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INTERIM STUDY REPORT
Pension Oversight Committee
Representative Randy McDaniel, Chairman
Oklahoma House of Representatives
Interim Study 11-040, Representative Randy McDaniel
January 10, 2012
Pension Investment Management Review
Steven Snyder, Executive Director
Oklahoma Police Pension & Retirement System
steven.snyder@opprs.ok.gov
Oklahoma Police Pension & Retirement System (OPPRS) investments are made using a long-term,
conservative approach, which may limit gains on upside but shelters against deep losses
on downside. The current policy of asset allocation by asset class was adopted in July 2011.
OPPRS uses several market benchmarks in performance assessments.
OPPRS believes that private equity investments are worth the higher cost, as these investments
are not as closely correlated to the market which provides protection on the downside.
The OPPRS return over the past 20 years equals 8.14%, which exceeds the system’s assumed
discount rate. Additionally, the projected 10 year median return of 9.58% exceeds the assumed
discount rate by roughly 2%. OPPRS is comfortable with the discount rate of 7.5%.
The DROP plan, with a guaranteed return of at least 7.5%, was instituted for the recruitment of
young officers and the retention of experienced officers.
See OPPRS handout (presentation a).
Ginger Poplin, Executive Director
Oklahoma Law Enforcement Retirement System
GPoplin@olers.ok.gov
The Board of the Oklahoma Law Enforcement Retirement System (OLERS) is very
conservative and focused on protecting assets, which may limit gains on the upside, but also
limits losses on the downside.
Modifications to the asset allocation by asset class policy were made in July 2011. Changes
included additional asset allocation in private equity, emerging markets, and commodities, as
the Board looked to diversify investments. The Board is very conscientious about who is
selected and hired to run the plan’s funds.
The OLERS return over the past 20 years equals 7.98%, which is slightly above the system’s
assumed discount rate of 7.5%. The projected 10 year median return is 8.57%, which also
exceeds the assumed discount rate. OLERS is comfortable with the discount rate of 7.5%.
Recognizing the debate over indexing versus active management, OLERS feels that sometimes
additional management costs are worth it. OLERS also believes that there are great investment
opportunities available in private equity, despite higher fees, and that these investments have
helped their system.
With respect to the DROP plan, OLERS recognizes that the system loses when the market is
below 7.5%, but believes that gains are realized in exceptionally strong years, when asset
growth is strong and members receive 2% less than the actual percentage return.
Object Description
Description
| Title | 11-040 report ocr 1 |
| Full text | INTERIM STUDY REPORT Pension Oversight Committee Representative Randy McDaniel, Chairman Oklahoma House of Representatives Interim Study 11-040, Representative Randy McDaniel January 10, 2012 Pension Investment Management Review Steven Snyder, Executive Director Oklahoma Police Pension & Retirement System steven.snyder@opprs.ok.gov Oklahoma Police Pension & Retirement System (OPPRS) investments are made using a long-term, conservative approach, which may limit gains on upside but shelters against deep losses on downside. The current policy of asset allocation by asset class was adopted in July 2011. OPPRS uses several market benchmarks in performance assessments. OPPRS believes that private equity investments are worth the higher cost, as these investments are not as closely correlated to the market which provides protection on the downside. The OPPRS return over the past 20 years equals 8.14%, which exceeds the system’s assumed discount rate. Additionally, the projected 10 year median return of 9.58% exceeds the assumed discount rate by roughly 2%. OPPRS is comfortable with the discount rate of 7.5%. The DROP plan, with a guaranteed return of at least 7.5%, was instituted for the recruitment of young officers and the retention of experienced officers. See OPPRS handout (presentation a). Ginger Poplin, Executive Director Oklahoma Law Enforcement Retirement System GPoplin@olers.ok.gov The Board of the Oklahoma Law Enforcement Retirement System (OLERS) is very conservative and focused on protecting assets, which may limit gains on the upside, but also limits losses on the downside. Modifications to the asset allocation by asset class policy were made in July 2011. Changes included additional asset allocation in private equity, emerging markets, and commodities, as the Board looked to diversify investments. The Board is very conscientious about who is selected and hired to run the plan’s funds. The OLERS return over the past 20 years equals 7.98%, which is slightly above the system’s assumed discount rate of 7.5%. The projected 10 year median return is 8.57%, which also exceeds the assumed discount rate. OLERS is comfortable with the discount rate of 7.5%. Recognizing the debate over indexing versus active management, OLERS feels that sometimes additional management costs are worth it. OLERS also believes that there are great investment opportunities available in private equity, despite higher fees, and that these investments have helped their system. With respect to the DROP plan, OLERS recognizes that the system loses when the market is below 7.5%, but believes that gains are realized in exceptionally strong years, when asset growth is strong and members receive 2% less than the actual percentage return. |
| Date created | 2012-03-13 |
| Date modified | 2012-03-13 |
