Report from the CFO

“The Fund worked hard to contain operating costs while maintaining the outstanding level of service that our participants have come to expect.

During the fiscal year ended June 30, 2016, account balances reached $4.1 billion and benefit payments exceeded $346 million. Annuity payments to 13,386 retirees equaled $235 million, lump sum payments totaled $103 million and death benefits paid were $8 million.  Each category experienced significant growth over the prior year.

Actuarial Valuation

The Fund’s Actuary, Buck Consultants, completed their detailed review of our participants’ account balances, along with the obligations to retirees, and determined that our liabilities were $6,489 million at June 30, 2016. In addition, Buck Consultants was commissioned to review the discount rate used in the valuation. Their results indicated that the Fund can, on average, expect to earn more in investment returns than the stated discount rate. Simply said, the discount rate is appropriate for the valuation and the Fund will grow out of its current underfunded condition.

The complete Annual Report of the Actuary, along with their letter regarding the review of the discount rate, is available on our website.  

Operating Costs

Throughout the year, the entire staff of the Fund worked hard to contain operating costs while maintaining the outstanding level of service that our participants have come to expect. Over 62% of our total controllable expense is personnel-related. The Fund employs 100 dedicated individuals whose only mission is to partner with all YMCA employees and employers in the process of saving for retirement and the eventual transition into a safe and secure retirement. Given the continued increases in health care costs and other personnel-related items, cost containment has not been easy. We have also increased our spending in the area of cyber security to provide the safest environment possible for our participant records.

The Fund’s “Controllable Costs” include all the expenses incurred to operate the plan and support our internal investment team. The “Non-Controllable Costs” are investment management fees paid directly from the Fund and reported in our financial statements as part of investment expense. Typically, fees related to investments in alternative assets and pooled accounts are subtracted from the asset values under management and reported as realized or unrealized losses. As the portfolio allocation to these types of investments has increased over time, the cost to invest our portfolio has shifted from Non-Controllable Costs to realized or unrealized losses. The Fund reports all investment returns net of all management fees and internal investment costs.

Many organizations measure their operating cost relative to the value of their Assets Under Management (AUM). In Fiscal Year 2016 we experienced a decrease in our average AUM from $6.1B to $5.9B. This resulted in the total relative operating costs increasing from 71 basis points to 75 basis points. The actual operating costs reported in our financial statements decreased 0.5% from the prior year.

Relative Operating Costs Measured in Basis Points

  2016 2015 2014  2013  2012 
Administrative Expenses 37 33 34 34 36
Investment Expenses 38 38 36 36 33
  Total 75 71 70 70 69
           
Controllable Expenses 53 46 47 46  48
Non-Controllable Expenses 22 25 23 24 21
  Total 75  71 70 70 69
Average AUM $5.9B $6.1B $5.7B $5.2B $4.8B
           

KPMG, the Fund’s Auditors, concluded their work on July 29, 2016. Their opinion, the Fund’s Financial Statements and footnotes can be read here.


  2016 2015 2014  2013  2012 
Administrative Expenses  37  33 34 34 36
Investment Expenses 38 38 36 36 33
 Total 75 71 70 70 69

  2016 2015 2014  2013  2012 
Administrative Expenses  37  33 34 34 36
Investment Expenses 38 38 36 36 33
 Total 75 71 70 70 69