticipation of the Fund placing this money into mutual funds.
As of Oct. 25, 2011, the Fund had $264,497,211.
Annual bonus
The Fund board on Thursday also approved the issuance of an annual retirement bonus.
Fund legal counsel Carolyn Kern said the Fund had $120,698 for this purpose.
Kern explained to the trustees that the board had the choice between giving an annual bonus or cost of living allowance.
Kern said, “It has been the policy that COLA amounts are paid out in quarterly installments or as they come but at the end of the year it’s when they are compounded.”
She said if the board voted for it to be non-compounding for 2011, it would affect all of the payments made in 2011 as a supplemental stimulus.
Money appropriated for distribution for FY 2011 shall be paid out as ARB.
During the discussion, Fund Chairman Sixto Igisomar inquired if this would be equal distribution or by percentage to which Villagomez responded,
“It’s a percentage of your pension.”
Kern also said it would be calculated based on the first $30,000 of the pension.
