By Tom Moutes, RLACEI Legislative Director
You’ve probably heard the word “fiduciary.” This month, we’ll talk about it – what it means, and why it matters.
What Does Fiduciary Mean?
Wikipedia defines a fiduciary as “a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person.” Wikipedia is not always as accurate as a dictionary, but in this case it is.
Why Are Fiduciaries Important to LACERS?
Theoretically, as it relates to LACERS, fiduciaries will always put the interests of LACERS members first. High-ranking LACERS staff and LACERS Board Members are fiduciaries. Their primary duty is required to be to the members of LACERS. The California Constitution indicates that “a retirement board’s duty to its participants and their beneficiaries shall take precedence over any other duty.” Because LACERS Board Members have a legal requirement to be fiduciaries, theoretically, they could be sued if they act contrary to their fiduciary duty.
Are City Councilmembers Fiduciaries to LACERS Members?
No, City Councilmembers are not fiduciaries to LACERS members and, therefore, have no duty to put the interests of LACERS members ahead of any other interests.
Why Is This Important?
When the City Councilmembers pass motions directed at LACERS, such as the recent motions requesting divestment from certain industries and to reduce healthcare costs, they don’t have to take LACERS members into consideration. You would hope the City Council would take City employees and Retirees into consideration as Councilmembers count on us to make the City operate efficiently, and it is the City Council that adopted the retirement benefits we have been promised. But the bottom line is, despite the lip service it serves up, the Council is not required to – and often does not take us – into consideration.
How Can Retirees Help Ensure the Right Things Happen?
Retirees can contact Council offices and provide public comments when issues impacting us are being considered by the City Council. Retirees also can hold the LACERS Board accountable by providing public comments. To some extent, the City Council and the LACERS Board take actions based on who is paying attention and who is making noise. It is time for us to make more noise!
Please keep informed of important issues that could impact your benefits by reading Alive! articles and checking the RLACEI Website and Facebook page.