7th Annual Economic & Financial Development Conference
Today’s Challenges, Tomorrow’s Opportunities & Pension Funds
July 11-13, 2012
The Biltmore Hotel
Miami, Florida
Presented by: Tim Johnson, Allegheny County Administrative Director and Past Retirement Board Trustee
YOUR LEADERSHIP ROLE AS A
STEWARD OF PUBLIC FUNDS
GETTING YOUR EMPLOYEES
FINANCIALLY FIT IN 2012
NEW STRATEGIES IN
ALTERNATIVE INVESTMENTS
THE EVOLVING ROLE OF
INVESTMENT CONSULTANTS
LEGAL ISSUES FACING PUBLIC
PENSION PLANS
THE FUTURE OF PUBLIC PENSION
PLANS IN ALLEGHENY COUNTY
TRUSTEE BOOT CAMP
Background: Established by the County Commissioners in 1915 to invest retirement funds
for the benefit of fund members.
Board of Trustees:
Consists of seven members each serving a four year term.
Employees/Retires:
7,479/4,407
Contribution:
6% (8% Member/8% Employer)
Market Value of Assets:
$729 Million
Return Assumption:
7.75%
Formula:
Highest 52 contributions of the last four years
Benefit Multiplier:
2.5% (Full Pension at age 60 with 20 years of service)
Consultants:
Wilshire, PFM and Asset Strategy
Actuary:
Cowden Associates
Attorney:
Campbell, Durant, Beatty, Palombo and Miller
Act
”leadership
drives
performance!”
Allocate
“Put your
money where
your mouth
is!”
Asset
“Alternatives
continue to win
pension assets”
Advise
“Bigger isn’t
always better!”
Administer
”from 1.21 to
1.46!”
“The ultimate measure is not where you stands in moments of comfort,
but at times of challenge and controversy.”
Martin Luther King, Jr.
“Great leaders are almost always great simplifiers,
who can cut through
argument, debate, and doubt to offer a solution everybody can
understand.”
General Colin Powell
“One who knows the way, goes the way, and shows the way.”
-
John C Maxwell
RBAC Asset Allocation
Products
of March 31, 2012
Market
Val.
Allocation
Target
of March 31, 2009
Var.
Market
Val.
Allocation
Target
Var.
EQUITY
317.1
43.5%
40%
3.5%
211.9
38.8%
52.5%
-13.7%
FIXED INCOME
208.9
28.6%
27%
1.6%
184.2
33.8%
30%
3.8%
ALTERNATIVES
194.6
26.7%
33%
-6.3%
137.9
25.3%
17.5%
7.8%
Private Equity
93.6
12.8%
15%
-2.2%
53.6
9.8%
5%
4.8%
Real Estate
47.9
6.6%
10%
-3.4%
46.8
8.6%
10%
-1.4%
26
3.6%
8%
-4.4%
15.3
2.8%
2.5%
.3%
26.6
3.6%
0%
3.6%
0
0%
0%
0%
.5
.1%
0%
1.2%
22.2
4.1%
0%
4.1%
CASH
8.6
1.2%
0%
1.2%
11.7
2.1%
0%
2.1%
TOTAL
729.1
100%
100%
0%
545.7
100%
100%
0%
Commodities
Life Settlement
Hedge
Asset…
Some of the characteristics of
alternative investments may include:
•Low
Alternative
investments
comprise groups of
investments with
risk and return
characteristics that
differ markedly from
those of traditional
stock and bond
investments.
correlation with traditional
financial investments such as stocks
and shares
•Alternative investments may be
relatively illiquid
•It may be difficult to determine the
current market value of the asset
•There may be limited historical risk
and return data
•A high degree of investment analysis
may be required before buying
•Costs of purchase and sale may be
relatively high
Alternatives Continue to Win Pension Assets By Emma Boyde Financial Times Limited
July 7, 2012
http://www.ft.com/cms/s/0/0e32eeb6-c42c-11e1-9c1e-00144feabdc0.html#axzz20FRY7s5n
Public Pension Suckers For Private Equity By Edward Siedle Forbes Feb 16, 2012
http://www.forbes.com/sites/edwardsiedle/2012/02/16/public-pension-suckers-for-privateequity/
Alternatives pioneer PennSERS trims sails
PennSERS cites liquidity needs in slashing its allocation
By Rob Kozlowski June 25, 2012
http://www.pionline.com/article/20120625/PRINTSUB/306259980/alternatives-pioneerpennsers-trims-sails?goback=%2Egde_1830538_member_127867746
Advise…
A Premier Boutique Investment
Consulting Firm
Very Focused: Consulting only with
endowments, foundations and retirement
plans in middle market
Independent and Objective: Our firm has
no affiliation with brokerage firms, banks,
insurance companies, or any other product
vendors
Professional Fee Basis Only: No acceptance
of commissions or finders fees from any
product providers
“We assist clients in the pursuit of achieving
superior investment performance, reducing risks,
and controlling expenses of their portfolios.” Edwin R. Boyer
www.assetstrategyconsultants.com
Investments
Commitments
11 Investments
2003 – 2008
$100,733,000
$85,093,632
$103,294,276
1.21
14 Investments
2009 – 2012
$60,750,000
24,768,225
36,132,811
1.46
$161,483,000
$109,861,857
$139,427,087
1.27
25 Investments
Amounts
Contributions
Asset Value +
Distributions
Return
Act – Objectives are the building blocks of the portfolio.
Allocate – Translate objectives into allocation by directing consultant to construct model.
Asset – Learn the asset before investing.
Advise - Select the consultant that meets your needs.
Administer - Monitor portfolio closely.
Timothy H. Johnson, Director
Allegheny County Department of Administrative Services
436 Grant Street – Room 202 Courthouse
Pittsburgh, PA 15219
412-350-6109
tjohnson@alleghenycounty.US