lcec retirement plan oversight and performance update

LCEC Retirement Plan Oversight

and Performance Update

March 17, 2016

Retirement Plan Structure

• LCEC provides two types of retirement benefits under two separate plans:

Defined Benefits • Traditional Plan • Cash Balance Plan

401(k)

• Retirement plan policies have been developed to ensure proper oversight is in place

Retirement Plan Oversight

Investment Committee

• Designated members of Executive Steering Committee, Board counsel, Internal Audit, Human Resources

• Meets quarterly

• Has engaged the services of an investment consultant (w/ Morgan Stanley) to assist in fulfillment of responsibilities and to provide independent expertise and opinion on plan management (John Hancock Retirement Plan Services) and performance

Responsibilities

• Establish and review investment objectives, policies, amendments, and guidelines

• Review performance of plans and plan components

• Periodically report results overview to Board of Trustees

Retirement Plan Performance Update

• Following slides are excerpts from the most recent quarterly report prepared for and reviewed by the Investment Committee

• Report based on 4Q 2015 results

401(k) Fund Performance

LCEC Fund

2015 LCEC Fund

1-Year Performance

2015 Benchmark

1-Year Performance Benchmark

JP Morgan SmartRet Income I -1.01% -1.75% Morningstar Retirement Income

JP Morgan SmartRet Income 2015 I -0.91% -1.39% Morningstar Target Date 2011-2015









MainStay Large Cap Growth I 6.17% 5.67% Russell 1000 Growth

MainStay ICAP Select Equity I -3.98% -3.83% Russell 1000 Value

Columbia Large Cap Index Z 1.23% 1.38% S&P 500

T. Rowe Price Mid Cap Growth Adv 6.28% -0.20% Russell Mid Cap Growth

Vanguard Extended Market Index -3.27% -3.35% S&P Completion Index

Artesan Mid Cap Value Investor -9.68% -4.78% Russell Mid Cap Value

ClearBridge Small Cap Growth A -4.50% -1.38% Russell 2000 Growth

Perkins Small Cap Value S -2.86% -7.47% Russell 2000 Value

Oppenheimer International Growth Y 3.44% 4.47% MSCI EAFE Growth

Harbor International Inv -3.82% -0.39% MSCI EAFE

Lazard Emerging Markets Equity Open -20.16% -14.60% MSCI EM (Emerging Markets)

Oakmark International I -3.83% -5.22% MSCI EAFE Value

Vanguard Total International Stock I ndex -4.26% -4.03% FTSE Globall All Cap Ex US Index

Nuveen Real Estate Secs I 3.48% 2.83% FTSE Nareit Equity-Reits

BlackRock Natural Resources Inst -24.32% -24.28% S&P North America Natural Resources Sect Index

PIMCO Real Return Instl -2.75% -1.44% Barclays Capital U.S. Treasury - U.S. TIPS

Vangard Short Term Bond Index -0.92% -0.97% Merrill Lynch Domestic Master, 1-3 yrs.

Metropolitan West Total Return I -0.29% -0.55% Barclays Capital U.S. Aggregate

PIMCO Money Market Admin 0.02% 0.03% CitiGroup 3-month Treasury Bill

Noted Items for 2015

• Made contributions of $8,533,944 to Defined Benefit Plan

• Distributed assets of $1,195,385 from Defined Benefit Plan

• Rebalanced to Target on Defined Benefit Plan in February, May, and July

• New York Life sell to John Hancock Retirement Plan Services completed in June

• Distributed Employee Total Compensation and Benefits Statements

• Auto enrollment in 401(k) continues to be successful

Noted Items for 2015

Defined Benefit Class New Defined Benefit Funds Removed Defined Benefit Funds

International Equity Vanguard Developed Markets IDX Admiral (VTMGX)

Harbor International Investor (HIINX)

HEDGE/ALT/World Alloc. PIMCO All Asset All Authority (PAUIX)

REITS Voya Global Real Estate A (IGLAX)

Defined Contribution – 401(k)

Fund Class New Defined Contribution Funds

Removed Defined Contribution Funds

Mid-Cap Equity Artisan Mid Cap Value (Investor Shares - ARTQX)

Artisan Mid Cap Value Fund (Institutional Class - APHQX)

International Equity Harbor International Fund (Investor Class - HIINX)

Harbor International fund (Institutional Class - HAINX)

Emerging Market Equity Lazard Emerging Markets Equity Portfolio ( Open Shares - LZOEX)

Lazard Emerging Markets Equity Portfolio (Institutional Shares - LZEMX)

Small Cap Equity ClearBridge Small Cap Growth Fund (Class A - SASMX)

ClearBridge Small Cap Growth Fund (Class I - SBPYX)

Fixed Income Vanguard Short-Term Bond Index Fund (Investor Shares - VBISX)

Vanguard Short-Term Bond Index Fund (Admiral Shares - VBIRX)

Current Issues

• Monitor interest rates

• Continue to watch funding levels of defined benefit plan in light of distributions and MAP

• Consider automatic employee contribution increase for 401(k)

• Focus on employee education on saving for retirement

Questions

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