Friday, October 26, 2012

TRS Executive Director Dick Ingram has failed to perform his fiduciary responsibility by Tom White, Executive Director of the Metropolitan Water Reclamation District Retirement Fund (retired)

Dick Ingram has tried to mislead the TRS trustees and TRS members into believing that his and TRS fiduciary responsibility is no more than what Employee Retirement Income Security Act (ERISA) would require. This is an out-an-out misrepresentation.

Ingram would have the trustees believe that TRS fiduciary responsibility requires them to neither champion or defend any particular benefit, but rather only have their eye on the overall health of the fund. In truth, their primary fiduciary responsibility is to insure that benefits promised and earned, per the state statues, are provided. The TRS trustees’ oath of office includes “will not knowingly violate or willingly permit to be violated any of the provisions of the law applicable to the retirement system.” 

Moreover, Ingram has continued to reference the insolvency studies that he now admits utilize arbitrary assumptions, and he has disregarded or refutes potential state asset-raising legislation while continuing to entertain unconstitutional reduction of benefits.

The TRS trustees’ oath of office should result in TRS taking the State of Illinois to court relative to any signed legislation that would violate benefit provisions provided in the statutes. That certainly will not happen with Ingram as the Executive Director.

I have e-mailed and spoken with trustees Bob Lyons and Cynthia O’Neill. Minimally, I was trying to get Lyons and O’Neill and the rest of the TRS board to address the above issues. Specifically, I believe that they should direct Ingram to no longer reference the impending insolvency, which is a pure fabrication. Ingram now calls his original insolvency assumptions “arbitrary” because the state’s contributions in the first two years of his stress test are significantly higher than what he had proposed. Additionally, the state is discussing additional funding options, beyond stress test assumptions. Ingram continues to divert the state’s additional funding discussions by encouraging reduction in retirement benefits.

Ingram should also be put on notice with regard to his ERISA-based fiduciary responsibilities and should not comment on the legislature’s or Governor Quinn’s discussion relative to raising additional capital. Therefore, the “hands off Dick Ingram” that I recently heard at an Illinois Retired Teachers Association meeting on October 24th, which I have also heard from Lyons, is NOT the right way to proceed.

Assuming that TRS trustees put Ingram on notice as to what he cannot say as a TRS fiduciary, personnel actions should be taken when their directives are violated. This could be a suspension without pay or possible termination. I have mentioned to O’Neill and Lyons that outside counsel should be consulted before taking this path.

If Ingram were to be fired, it would not be because TRS is trying to silence him from telling the truth. His truth is arbitrary! He has continued to violate fiduciary responsibilities of the organization that he represents. TRS has been infiltrated by a Civic Committee/Civic Federation mole, and the TRS trustees have allowed him to remain at the podium, on their payroll, long after he has been uncovered.  

Although I have respect for the job that O’Neill and Lyons have performed as TRS annuitant trustees, I have been dissatisfied that the TRS Board of Trustees has allowed Ingram’s poisoning to continue. If this mess ends up in the courts, I am afraid that the courts could decide that impending insolvency trumps constitutionally-guaranteed benefits. Then the TRS statement of benefits, which I and all teachers relied upon at retirement, becomes a worthless piece of paper.

We should immediately begin distributing petitions to be signed by TRS members, active and retired and any other likeminded Illinois citizens, calling for the resignation of Dick Ingram, specifically related to his failure to perform his fiduciary responsibility.
--Tom White, TRS retiree and retired Executive Director of the Metropolitan Water Reclamation District Retirement Fund (Illinois Complied Statues 40/5, Article 13.)

To:  TRS Board of Trustees
From: Tom White, Annuitant, Retired Executive Director MWRDRF
Re: Fiduciary Responsibilities
Date: May 12, 2012
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

The prudence and loyalty fiduciary standard under ERISA, as published in the handwritten “Comments on Fiduciary Duty” provided at IL TRS Board Meeting of August 8, 2011, included the following:

“These standards (ERISA) establish that the trustees must protect the overall actuarial soundness of the fund, but do not extend to a protection of particular benefits for members.” 

Being a public plan, the statutes set out a much higher fiduciary standard, specifically:

 (40 ILCS 5/1-109) (from Ch. 108 1/2, par. 1-109)
    Sec. 1-109. Duties of Fiduciaries. A fiduciary with respect to a retirement system or pension fund established under this Code shall discharge his or her duties with respect to the retirement system or pension fund solely in the interest of the participants and beneficiaries and1:
    (a) For the exclusive purpose of:
    (1) Providing benefits to participants and their beneficiaries;
    (2) Defraying reasonable expenses of administering the retirement system or pension fund;
    (b) With the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character with like aims;
    (c) By diversifying the investments of the retirement system or pension fund so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and
    (d) In accordance with the provisions of the Article of the Pension Code governing the retirement system or pension fund.
(Source: P.A. 82-960.)

1 Courts have interpreted (40 ILCS 5/1-109) to mean that fiduciaries must act “with an eye single to the interests of the participant and beneficiaries” and with complete and undivided loyalty to the beneficiaries. Furthermore, Trustees “must overcome any loyalty to the interests of the party that appointed” them when functioning in their respective capacity as plan fiduciaries.

Excerpts from “Role and Responsibilities of Fiduciaries” provided for the MWRD Retirement Fund (40 ILCS Act 5, Article 13), December 2, 2008, by Joseph M. Burns, Esq. of Jacobs, Burns, Orlove, Stanton & Hernandez, Chicago, IL

Additionally, the Board of Trustees Manual (January 2012), under the Code of Ethics and Conduct section (p10), similarly references the trustees’ fiduciary duties under article 1 of the statutes.

The current TRS Oath of Office further reflects these fiduciary responsibilities:

I, __________, do solemnly swear that I will support the Constitution of the United States, and the Constitution of the State of Illinois; will diligently and honestly administer the affairs of the Board of Trustees of the Teachers' Retirement System of the State of Illinois; and will not knowingly violate or willingly permit to be violated any of the provisions of the law applicable to the retirement system.  Underling added for emphasis!

“Once again we have a problem” with Executive Director Dick Ingram:

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