Senate Sends Back KY Pension Bill

A.G. Beshear warned of illegalities prior to non-vote.

Just as the Kentucky Senate was about to vote on the controversial Senate Bill 1, Attorney General Andy Beshear warned the bill would not hold up in court if made a law.

Beshear told reporters and encouraged protesters of SB 1 by telling them that “if the Senate passes SB 1 today, they’ll be breaking the law,” reports Kentucky.com. “The General Assembly decades ago made a promise that if you dedicate your life to public service, if you spend decades teaching our children, protecting our families through law enforcement, protecting neglected children through being a social worker, that we will guarantee you a solid retirement.”

According to the publication, the Friday session—during which the Senate was supposed to vote on the bill—began around 9 a.m., albeit in recess for most of the morning. Following the lunch break, the Senate chose not to vote on the bill at all, sending it back to the Senate State and Local Government Committee.

“After long discussions last night, today, this morning, this afternoon, individuals wanted more time to consider the position that we’re in,” Senate President Robert Stivers said to the delight of several hundred protesters, who cheered for the vote’s stalling.

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After the original bill was deemed illegal by Beshear, a substitute bill was unveiled which aimed to fix the issues. Although it was voted in favor by the committee earlier in the week, Beshear also posted videos on his social media accounts indicating that the substitute bill would not hold up in a court of law as there were still 21 violations, including reductions to the teachers cost of living adjustments (COLA).

With an unfunded liability of more than $40 billion, Kentucky’s pension system is one of the worst-funded in the country. Stivers and the bill’s sponsor, Sen. Joe Bowen, have attested that the bill is in fact legal, with the revised version to improve its legal standing.

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HOOPP Grows to $77.8 Billion, Remains 122% Funded

Fund exceeds benchmark by 2.99%.

Following a 10.88% rate of return, the Healthcare of Ontario Pension Plan (HOOPP) increased its assets by more than C$7 billion, retaining its 122% funded status at the end of 2017.

“Our investment return for 2017 was 10.88%. While we had strong returns pretty much across all asset classes, our public and private equities, fixed income, and real estate all provided significant contributions to our investment income,” HOOPP President and CEO Jim Keohane said in a statement.

At the end of 2017, the Canadian pension fund’s assets climbed from 2016’s C$70.4 billion to C$77.8 billion ($62 billion), keeping its funded status on-par with the previous two years.

Investment income was C$7.6 billion ($5.9 billion, beating 2016 by C$1 billion, with the fund’s 10.88% return exceeding HOOPP’s benchmark by 2.99%. According to a news release, the 10-year return is at 9.55%, just above the 20-year return of 9.01%.

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HOOPP utilizes a liability-driven approach to its investment strategy. With two portfolios—a liability hedge portfolio and a return-seeking portfolio—the fund is able to continually reap returns while minimizing risk. The liability hedge portfolio consists of real estate and fixed income, while the return-seeking portfolio handles public equities, private equity, corporate credit, short-term money market and foreign exchange, and other return-seeking strategies. 

In 2017, 48% of the liability hedge portfolio contributed to HOOPP’s returns. Although real return bonds were basically unchanged, nominal bonds returned 10.5%. According to the release, the real estate section of the portfolio saw an 11.9% currency hedged return—a major contributor during the year.

Returning the remaining 52% of HOOPP’s income, the return-seeking portfolio saw public equities as the top contributor with a 14.8%. Private equity returned 19% on a currency hedged basis.

“HOOPP exists to pay pensions for members. We invest with that objective in mind to ensure that we can meet our pension obligation regardless of the economic backdrop. We also continue to reinvest in our personnel and our systems in order to maintain the sustainability of the Fund and support growth going forward,” Keohane said.

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