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Asset Allocation

CFA Establishes GIPS Guidance for OCIO Providers

Effective December 2025, the framework – which has been in development for several years – will be mandatory for firms that claim compliance with GIPS standards.
By Matt Toledo



The CFA Institute has released its guidance statement for OCIO portfolios, which aims to develop a framework for outsourced CIO providers to comply with Global Investment Performance Standards, or GIPS.

The framework follows an exposure draft guidance statement for OCIO standards, published in September 2023, and a public comment period which lasted from September to November 2023. The guidelines will be effective December 25, 2025, for firms that claim compliance with the GIPS standards.

Worldwide, OCIO providers manage more than $3 trillion in assets, and that number is set to continue to grow. Cerulli Associates expects the OCIO industry to manage more than $4 trillion in assets by 2028, driven, in particular, by demand from endowments and foundations. 

The guidance statement considers firms that are an OCIO provider and subject to the guidelines if they provide both strategic investment advice and investment management services to clients. 

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A firm which provides one service but not the other will instead follow the existing GIPS Standards for Firms. Additionally, the guidelines for OCIO portfolios applies to providers that manage all of a portfolios’ investment mandate; for example, if a provider only manages one asset class in a client portfolio, this firm would follow the GIPS Standards for Firms, rather than the new OCIO guidance.

The guidance includes standards for OCIO composites, fee schedule disclosures, use of asset allocation ranges, distribution of GIPS reports to clients and benchmark selection.

The guidance also includes a section addressing how firms managing OCIO portfolios should account for performance of legacy assets “that they might wish to sell but may not be able to sell on a timely basis or even on a longer-term basis.” 


The guidance gives firms managing portfolios including legacy assets three options for determining which OCIO portfolios are considered discretionary and will be included in a required OCIO composite, and says firms must “establish a composite-specific policy for the treatment of legacy assets and apply the policy consistently.”

The options are: 

  • Exclude OCIO portfolios from composites portfolios with legacy assets when the legacy assets materially affect the ability of the firm to implement its intended strategy. A firm may consider the amount of legacy assets and type of legacy assets when making this determination.
  • Include OCIO portfolios in composites portfolios with legacy assets, regardless of the amount or type of legacy assets, because the firm determines that it can manage these portfolios to its intended strategy.
  • Include OCIO portfolios in composites the portion of the portfolio that excludes legacy assets when the non-legacy portion of the portfolio is consistent with the mandate for an OCIO Portfolio.

The guidelines can be viewed here:

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Home > News > Pensions > PBGC Updates Rate Tables on Expected Retirement Age, Missing Participants Mortality Assumption
Pensions

PBGC Updates Rate Tables on Expected Retirement Age, Missing Participants Mortality Assumption

Effective date for the final rule is January 1, 2025.
By Remy Samuels



The Pension Benefit Guaranty Corporation published a final rule on Friday amending its regulation on the allocation of assets in single-employer plans.

The amendment involves substituting a new table for determining the expected retirement age of participants in pension plans undergoing distress or involuntary termination. The guidance applies to plans with valuation dates falling in 2025, according to the final rule, which is effective January 1, 2025.

This table is needed to compute the value of early retirement benefits, and, thus, the total value of benefits under a plan. The expected retirement age, or XRA, is one of the assumptions used to determine liabilities under ERISA section 4044.

For ERISA section 4044 calculations, the age at which benefits are assumed to commence depends on two factors:

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  1. Whether the benefit amount is considered low, medium or high (the Retirement Rate Category), and
  2. When participants, under the provisions of their plan can begin receiving reduced and unreduced benefits (the XRA tables).

A copy of the table is available on PBGC’s ERISA Section 4044 Retirement Assumptions web page.

The final rule also provides the mortality assumption for use with PBGC’s missing participants programs for determination dates in 2025. The current table for the missing participants programs provides the mortality assumption only for benefit determination dates on July 31 and later in 2024. The final rule updates the table to provide the mortality assumption for benefit determination dates in 2025.

In addition, the PBGC determined that notice of, and public comment on the rule are “impracticable, unnecessary and contrary to the public interest,” as the PBGC’s update of the tables for calendar year 2025 are routine.

Plan administrators also need the updated tables to value benefits in a timely manner. As a result, the PBGC stated that the public interest is best served by issuing these tables “expeditiously” without an opportunity for notice or comment. The PBGC wrote that good cause exists for making the table set forth in the amendment effective less than 30 days after publication to allow the use of the proper tables to determine the value benefits for dates in early 2025.

 

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