Illinois Police Fund Finishes Consolidation of Local Pensions

The Illinois Police Officers’ Pension Investment Fund has completed the consolidation of 351 local police pension funds, it announced Monday. Approximately 18 local pension funds had their assets transferred as part of the 14th and final group to be added, bringing the value of the IPOPIF’s assets under management to $12.9 billion.

“During this final tranche, approximately 2,100 line items valued at $1.6 billion were transferred to IPOPIF, bringing the total fund value to $12.9 billion as of the end of November,” said Kent Custer, the IPOPIF’s CIO, in a statement.

The IPOPIF was established in December 2019 by state law that mandated the consolidation of the state’s numerous police officer and firefighter pension funds into two investment funds, one for police and one for firefighters. There were 357 police pensions in Illinois; while 351 are now consolidated, another six are considered “special situations” which the Illinois Department of Insurance and the IPOPIF are evaluating, according to a statement.

The IPOPIF began consolidation of assets on March 1, 2022. This last tranche included the funds that had filed a lawsuit questioning the constitutionality of the legislation that established IPOPIF, a spokesperson for IPOPIF said.

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“Transferring assets from 351 separate local police pension funds was a monumental task for our investment and administrative teams at IPOPIF,” said Richard White, the executive director of the IPOPIF, in a statement.

The fund had $11.28 billion in assets under management as of September 30, prior to asset consolidation. The fund allocates 58.1% to a growth portfolio consisting of equities, 20.6% to risk mitigation strategies, 15.5% to fixed income and 5.8% to real assets.

The fund hired Deputy CIO Greg Turk in July to spearhead a push into the private markets. As of September, the fund’s investment policy calls for a 20% allocation to private markets, 7% of which would be private equity, 5% to both private credit and real estate, and 3% to infrastructure.

The Illinois Firefighters’ Pension Investment Fund, created by the same 2019 state law, completed its consolidation into a $7 billion fund by June 30, 2022. It reported more than $9.69 billion in assets under management as of September 30.

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Tags: Illinois Police Officers’ Pension Investment Fund, IPOPIF, Kent Custer, Richard White

The Indiana Public Retirement System has identified State Street, Northern Trust and UBS Asset Management as potential replacements for BlackRock as manager of a $969 million global fixed-income portfolio, INPRS staff said during a December 13 board meeting.

Indiana law, passed in May, requires state pension funds to replace a manager or service provider if the firm is determined to have made “ESG commitments,” defined as actions taken or factors considered “with the nonfinancial purpose” related to environmental, social or governance issues.

If a manager or service provider is determined to have made an ESG commitment, then the board of INPRS must replace them with a comparable firm if one is available. If there is at least one service provider expected to be materially equivalent or materially better financially for the system, then the comparable firm must be chosen.

On June 21, Indiana State Treasurer Dan Elliott determined that BlackRock Inc. was engaged in an ESG commitment, citing BlackRock’s Form 10-K filing that referenced ESG risks and the firm’s status as a signatory to the Net Zero Asset Management Initiative, a group of 325 managers representing $57.5 trillion in assets that support investing aligned to achieve net zero carbon emissions by 2050.

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Following the treasurer’s finding, INPRS issued on June 28 a request for proposals for potential replacements. The BlackRock portfolio eligible for replacement is a passive global inflation-linked bond portfolio. “It’s a portfolio that, frankly, in my opinion, is not even ESG-related, because it’s a global fixed-income portfolio,” said one INPRS staff member in the December 13 meeting.

INPRS staff and the fund’s investment consultant, Verus, determined State Street, UBS and Northern Trust to be comparable to BlackRock, following the RFP process. “They all have over $1 trillion in assets, [and] they all have passive fixed-income assets greater than $90 billion,” an INPRS staff member said in the meeting.

Like BlackRock, State Street, Northern Trust and UBS are all members of the Net Zero Asset Owner Initiative. Firms like State Street have also been placed on watchlists and have been scrutinized for ESG commitments.

The board of INPRS made a unanimous decision to confirm those three firms as comparable vendors. A provider selection is due within 180 days of the RFP, which puts the deadline as December 25.

INPRS staff at the board meeting noted that there were no concerns with BlackRock’s investment performance, but BlackRock’s status as engaged in an ESG commitment dictated the change.

“We’re proud of having helped hundreds of thousands of Indianans invest and retire with dignity. Despite this decision, we remain committed to Indiana and the $102 billion we have invested in the state on behalf of our clients,” a spokesperson for BlackRock said in a statement.

INPRS manages $46 billion in assets for more than 529,000 beneficiaries.