PRB Study of Asset Pooling Delayed Due to Staff Member's Resignation
The Pension Review Board's Actuarial Committee postponed the agency's three-year effort to study the feasibility of asset pooling for smaller pension systems. Anumeha Kumar, the PRB's executive director, told the committee at its Sept. 13 meeting in Austin that the resignation of a staff member would further delay the project.
By Joe Gimenez, TEXPERS Guest Contributor
Kumar had told the PRB in March that staff would begin its research of a recommendation in the agency's 2014 Study of the Financial Health of Texas Public Retirement Systems. The recommendation noted that “Smaller systems may not have the advantage of the economies of scale available to larger retirement systems, thus smaller systems may have greater challenges in keeping their expenses low and achieving higher investment returns.”
This concern was on full display at the Sept. 13 meeting. During a review of a system, PRB Chairman Josh McGee asked several detailed questions about investment consultants' fees compared to the assets of funds they managed. The system's consultant responded by listing several services his firm provides smaller funds. The exchange did not seem to satisfy PRB committee members.
The 2014 PRB report noted that pooling existing pension fund assets might be problematic. While new systems might enroll in the Texas Municipal Retirement System and the Texas County and District Retirement System, merging existing systems into them “may present several significant potential legal and other issues, including how to maintain equivalence of benefits between old and new members, and how to address the existing liabilities of the merging systems.”
The PRB's executive director, Kumar, did not indicate a timetable for hiring a new staff member to study the recommendation.
About the Author:
Joe Gimenez is a public relations professional who specializes in pension fund communications. He has assisted TEXPERS and several Texas pension funds in crisis situations and public affairs.