Arkansas Public Employee Retirement Administration Board Selects Stevens as Private Equity Consultant


The Arkansas Government Employees’ Retirement Plan Board of Trustees voted Thursday to hire Little Rock’s Stevens & Co. as a private equity consultant for the plan, which will ultimately fund about $500 million in its investment portfolio. We aim to invest in publicly traded stocks.

The Trustees also voted in favor of lowering the plan’s annual investment return target from 7.15% to 7%. This comes after an actuary at the plan’s actuary said in May that the plan’s current target of 7.15% was reasonable, but it was close to the high end of the target range. I think the company is reasonable.

Rather than raising the current employer ratio of salaries charged to state and local governments from 15.32% to 16.51% in conjunction with the reduction in the annual investment return target, the Board of Trustees has decided to 14% in line with the reduction in the annual investment return target. elected to extend from 2018 to 18 years. The forecast period for the system to repay the unfunded debt.

The system’s unfunded liabilities totaled about $2.1 billion as of June 30, said Mita Dragilov, actuary of Gabriel Lauder Smith & Co. for the system. A system’s unfunded liability is the amount by which the system’s liability exceeds the actuarial value of the system investment. Actuaries often compare the expected repayment period of an unfunded liability to a mortgage.

Drazilov said the system has made significant progress in reducing unfunded debt since it reached $2.5 billion in 2012.

The Arkansas Civil Service Retirement Plan is the second largest retirement plan in the state government, with more than $10 billion in investments and more than 75,000 active and retired members. The Arkansas Teachers’ Retirement Plan is the state’s largest retirement plan, with more than $20 billion in investments and more than 100,000 active and retired members.

In a voice vote in which the dissenters were not heard, the Trustees voted Stevens into the system after interviewing officials from two other private equity consultancies, Callan of Chicago and Alborn America of Stamford, Connecticut. voted to hire as a private equity consultant for Stevens on Thursday.

Mr. Curran has been the system’s full-service investment consultant for nearly 35 years and has offered private equity consulting services to the system for four years at no additional cost, said Brian, senior vice president of Curran. Weymouth said.

Albourne America proposed a private equity consultant fee of $300,000 per year for four years, but Stevens reduced fees from $54,000 in the first year to $155,000 in the second year. proposed a gradual increase of $254,000 in the third year and $354,000 in the fourth year. According to written summaries of the companies’ proposals provided to the trustee.

The Trustees’ Investment Finance Subcommittee on Wednesday recommended meeting with all directors of Curran, Alborn America and Stevens on Thursday. The subcommittee also considered four other companies that had submitted qualifications to the system as potential private equity consultants. Cliffwater, Meketa Investment Group, NEPC LLC and RVK Inc.

Larry Middleton, Stevens’ executive vice president, told the trustees of the plan on Thursday that Stevens was a pioneer in private equity before it was called private equity, and in recent years private equity investments have seen an increase in investors. said it was bringing “fantastic profits” to Stephens is an investment consultant to the Arkansas District Police and Fire Retirement Organization, and currently has $600 million of its $3 billion investment portfolio in alternative and private equity investments, Middleton said. It is said that there is

Labor and Licensing Secretary Trustee Darryl Bassett said Albourne America is a super company, but “for me it’s Curran or Stevens” because it’s the hardest to consider for the proposed fees.

Trustee Larry Walther, Secretary of the Treasury Department, said he likes the idea of ​​getting different opinions from two investment consultants. Curran has done a good job as a general investment consultant for the system, but he said it would be helpful to hire another firm as a private equity consultant.

Amy Fescher, the program’s executive director, noted that the Arkansas Teachers’ Retirement Program includes integrated investment consultant Aon and private equity consultant Franklin Park.

As of June 30, 2022, the plan will have 42,771 workers with an average annual income of $45,020, according to Gabriel Lauder Smith & Co.

The plan also includes 41,390 retirees, including participants in the deferred retirement plan, with total annual benefits of $671.2 million as of June 30, 2022, an average annual It is about $16,216. As of June 30, there were 1,426 participants in deferred retirement with a total salary of $93 million, or approximately $65,217 annually.

In fiscal 2022, which ended June 30, 2022, state and local governments paid $320.8 million to the system, and system operating members paid $81.2 million to the system, according to the system report. Active members of the scheme who contribute to the scheme will pay 5% of their salary to the scheme in 2022 under Law No. 365 of 2021 and will start paying 5.25% of their salary to the scheme from 1 July 2022 . In 2021, the percentage of workers’ salaries contributing to the scheme will increase by 0.25 percentage points per year from 5% over eight years until reaching 7% of salaries.

As of June 30, the system totaled about $2 billion in outstanding debt, giving the system a funding rate of about 84%, Gabriel said. As of June 30, Gabriel reported that the expected period for the system to pay off its unfunded debt is 14 years.

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