Researchers found a decline in assumed rates of return due to lower assumed inflation combined with a change in asset allocations, resulting in a higher expected real return, has increased costs for public pensions, but the increase is much smaller than if the decline in the assumed return was due to a lower assumed real return.
The San Bernardino County Employees’ Retirement Association uses knowledge management and InvestTech to make better-informed portfolio rebalancing decisions.
Wilshire Consulting also reports significant changes to state pensions’ allocations to equity and real assets over the past decade.
The regulator says a romantic interest led a county manager in Georgia to recommend one investment adviser over others to three public pension fund boards.
Employer contributions to public pensions fell below certain benchmarks for improving plan funded status, and the Society of Actuaries suggests a couple of reasons this may be so.
Between nearly doubled investment returns, stable contributions and cost-effectiveness, the "2018 NCPERS Public Retirement Systems Study” shows an increase in pension funding.
“Equity exposure weighed on plan performance in the fourth quarter,” says Jason Schwarz, president, Wilshire Analytics and Wilshire Funds Management.
“Fixed income was something of a safe harbor in the fourth quarter, and Corporate ERISA plans benefited from larger allocations to bonds,” says Bill Frieske, with Northern Trust.
Research from the Center for Retirement Research (CRR) at Boston College also suggests public defined benefit (DB) plan return assumptions are on the optimistic end compared with those of investment professionals.
It developed the new tables to give pension actuaries and plan sponsors current information to assist in setting mortality assumptions once it was determined that public pensions have differing levels of mortality than private pensions.
The study, which evaluated pensions against hypothetical 401(k) plans, finds 77% of teachers in six states will work long enough in the same retirement system to earn benefits of greater value and security from the lowest-tier pension, compared to an idealized 401(k) with low fees and no investment mistakes.
Reporting proposals from the Actuarial Standards Board and Congress, as well as new proposed mortality tables from the Society of Actuaries could result in a higher valuation of pension obligations and lower funded levels for public pensions, according to Mike Moran with GSAM.
BNY Mellon says higher allocations to U.S. equity drove outperformance as U.S. fixed income sustained its streak as the lowest performing asset class.
The New York State Common Retirement Fund and the New York State Teachers Retirement System hold Exxon shares with a combined value of approximately $1.5 billion, and a lawsuit asks for damages, a disgorgement of all monies obtained in connection with the alleged fraud, and restitution.
Looking at the average funded ratio of all public pensions leads to generalizations, but dividing them into groups shows many are doing well, while some will need serious intervention.
OPERS said the move is expected to lower its funding level, but increase the time in which it can pay off liabilities.
Corporate plans have significantly increased their U.S. fixed income allocation, while public plans have used the funds from U.S. equity and placed them into alternatives, Investment Metrics finds.
“The increase in global equity values for the 12-month period ending June 30, 2017 was a primary driver of the improved funding levels,” says Ned McGuire, at Wilshire Consulting.
The SOA said it developed the new tables once it was determined that public pensions have differing levels of mortality than private pensions. It is soliciting comments on its proposal.