Public Pension Return Assumptions Haven’t Budged: Survey

Public pensions still targeted a 7.5% average rate of return in 2016, according to a survey by the National Conference on Public Employee Retirement Systems (NCPERS).

The average did not change from 2015, despite a majority of funds reporting that they are at least considering revising their return assumptions.

In the survey, which polled 159 state, local, and provincial government pension funds between September and November of last year, NCPERS found that nearly 40% had decreased their actuarial assumed rate of return in 2016.

A further 30% said they were considering making downward revisions in the future.

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Of the pensions that did lower their return targets between 2015 and 2016, the reduction was an average of 0.26%.

Although annual returns in 2016 were just 1.7%, according to NCPERS, long-term returns were closer to current targets: Returns over 3-, 5-, and 20-years hovered around 8%, while 10-year returns were 6.2% on average.

However, in the last year managers and asset owners alike have raised concerns that returns will be harder to come by going forward.

Allocators surveyed by CIO between May and June 2016 said their “best guess” of actual performance was 6.15%, below average official return assumptions of 7.35%.

In December, the California Public Employees’ Retirement System (CalPERS) announced that it would lower its long-term expected return from 7.5% to 7% over the next three years.

“This was a very difficult decision to make, but it is an important step to ensure the long-term sustainability of the fund,” CalPERS Board of Administration President Rob Feckner said in a statement at the time.

The Florida State Board of Administration also slightly lowered its return assumption last year, from 7.65% to 7.6%.

Anthony Scaramucci, founder of SkyBridge Capital and its famed Las Vegas SALT conference, has sold the hedge funds-of-funds firm after being appointed advisor to President-elect Donald Trump.

Holding company RON Transatlantic and Chinese financial services firm HNA Capital agreed to purchase a majority stake in SkyBridge, the three firms announced Tuesday.

As part of the agreement, Scaramucci will step down from his role as co-managing partner and cease to be affiliated with both SkyBridge and SALT.

The announcement comes a week after news broke that Scaramucci, a member of Trump’s transition team, was tapped for a White House advisory job.

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“It has been an honor and privilege to help build SkyBridge and work alongside some of the most talented individuals in the asset management industry,” Scaramucci said in a statement. “While I am moving on to a new chapter in my career, I am truly excited about what the future holds for SkyBridge.”

Aside from Scaramucci’s departure, SkyBridge’s current senior management and investment team will “remain intact,” the firms stated.

The SALT conference, meanwhile, will be spun out as a standalone event. This year’s conference will still be held this May in Las Vegas as planned, according to the news release.

“SkyBridge and SALT are in great hands and will continue to thrive,” Scaramucci said.

The transaction is expected to close in the second quarter of this year.