Presentation of Annual Report
LAGERS Chief Financial Officer, Melissa Rackers, presented the completed 53rd Annual Financial Report of the LAGERS system. This report contains a detailed analysis of the financial, investment, and actuarial performance of the system. She noted the continued excellent financial and actuarial health of the LAGERS system, and furthermore remarked she believes this report continues to help enhance LAGERS’ transparency with our stakeholders. She additionally noted the availability of LAGERS Popular Financial Report which provides a higher level snapshot of the LAGERS system.
The legislative team updated the Board on interim activities and previewed the 2022 legislative session. They noted that LAGERS’ public safety classification expansion bill has been pre-filed by Representative Pike, Senator Crawford, and Senator Riddle. These bills would each expand the option to all employers to choose to classify their EMS, Jailers, and Emergency Telecommunicators, as public safety personnel for purpose of determining an age 55 normal retirement. This provision is currently only available to employers in 3rd class counties. LAGERS will be supporting this measure in the coming session.
LAGERS Pre-Filed Legislation
HB 1473 – Representative Pike
SB 634 – Senator Riddle
SB 655 – Senator Crawford
Update of Statement of Policy Beliefs
The LAGERS Board reviewed and updated LAGERS’ statement of policy beliefs based upon the recommendations of the Board Legislative and Governance Committees as well as the Member Legislative Advisory Committee. LAGERS statement of policy beliefs is a component of LAGERS’ Governance Policies which sets forth the organization’s values and beliefs as they relate to areas of policy interest and any policy positions that derive from these beliefs. The changes included:
- An statement of disapproval for social investing mandates when they conflict with LAGERS’ fiduciary duty.
- A statement of support for responsible return to work practices.
- A statement of disapproval for contribution holidays.
- A statement of opposition for blanket pension reform.
LAGERS’ investment team discussed the investment activity from the last quarter, which included $199.3 million in commitments to the following asset classes:
- $14.6 million to Equity
- $143.7 million to Fixed Income
- $41.0 million to Real Assets/Real Return
LAGERS’ portfolio has $10.2 billion in assets under management as of September 2021.
LAGERS’ Chief Investment Officer, Brian Collett, also provided some additional commentary to the Board on the rising inflation environment and the impacts to LAGERS’ portfolio. Brian noted that predicting inflation is a very uncertain task. To combat this task, the investment team moved LAGERS’ portfolio to an inflation-neutral position approximately ten years ago by incorporating real assets as an offset to the non-inflation oriented pieces of the portfolio. He believes LAGERS’ portfolio continues to be well positioned to meet LAGERS’ long-term assumed rate of return of 7.0% in any market, including periods of rising or falling inflation.
The operations team reported on the survey results from LAGERS Annual Meeting, noting that interactions with LAGERS Board and Staff and education sessions as some of the top-rated components to the meeting. The team also discussed operational and communication plans for the rollout of the new W-4P tax withholding forms to comply with updated IRS regulations in 2022. The team concluded their report noting another above-average January retirement rate of 198 retirements within the system.