Home > News > Newsmakers > Oregon PERS to Lower Fund’s Assumed Rate 0.3%, Increasing Unfunded Liability
Newsmakers

Oregon PERS to Lower Fund’s Assumed Rate 0.3%, Increasing Unfunded Liability

New rate suggested by Milliman based on study.

By Chris Butera

A unanimous vote at Oregon Public Employees Retirement System’s (PERS) July 28 board meeting will lower the pension fund’s assumed rate of return, further straining the long-term budgets of the state’s school districts and other public agencies.

The 0.3% reduction—from 7.5% to 7.2% per year—will add an estimated $2.4 billion to PERS’s unfunded liability, expanding it to $24.4 billion, according to National Public Radio affiliate KOUW.

According to The Register Guard, this is the third time since 2013 that the board lowered its assumed rate of return. The Register Guard also said that prior to 2013, the fund kept a steady return rate of 8% for 23 years.

The move will cause public employers to make more annual contributions into the overall system to meet the required pension payments to retirees. To cover the balance of these payments, PERS will use returns from stocks and bond investments.

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In addition, money from property and tax receipts paid into PERS by government agencies will reduce the available funds agencies have for public services. This includes teachers, police, library staff, and others.

The rate was lowered due to suggestions in a formal report issued to the board by the board’s actuary, Milliman. In the report, Milliman calculated 10- and 20-year data from Pension Consulting Alliance (PCA), primary investment consultant Callan, a 2016 Horizon survey of capital market assumptions, and Milliman data, and determined that the new assumed rate should be between 7% and 7.25%, as told to CIO by Milliman principal, consulting actuary Matt Larrabee.

The report also finds that long-term market projections compiled from Milliman and the PCA would have set the return rate between 6.7% and 7.6% over the next 20 years.

In a statement, Pat McCormick, spokesman for statewide business coalition Brighter Oregon, said “a more realistic assumption is an important first step toward unmasking the severity of the problem.”

The new assumed earnings rate takes effect in 2018.

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Home > News > Newsmakers > UN Pension Fund Launches Global Search for New CIO
Newsmakers

UN Pension Fund Launches Global Search for New CIO

Female candidates strongly encouraged.

By Chris Butera

The United Nations is issuing a global search for a new CIO to lead its pension fund.

The $50 billion-plus fund, known as the United Nations Joint Staff Pension Fund, has set forth the following requirements for candidates:

  • More than 20 years of proven progressively responsible experience in the management of economic, social security, and/or financial policies and activities for governmental or intergovernmental organizations or for substantial private concerns.
  • A proven track record of extensive relevant experience in the management of investment of complex portfolios of assets of various classes, such as pension funds, including their risk management, and in financial markets.
  • Demonstrated direct knowledge of and experience in managing financial, economic, and investment policies, including:
    (a) Defining and overseeing investment policy for substantial and diversified investment portfolios having long-term return objectives, including policies for investment objectives, risk appetite, and tolerance, the risk framework, the investment milieu, restrictions on investments, and social responsibility considerations;
    (b) Developing strategic asset allocation for portfolios aiming for long-term rates of return, particularly for defined-benefit pension or other similar long-term social security and similar benefit schemes where long-term asset-liability management considerations are paramount;
    (c) Developing, implementing and monitoring investment strategies and overseeing research on economic and other trends affecting financial markets;
    (d) Managing interdisciplinary and internationally diverse teams of financial professionals;
    (e) Reporting to and coordinating with governing organs (e.g., legislative bodies, boards, and committees) on investment, financial, and/or technical matters.

In addition, there will be a human rights screening for the position as well as the completion of a pre-appointment declaration of any conflicts of interests.

Applicants from anywhere in the world may apply by sending a cover letter and CV to the Secretariat of the United Nations at eosgapplications20178@un.org by August 28, 2017.

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Female candidates are strongly encouraged to apply.

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