REQUEST FOR PROPOSALS FOR: PENSION PROFESSIONAL SERVICES

INTRODUCTION (SERVICES)

The Municipal Pension Plan Funding Standard and Recovery Act, as amended by the Act of September 18, 2009, requires each Municipal Pension to develop procedures which will facilitate the selection of the most qualified persons and individuals for professional service contracts. Subsequently, on February 6, 2014, the Board of Supervisors of Lower Providence Township passed Resolution 2014-17 establishing a policy for the procurement of professional services for the Township’s pension plans. It is within these guidelines that Lower Providence Township is now soliciting proposals from an interested “Person” (as defined in the Resolution as “an individual, entity, person …”) to provide Township pension fund investment consulting services. The requested services will include the supervision, monitoring, and ongoing evaluation of the Township’s Pension Funds, post-retirement medical benefits fund, and an employer-funded defined contribution plan. As of February 5, 2014, the funds had approximately $18.5 million in assets, and approximately fifty-five active members, thirty-nine retirees as well as twenty-four vested former members eligible for a future pension. The selected party will report to the Board of Supervisors of Lower Providence Township through two Township Pension Committees, the Police Pension Fund Committee and the Employee Pension Fund Committee (hereinafter “Committees”) that is charged with “assisting the Board of Supervisors in the management and investment policies for the Pension Funds.

SPECIFICATIONS Those responding to this RFP will be expected to attend quarterly review meetings with the Committees and provide appropriate data for scrutiny by the Committees. In addition to this, persons responding to the RFP should understand that the municipality seeks a person that will perform all of the following – and all other associated and required functions – at the lowest possible cost: Investment of pension funds at the highest possible rate of return while maintaining the security of the funds, preservation of principal, and the generation of income and liquidity of funds as specified by the Township’s investment policy. A copy of “Lower Providence Township, Pennsylvania Pension Fund Statement of Investment Policy” is attached. Manage Township pension funds through regular reporting requirements that identify monthly returns compared to benchmarks. The reports should be

available for the Committees’ quarterly meetings, or with a different frequency as communicated by the Committees. The written reports should describe the content, activity, and status of all investments as well as regular reporting to and interaction with the Township’s actuary, manager, auditor, and finance personnel. Completing all administrative and maintenance functions including all nonactuarial reporting that may be required by governmental agencies, and municipal personnel; and most importantly, the monthly issuance of retiree checks, and issuing 1099-Rs. The successful person must appoint a client representative who is accessible by phone and available for meeting approximately quarterly to interact with Township officials and personnel, to answer questions or concerns as needed and to assist with implementing changes, additions, adding retirees, etc. at no additional cost to the Township. Participate in and support periodic audit Township audits.

COMPETITION PROCEDURES Candidates for “Pension Professional Services” must complete an RFP that is comprised of the following response sections and attachments: Company Information, Summary of Services, References, Fees, Other Services, Conflicts of Interest, Professional Service Application and Contract Disclosure, and Professional Service Contract Disclosure. Supporting documentation may also be attached, and any exceptions to the scope of each question and section can be highlighted and justified in this proposal. However, failure to furnish all information requested in the RFP in the order and format requested, at the discretion of the Township, could disqualify the proposal. Written proposals, in accordance with the specifications and procedures provided herein, will be received at the following address: Lower Providence Township, Attn: Township Manager, 100 Parklane Drive, Eagleville, PA 19403. Proposals must be received no later than 10:00 a.m. (local time) on March 15, 2014. Proposals must be sealed and clearly marked "Township Manager: Proposal for Township Pension Professional Services" on the exterior of the envelope. Ten (10) complete copies of each proposal are to be submitted, and all costs incurred by the respondents in the preparation and submission of the RFP shall be the sole responsibility of the respondents. Upon submission, all proposals become the property of the Township and will not be returned, and following the award of a Professional Service Contract, all applications and disclosure forms shall be public except for proprietary information or other information protected by law.

Any technical clarification of this RFP should be made in writing and submitted to OR BY Richard Gestrich, Township Manager (Lower Providence Township, Attn: Richard Gestrich, Lower Providence Township, 100 Parklane Drive, Eagleville, PA 19403). However, the Contractor “may not cause or agree to allow a third party to communicate with officials or employees of the Township except to request technical clarification…(and) nothing … shall preclude a potential Contractor from responding to requests for clarification or additional information from the Township.” The Township will review all proposals at a date and time to be determined, and will consider procuring pension fund professional services from a person for an unspecified time period. In doing so, the following terms and conditions will be part of the selection process: -

The Township reserves the right to reject any and all RFPs.

-

The Township “shall evaluate the qualifications of the person submitting proposals for the services sought and shall select the most qualified after a review of the person’s qualifications, experience, expertise and compensation to be charged.” The Township may select an RFP other than the lowest cost provider; however, the “relevant factors that resulted in the award of the Professional Service Contract must be summarized in a written statement to be included in or attached to the documents awarding the contract. Within ten (10) days of the award of the Professional Service Contract , the original application, a summary of the basis for the award, and all required disclosure forms must be transmitted to all unsuccessful applicants and posted on the Township website, at least seven days prior to the execution of the Professional Service Contract.”

-

Township may select one or more applicants for interviews.

-

The Township reserves the right to suspend, withdraw or amend RFP structure and content at any time.

-

All RFPs will clearly indicate a contact person, office address and telephone number for the bidding person.

-

Within ten (10) days of the award of the contract, respondents will receive notice in writing from the Township as to the award made pursuant to this RFP. The notice will include the application form and disclosure statements of the successful candidate as well as a statement summarizing the relevant factors that resulted in the award of the professional services contract. This notice will also be posted on the Township website.

Response Section I: Company Information: 1. Provide the full name of your person or organization.

2. List the name and addresses of your parent organization and/or other affiliates. Provide a brief description of each relationship.

3. Provide a brief summary of your person. Attach a copy of your most recent annual report.

4. List the address of the local office that will provide service for our relationship. 5. NOTE: This section is substantially included in the attachment “Professional Service Application and Contract Disclosure”, and should be disclosed where applicable on that form. Disclose the names and titles of each individual who will be providing professional services to the Township, including advisors or subcontractors of the proposed provider. The disclosure and personnel information shall include, but not be limited to, the following: A. Whether the person providing services or any principal in the entity providing services is a current or former official or employee of the Township. B. Whether the person providing services or any principal in the entity providing services has been a registered Federal or State lobbyist. C. Whether the person that intends to enter or enters a Professional Service Contract is or has been employed or compensated by a third-party intermediary, agent or lobbyist to directly or indirectly communicate with a Township official or employee in connection with any transaction or investment involving the Contractor or the Municipal Pension. This disclosure requirement shall not apply to an officer or employee of the investment person who is acting on behalf of the person, including the actual provision of the legal, accounting, engineering, real estate or other professional advice, services or assistance pursuant to a Professional Service Contract with the Municipal Pension. D. A description of the responsibilities of each individual with regard to the contract.

E. Resumes of the person and any individual employed by the person who intends to provide or provides service to the municipal pension funds. To be included ought to be the name of the main person(s) and contact(s) for our relationship. Please include information on their education, backgrounds, certifications and levels and duration of experience. 6. If there have been significant changes in your organization in the past twelve months, please provide a summary of the changes and include a timeline. 7. If your organization is planning to implement changes during the next two years, please provide a summary of the changes and include a timeline. 8. Provide a history of your investment consulting services and include the years of experience. 9. Specify whether you and your person are registered investment advisors, and include descriptions (e.g., NASD).

Response Section II: Summary of Services 1. Outline the intended method of developing appropriate investment policies for Lower Providence Township’s Pension Funds. 2. Describe your intended interaction and involvement with the Committees during the investment policy development process. 3. Outline your opinions and any time frames for implementing an appropriate asset allocation mix. 4. Describe your intended interaction and involvement with the Committees during the asset allocation process. 5. Describe your method and time frame for identifying potential investment managers. Include any databases you typically utilize in your search. 6. Describe the role that your person would like to take in manager presentation to the Committees. 7. If you or your person receive any direct or indirect compensation from the managers you help us select, please describe. 8. Please comment on the frequency with which portfolios would be priced and the treatment of the fees.

9. Provide the methodology used to compute investment manager rates of return. If the rates of return include the use of accrued income, please explain. Provide a description of how you incorporate accrued income into the calculations of returns. 10. Provide a description of how you evaluate “value added” in active management. 11. Describe your process for reviewing investment manager compliance of investment objectives and guidelines. 12. Specifically describe your performance evaluation system and philosophy related to investment objectives and guidelines. 13. Provide a list of relevant services that your person outsources. Include information on your ability to influence changes to the services or software to meet the reporting needs of the Committees. 14. Provide information on the timing of distributing copies of the investment performance measurement reports to the Committees following the end of a reporting period. Specifically describe what types of exhibits would be used in a summary report presented to the Committees and include other types of exhibits that you would want to include in a detailed performance analysis. Please provide copies of sample reports. 15. If your company proposes custodial services for Lower Providence’s account, please provide a list and description of service charges. 16. If your company will provide online access for the Committees, to view assets and account values, please include a description of how often the values are updated.

Response Section III: References 1. Quantify the number of clients using your services and include the value of funds currently under existing consulting agreements. 2. Provide the number of clients which are public retirement plans. Include the number of Pennsylvania City/Borough/Township pension plan clients currently under existing consulting agreements. 3. Provide three client references with at least two being public retirement plans, and identify their asset size, phone numbers and a contact name.

Response Section IV: Fees Note that a Professional Service Contract shall not be amended to increase the cost of the contract by more than ten percent (10%) or $10,000, whichever is greater, unless the increase and a written justification for the increase are public and posted on the Township’s website at least seven days prior to the effective date of this amendment 1. Provide a detailed description of the fees for proposed service. 2. Specify fees or expenses that would be recurring, versus “one time” or initial fees. 3. Provide the period of time that the fee schedule is guaranteed. Please attach a sample engagement contract. 4. Describe any additional charges that might apply.

Response Section IV: Other Services 1. Please provide any other relevant services, and the details of those services, that are included in this proposal. 2. Are there additional comments or suggestions that the Committees ought to consider? 3. If selected, describe the likely transition process from the current advisor and include a proposed timeline.

Response Section IV: Conflicts of Interest NOTE: Some elements of this section are included in the attachment “Professional Service Contract Disclosure”, and should be disclosed entirely on that form. In order to prevent conflicts of interest on the part of any person providing services to the Municipal Pension, there shall be a minimum one-year restriction on: participation by a former employee of a Contractor or potential Contractor in the review of a proposal or negotiation of a Professional Service Contract with the Contractor; and, participation by a former employee of the Municipal Pension in the submission of a proposal or the performance of a Professional Service Contract. Also, in regard to relationships and gifts: a “Person or an affiliated entity that enters into a Professional Service Agreement with the Township may not have a direct financial, commercial, or business relationship with any official of the Township unless the Township consents to the relationship following full disclosure”; and, a “Person who enters into or proposes to enter into a Professional Service Contract may not offer or confer a gift having more than a nominal

value, including a gift of money, services, loans, travel, lodging, entertainment, discount or other thing of value, to any Township official, employee or fiduciary.” All Persons “entering into a Professional Service Contract or submitting an RFP with the hope of entering into a Professional Service Contract or who in any other way solicits a Professional Service Contract shall annually disclose all Contributions to which all of the following apply: A. The Contribution was made in the last five years; B. The Contribution was made or caused to be made by an officer, director, executive-level employee or owner of at least 5% of the person or Affiliated Entity; C. The amount of the contribution was at least $500 in the form of: 1. A single contribution by a Person identified in Resolution 2014-17 2. The aggregate of all contributions by all Persons listed in the Resolution 2014-17. D. The contribution was made to: 1. A candidate for any public office in the Township or to an individual who holds that office; 2. A political committee of a candidate for public office in the Township or of an individual who holds that office. In addition, Persons shall disclose the following as it relates to “Conflicts of Interest”: 1. If you, your person or affiliate manage money for clients, please describe the organizational controls implemented to prevent any conflicts of interest. 2. If your person or affiliate is broker/dealer, explain how your person trades for client accounts through this broker/dealer. Describe the organizational controls implemented to prevent any conflict of interest. 3. If you buy products or services from any investment advisors, please describe. 4. If you sell products or services to any investment advisors, please describe. 5. If you sell database information and/or performance analysis to investment managers, please explain if you receive compensation directly or indirectly. Include a summary of how you prevent conflicts of interest. 6. If you charge direct or indirect fees for investment managers to be included in your person’s database, include a listing and description of the fees. Provide a summary of how you prevent conflicts of interest. 7. Describe the circumstances under which you would receive or could receive fees or soft dollars from investment managers or their affiliates.

8. Specify the circumstances under which you would receive fees, or any other hard or soft dollar arrangements, from broker/dealers and provide a brief description. 9. Explain in detail, any potential conflicts of interest that may exist should you be selected. Please include any activities of affiliated or parent organizations, as well as, other client relationships, which may inhibit services. 10. Provide the date, amount and recipient of any political contributions you have made, in excess of $500.00 to any Lower Providence Township elected official or related elections committee from January 1, 2009 to the present. Note that a “Person that enters into or has applied for, submitted an offer, or bid for, responded to a request for proposal on or otherwise solicited a Professional Service Contract with a Municipal Pension or an agent, officer, director or employee of that Person may not solicit a Contribution to any Township official or candidate for Township office or to the political party or political action committee of that official or candidate.” Further, a “Person or an affiliated entity that, within the past two years, has made a contribution to a Township official or candidate for municipal office in the municipality which controls the Municipal Pension may not enter into a Professional Service Contract with the Township, except that the two-year restriction shall not apply to any contribution made prior to December 17, 2009.” 11. Complete the attached “Professional Service Contract Disclosure” & “Professional Service Application and Contract Disclosure”

Lower Providence Township, Pennsylvania Pension Fund Statement of Investment Policy Spring 2005 This statement has been prepared by Smith Barney Consulting Services, for approval by the Board of Supervisors of Lower Providence Township, Pennsylvania. The purpose of this statement is to define investment policy regarding the investment management of Pension Fund assets. Division of Responsibilities The Pension Committee has responsibility for the following with respect to investment policy:  Establishing overall financial objectives and investment policy.  Selecting one or more qualified investment managers and delegating to such investment managers the responsibility for implementing the investment policy expressed by the Pension Committee.  Monitoring performance of fund managers to assure that objectives are met, and that policy and guidelines are followed.  Taking appropriate action if objectives are not met or if policy and guidelines are not followed. The investment managers will be responsible for asset management including the investment strategy and implementing of security selection within the guidelines established by the Pension Committee. The Pension Committee will fix guidelines from time to time after consideration of the advice and recommendations of the investment managers and investment manager consultant. All modification of guidelines shall be in writing and signed by the appointed representative of the Pension Committee. The ratification of these objectives and any changes contained herein must be submitted to the Lower Providence Board of Supervisors for final approval.

Lower Providence Township Pension Fund Investment Objective Statement 1

Objectives The Lower Providence Township has one police fund and a non-uniform pension fund. The goal for the fund will be set forth as follows: The Police and Non-uniform Pension fund have pension pay out obligations and will be invested accordingly. The Funds will use a mixture of stocks and bonds to achieve the overall objective of growth exceeding the inflation rate. In additions the funds will strive to beat the actuarial assumption over a complete market cycle, (three to five years). The Pension Committee and the Investment Manager Consultant will set asset allocation policy with regards to how much will be invested in each asset class and with each money manager. Each asset class and each manager will have a specific percentage allocated to them. However, the Pension Committee and the Investment Manager Consultant will set ranges for each asset class and each manager. This will be done so that the investment objective statement does not have to be amended, whenever a strategic asset allocation decision is made. The range of allocation for each asset class and each manager style will be a minimum of 5% to a maximum of 40%. The Investment Manager Consultant will communicate to the board prior to any major asset allocation rebalancing that will take place. It is the philosophy of the Pension Committee that a maximum of 65% of the Funds assets might be invested in equities, if, in the Investment Manager Consultant’s opinion, the equity outlook is very positive. Conversely, the Pension Committee believes the equity portion should not be allowed to decline below 20% of the Fund's assets. Equity Management Equity Management will be divided amongst equity managers with different investment styles and equity strategies. The consultant and the Pension Committee with regards to allocation between managers will review the percentage that each manager is responsible for at least annually. When the manager is more than 5% over his target allocation he will be cut back unless the standard deviation for that asset class remains low. However, at least annually the manager who is more than 5% over (or under with approval of the board), their stated allocation will be brought back into line with the agreed upon allocation. The fund will utilize various styles of equity management in order to achieve growth of capital. However, the percentage allocated to each fund will be stated in a range. For example, currently 15% of the fund will be focused on the “value” style of investing. This range can fluctuate between 10% to a maximum of 35% without a change being made to the investment objective statement. The fund will also use ETF’s, (Exchange Traded Funds) in order to mimic various indices and lower overall costs. When needed the fund’s consultant will recommend which types of ETF’s to use.

Lower Providence Township Pension Fund Investment Objective Statement 2

As of the date of this document the current equity managers and/or styles being used are: Large Cap Growth Large Cap Value Small-Mid Growth Small-Mid Value International

5-30% 5-30% 5-20% 5-20% 5-25%

Permissible asset allocation range. Permissible asset allocation range. Permissible asset allocation range. Permissible asset allocation range. Permissible asset allocation range.

Each of the active managers will be measured against their respective benchmarks as determined by Smith Barney Consulting. Fixed Income Management The fund will utilize a fixed income manager. The fixed income manager will be expected to generate a positive return over the Lehman Brothers Intermediate, Government Corporate index.

Lower Providence Township Pension Fund Investment Objective Statement 3

Delegation of Authority The Investment Manager will be held responsible for making all investment decisions regarding the assets in the Fund and will be accountable for the objectives indicated herein, with the exception of the effect of 1) Any specific limitations set forth in this memorandum and 2) Any actions taken in observance of the guidelines and philosophies stated herein.

Guidelines I. Investment Philosophy Asset Allocation The Pension Committee believes it should be the function of the Investment Manager to allocate the Funds' assets among common stocks, bonds, and cash reserves. In so doing, the Investment Manager should strive to both preserve principal and achieve long-term appreciation of the Fund's assets. The Pension Committee believes that varying overall market conditions will, and should, cause the Investment Manager to place greater emphasis on either the preservation of principal or capital appreciation at certain times. It is the philosophy of the Pension Committee that a maximum of 65% of the Funds assets might be invested in equities, if, in the Investment Manager's opinion, the equity outlook is very positive. Conversely, the Pension Committee believe the equity portion should not be allowed to decline below 20% of the Fund's assets.

II. Diversification In order to minimize the risk of large losses in individual security positions, the Fund will be constructed by the investment managers to attain prudent diversification in equity and fixed income investments. At no time shall the investment in a single equity security or debt obligation exceed 5% of the Fund, expressed at cost value. The obligations of the United States government or its instruments and any commingled short term fixed income funds shall be governed by the foregoing limitation placed on these investments.

III. Investment Quality The fixed income portfolio will maintain an average minimum quality rating of "A" as designated by a recognized rating service. The selection and maturity of these issues is the responsibility of the investment managers.

Lower Providence Township Pension Fund Investment Objective Statement 4

IV. Types of Assets In order to provide the Investment Manager with freedom to invest in various types of assets, the following list of types of assets which are expressly approved is provided: Common Stock, Preferred Stock, U.S. Government Securities, Money Market Funds, Commercial Paper, and Convertible Securities Bonds, with AA rating. All assets selected for the portfolios must have a readily ascertainable market value and must be readily marketable. The following types of assets or transactions are expressly prohibited; Selling Short, Letter Stock, Mutual Funds, Foreign securities other than those listed on the New York Stock Exchange, and Margin purchases V. Investment Markets - Equities In order to broaden the investment opportunities for the Investment Manager to achieve the objectives set forth herein, he is permitted to invest in equity securities listed on the New York Stock Exchange, principal regional exchanges and over-the-counter securities for which there is a strong market providing ready salability of the specific security.

Lower Providence Township Pension Fund Investment Objective Statement 5

Review of Policies The Pension Committee on an annual basis will review the Investment Policy.

Review of Performance The Pension Committee will meet with the investment managers or the investment manager consultant, quarterly, at a minimum. The investment managers or the investment manager consultant will make presentations that consist of: Past and prospective changes in portfolio structure; Past and prospective changes in investment philosophy and investment strategy; Historical performance against the objective set forth in this document; Economic market analysis; Portfolio activity; Portfolio appraisals and specific security listings. Additionally, the Pension Committee will review investment results at least semiannually; the review of the investment results will focus on: Adherence to Investment policies and guidelines; Comparison of results against funds using similar strategies (in terms of the stock/bond ratio, diversification, income, and volatility); Comparison of equity, fixed-income and other investment vehicle results against similarly structured funds. This investment objective is agreed to and signed by the following members of the investment committee.

Pension Committee Member,

_________________________________

Pension Committee Member,

_________________________________

Pension Committee Member,

_________________________________

Pension Committee Member,

_________________________________

Pension Committee Member,

_________________________________

Chairmen of the Board of Lower Providence Township Supervisors

_________________________________ Lower Providence Township Pension Fund Investment Objective Statement 6

Lower Providence Township Professional Service Application and Contract Disclosure A disclosure is required in order to submit a proposal or enter into a Professional Service Contract for the Municipal Pensions and Retirement Plans. Please use a separate disclosure form for each Person providing or proposing to provide services to Township. A) FOR PERSONS SUBMITTING APPLICATIONS UNDER PROPOSAL i)

Information of each individual (including advisors or subcontractors) who will be providing professional services to the Township: Name ____________________________ Title ____________________________ Current or former official or employee of the municipality: ( ) Yes ( ) No Registered Federal or State lobbyist: ( ) Yes ( ) No Employed or compensated by a third-party intermediary, agent, or lobbyist to directly or indirectly communicate with a Township official or employee in connection with any transaction or investment involving the Contractor or the Municipal Pension: ( ) Yes ( ) No Description of Responsibilities of each individual providing services under the contract: ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ Please attach resume of each person intending to provide service to the Municipal Pension: _______

ii) Disclosure of all Contributions described in Section 2.d and 6 of Township Resolution: A Contribution of $__________was made to __________________________ on ____________________ for ____________ by __________________________. (Attach additional sheet if necessary) iii) Compliance with conflict of interest one-year restriction requirements: a) Has there been participation by a former employee of the potential contractor in the review of a proposal or negotiation of a Professional Service Contract with the Contractor: ( ) Yes ( ) No b) Has there been participation by a former employee of the Municipal Pension in the submission of a proposal or the performance of a Professional Service Contract: ( ) Yes ( ) No

B) FOR PERSONS OR ENTITIES WHO HAVE ENTERED INTO A PROFESSIONAL SERVICE CONTRACT

Must disclose all of the above information upon proposal in addition to the following upon the rewarding of the contract: i)

Must annually disclose all Contributions which meet the conditions of paragraph 6 of the Township Resolution: A Contribution of was made to __________________________ on ____________________ for ____________ by __________________________. A Contribution of was made to __________________________ on ____________________ for ____________ by __________________________. (use additional forms if necessary)

ii) With regard to Contributions, any Person or Affiliated Entity that has a Professional Service Contract

with a Township must disclose the following information about the Contribution: Name of contributor ____________________________ Address of contributor ____________________________ ____________________________ ____________________________ Contributor’s relationship to the Contractor ____________________________________ Name of person receiving Contribution ____________________________ His/Her office or position _______________________________________ Contribution amount _______________________

Date _______________________

iii) Must disclose any gifts made to a Township official or employee:

A gift was made to __________________________ on ____________________ for ____________ by __________________________.

iv) Must disclose the employment retention of any third-party intermediary, agent, or lobbyist and his or her

duties: __________________________ of ___________________________________was employed by _____________________________ for the period of ______________________________________. While employed, he/she was responsible for the following duties _______________________________ ___________________________________________________________________________________ ___________________________________________________________________________________ v) Must disclose any financial relationship under Section 5.b of the Township Resolution: ______________________________________________________________________________________________ ______________________________________________________________________________________________ ______________________________________________________________________________________________ ______________________________________________________________________________________________