Ohio Teachers’ Pension Increases Alts and Fixed Income Targets, Decreases Public Equities

The pension was also able to implement a cost-of-living adjustment thanks to high returns this past year.

The State Teachers’ Retirement Board of Ohio shifted its asset mix at its board meeting last week, announcing it will now target 26% of its assets to U.S. equities, down from 28%. It also decreased its international equity allocation to 22% from 23%. The fund increased its allocation to private equity to 9% from 7% and its allocation to fixed income to 17% from 16%.

The increase in private equity, which had record returns this past year, is part of a broader trend. STRS Ohio saw 29% returns in fiscal year 2021, in part driven by a 45% return on alternative assets. These returns were topped only by domestic equities, which returned 46.3% for the fund.

The pension plan is also beginning to share some of these returns with pension beneficiaries. At its board meeting last week, the pension approved a 3% one-time cost-of-living increase for beneficiaries who retired before June 1, 2018.  The 3% adjustment is still less than half of the Bureau of Labor Statistics’ official inflation calculation of 7% in 2021.

For more stories like this, sign up for the CIO Alert newsletter.

“The State Teachers Retirement System has been looking for a way to improve their pension plan and were able to do so with stronger investments that has given them good returns,” State Rep. Phil Plummer told the Springfield News-Sun. “These returns have now been passed along to retired teachers.”

Nevertheless, Ohio is still trying to balance sharing its returns with teachers with its goals to improve its funded status. STRS Ohio is 80.1% funded, which is nearly equivalent to the national average for statewide plans, according to Equable.

After the great recession, the Ohio Teachers’ pension began to implement measures that cut retiree benefits to prevent the fund from accruing even more unfunded liabilities. Despite the strong returns, some of these precautions remain in place.

Starting in August 2023, Ohio teachers will be required to put in 35 years of work to receive pension benefits. The amount of time to receive pension benefits in Ohio has been gradually increasing since 2012, when only 30 years of service were required.

Related Stories:

Ohio Teachers Pension Faces Special Audit Over Scathing Report

Ohio Pension Systems Report Robust Returns for Fiscal 2021

Unfunded Liabilities: How Three Public Pensions Found Themselves in Crisis

Tags: , , , , , , ,

Detroit Pension Fund Seeks Deputy CIO

The Retirement System of the City of Detroit is looking for an investment officer to support CIO Ryan Bigelow.


The Retirement System of the City of Detroit is looking to hire a deputy chief investment officer, according to a job posting on the pension fund’s website.

The RSCD is comprised of two separate retirement systems: the General Retirement System and the Police and Fire Retirement System, each of which is managed by their respective board of trustees.  Each retirement system also has two distinct plans: a legacy traditional defined benefit plan and a new hybrid defined benefit plan. 

The plan, while still underfunded, is on improved footing in the wake of its 2013-14 bankruptcy, which suspended the city’s contribution requirements. And the city itself is in better shape, with both Moody’s Investors Services and Standard & Poor’s this month giving it credit upgrades, to just two notches below investment grade. The ratings now are Ba2 and BB, respectively.

The deputy CIO will be responsible for managing and evaluating the fixed income and alternative investment programs in accordance with the RSCD’s investment policy statement, as well as applicable federal and state laws and regulations. The deputy CIO is also responsible for monitoring and due diligence of the equity and real estate portfolios, and providing advice and recommendations regarding all investments to the investment committee, executive director and board of trustees.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news.

The main responsibilities will be to identify, review and evaluate prospective investment opportunities, as well as coordinate portfolio review and due diligence meetings, and prepare agendas and meeting notes. The deputy CIO will also be expected to monitor and manage the portfolio of existing real estate investments to ensure compliance with limited partnership agreements and other contracts. The deputy CIO will also support CIO Ryan Bigelow with respect to ongoing due diligence of the private equity hedge fund portfolios.

Additional duties include, among others:

  • Developing internal and external reports on investment strategy and portfolio performance.
  • Assisting senior management with the use of risk analysis and compliance projects.
  • Performing quantitative and qualitative due diligence on prospective investment opportunities, including evaluating past track records.
  • Monitoring and regularly reporting on investment activities of investment partners.
  • Developing framework for analyzing the performance of existing investments.
  • Overseeing the quarterly and annual valuation process for all real assets.
  • Overseeing the development of an internal database of existing investments.

The knowledge, skills and abilities required include property, asset and portfolio management practices and procedures; real estate finance and investment methods and concept; real estate valuation methods, internal rate of return, net present value capitalization techniques; financial forecasting; sensitivity analysis; hold/sell and rent growth analysis and auditing principles and techniques.

The position also requires a minimum of 10 years’ experience performing a variety of professional investment duties related to acquiring, organizing, directing, underwriting and managing portfolios of institutional investment real estate. Experience with institutional private equity and hedge fund investments is preferred. Candidates can apply for the role at jobs@rscd.org.

RCSD provides services and benefits to approximately 9,000 active members and 20,000 retirees and beneficiaries, and has approximately $5 billion in assets.

In January of 2020, the board of trustees of the Police and Fire Retirement System sued its own investment committee to prevent a 75% pay increase to the retirement system’s former Deputy CIO Kevin Kenneally.

Related Stories:

Detroit Pension Sues Own Investment Committee over Deputy CIO Pay Raise

Detroit Pension No Longer Suing Dan Gilbert

CalPERS Appoints Nicole Musicco as Chief Investment Officer

 

Tags: , , , , ,

«

 

To continue in incognito, please login. Or... 

 Subscribe to a free PW Newsletter! 

…subscribing gets you free access to PW’s online content!

If you’re a subscriber, please login.