System Portfolio Earns 7.1% for the Year
September 23, 2019 - The Missouri Local Government Employees Retirement System (LAGERS), the pension fund that covers over 60,000 Missouri local government employees and retirees, had a 7.1% total return (net of fees) for the fiscal year ending June 30, 2019.
“For the year LAGERS’ portfolio performed well and within expectations. The Alpha and Equity allocations were hurt by the narrow breadth of outperformance in the equity market, specifically in US/Large Cap/Growth markets; while the Fixed Income and Real Assets allocations were helped by the shift down in interest rates and a renewed focus on cash-flowing asset based investments,” said Brian Collett, the Chief Investment Officer of the $8.1 billion LAGERS fund.
Additionally, as of June 30, LAGERS’ three, ten, and twenty year returns were 10.9%, 10.8% and 7.1%, respectively.
LAGERS’ is 94.9% funded on an actuarial value of assets and 95.5% funded using a market value of assets.
Five years in a row, Missouri LAGERS scores 4/4 on Annual Security Assessment
LAGERS participates in an annual security assessment of its core systems in an effort to keep members' and employers' information safe. For the fifth year in a row, LAGERS scored a 4 out of 4 rating, meeting and exceeding industry best practices for information security during its annual information security assessment held in June, 2019.
The assessment was performed by project engineers at nGuard, an outside firm hired by LAGERS to identify vulnerabilities associated with LAGERS' key systems, networks and processes.
LAGERS continues to follow its Board of Trustees directive to make the security of all members' information a primary focus and priority, and LAGERS staff is committed to this initiative to maintain a high level of security for our members and employers.
A new report released by the Missouri Local Government Employees Retirement System (LAGERS) shows that the pension plan is a small portion of local government budgets and is a good investment for employers.
In LAGERS first Pension Finance Survey, the pension fund asked around 700 local government financial officials about their views on the cost of the program. Almost all (97%) of the respondents said they believe LAGERS is a good investment for their organization. Only one responded that LAGERS is not a good investment and three responded that they didn’t know if it is a good investment.
The survey also found that contributions to LAGERS account for a small percentage of the overall local government’s budget. On average, only 2.8% of a local government’s budget goes toward paying the cost of the LAGERS program and over eight in ten respondents do not believe that LAGERS costs are a burden to their organization. These points likely contributed to the respondents saying LAGERS is a good investment.
According to LAGERS, the purpose of this survey was to gain insight into the funding of LAGERS benefits from their member employers’ point of view. The responses have helped LAGERS staff and board understand how member employers view their LAGERS costs and how these costs affect their overall operation.
LAGERS’ CIO, Brian Collett, has been named as a finalist for the Innovation Award from Chief Investment Officer Magazine. Under Collett’s leadership, LAGERS’ portfolio has beat its policy benchmark by 5.76% and its 7.25% assumed rate of return by 6.45% for most recent fiscal year that ended June 30, 2018. The returns also exceeded these benchmarks for each of the three, five, and ten year periods that ended June 30, 2018.
According to Chief Investment Officer, the goal of the Innovation Award is “to highlight the truly innovative approaches to asset owning and asset management, separating the merely different from the meaningful.” There are four other finalists in Collett’s category for “Public Defined Benefit Plans Below $15 Billion.” Finalists are chosen from hundreds of entries and only the “brightest and most forward-looking” asset managers are selected. The winner of the award will be announced on December 13th.
Collett has served as LAGERS CIO since 2005. His responsibilities include managing LAGERS’ investment portfolio and serving as the investment advisor to the LAGERS’ Board of Trustees. Prior to his CIO position, Collett held various positions across the investment industry including Senior Research Manager for the South Carolina Retirement Systems and a Senior Technology Analyst for the Russell Investment Group. Collett currently serves on several advisory boards for numerous US and global investment funds. He has a Bachelor of Science in Mathematics from Marian University and a Master of Business Administration from Butler University. He earned the Chartered Financial Analyst (CFA) designation in 1999 and the Chartered Alternative Investment Analyst designation in 2010.
Missouri’s largest retirement system for local government workers has partnered with UMass Medical School’s Disability Evaluation Services to provide enhancements and support for its disability certification and re-certification process.
Determining disability eligibility is a critical component of the Missouri Local Government Employees Retirement System (LAGERS), a $6.9 billion system that covers close to 60,000 current and former local government employees within the state of Missouri.
“We were seeking to improve our process and access to expertise in our disability claim analysis and review. We were impressed with UMass’ depth of resources, degree of effort and desire to assist us with process improvement,” said LAGERS Executive Secretary Robert Wilson. “We’ve found them very responsive and dedicated to helping us improve.”
“This has been a culmination of effort by our local government leaders, state legislators, and LAGERS staff, and we are excited to see our first plan transfer administration into our system,” says outgoing director Keith Hughes. “The heart of this legislation was truly to provide an alternative solution to local governments who wanted to get out of the pension administration business.”
And that’s just what the City of Jefferson will be doing on July 1st. “As far as both city retirees and LAGERS members are concerned, they shouldn’t notice anything different as we expect the transition to be seamless, but we hope that it will be a burden lifted on the city,” notes incoming director Bob Wilson.
“We have been overwhelmed by the positive response from employers across the state,” Wilson adds, “and we have several more employers already waiting in line to transfer their plans into LAGERS.”
The City of Jefferson originally joined LAGERS in 1970, but only offered LAGERS benefits to its general and police employers, while fire employees participated in a separate pension fund. The city has since closed their Fire Pension Fund and all new hires in the Fire Department now participate in LAGERS. Retirees in the closed Fire Pension Fund will, effective July 1st, begin receiving their pension check from LAGERS instead of the city, but will otherwise not notice anything different. The city, however, will no longer bear any of the administrative, actuarial, auditing, legal, investment, or compliance burden of managing a pension fund.
“This truly is a win-win for everyone. Retirees are assured their benefits remain secure and the city can focus on providing great services for its taxpayers. LAGERS is truly honored to be a part of this,” notes Wilson.
Jefferson City, MO - October 18, 2016 The Missouri Local Government Employees Retirement System (LAGERS) Director of Investments Megan Loehner was named one of the Top 30 Women Rising Stars in Institutional Investing by Trusted Insight magazine.
At LAGERS, Megan's job entails focusing on all aspects of portfolio management. She is a graduate of University of Missouri, where she received a B.S. and a master’s degree in accounting. Loehner is a Certified Public Accountant, a Chartered Alternative Investment Analyst and holds the Chartered Financial Analyst designation.
An excerpt of the interview with Trusted Insight:
"Many people don’t understand the math on what they would actually receive over a lifetime compared to what they contribute to their pension. It’s not that the systems don’t relay these important messages, sometimes the small negatives or the overbearing bold print on the front of the newspaper overshadows the large positives within the fine print, and sometimes there’s a disconnect in the desire to understand."
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