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Wednesday, 16 August 2017 13:27

PSPRS Facts Featured

Ben Roché, Guest Columnist

Got questions about the Public Safety Pension Retirement System?

Fact: PSPRS Board, Executives, and Investment Team are highly experienced and educated professionals that represent all stakeholders involved

The Board of Trustees governs PSPRS and has a fiduciary responsibility to the PSPRS trust and membership. Trustees oversee the system’s policies, operations, administration and investment of funds with all powers and duties outlined in state statute. The board consists of nine members, each serving five-year terms. Four trustees are appointed by the governor. A fifth trustee is also appointed by the governor, but must first be nominated by the PSPRS advisory committee and the Board of Trustees. Two trustees are appointed by the president of the Senate, and the two are appointed by the speaker of the House of Representatives.Membership of the Board of Trustees is split between members of the system - law enforcement and fire department - and trustees representing employers and taxpayers. The legal requirements for non-PSPRS members to serve on the board are stringent. These trustees require at least 10 years of substantial experience in any one or a combination of the following job descriptions:

  • A portfolio manager acting in a fiduciary capacity
  • A securities analyst
  • A senior executive/principal of a trust institution, investment organization or endowment fund acting either in a management or an investment-related capacity
  • A chartered financial analyst in good standing as determined by the chartered financial analyst institute
  • A professor or instructor at the college or university level in the field of economics, finance, actuarial science, accounting or pension-related subjects
  • Economist
  • Senior executive engaged in the field of public or private finances or with experience with public pension systems
  • senior executive in insurance, banking, underwriting, auditing, human resources or risk management

Source: “Board of Trustees”, Public Safety Pension Retirement System, 2017

The PSPRS Executive Team ensures the efficient execution of the day-to-day operations of the PSPRS Administrative Office and is dedicated to administering all directives established by the PSPRS Board of Trustees.

  • Jared A. Smout – Administrator
• Bachelor of Science, Accountancy; Bachelor of Science, Computer Information Systems; Master of Science, Information Management; Master of Public Administration; Certified Public Accountant
  • Dave DeJonge – Deputy Administrator
• Undergraduate in Business Administration and Music Education; Certified Government Financial Manager; Certified Treasury Professional
  • Ryan Parham – Chief Investment Officer
• Juris Doctorate; MBA; Undergraduate in English & Mathematics; Coursework in Strategy; Member of the American Bar Association; Member of the Academy of Political Science
  • Mark Steed – Deputy Chief Investment Officer & Chief of Staff
• MS in Predictive Analytics; MBA; Undergraduate in Latin American Studies

Source: “PSPRS Executive Team”, Public Safety Pension Retirement System, 2017

In the interest of the stability of the PSPRS trust fund, in conjunction with the Board of Trustees and consultants, the PSPRS Investment Team plays an invaluable role in the prudent and strategic efforts designed to provide the system with needed financial health and stability.

  • Ryan Parham(JD-MBA), Chief Investment Officer
  • Mark Steed (MBA, MS), Deputy Chief Investment Officer & Chief of Staff
  • Shan Chen(PhD – MBA), Lead Portfolio Manager
  • Rose Crutcher Investments Paralegal
  • Jennifer Eichholz(JD) Investment Counsel
  • Vaida Maleckaite(PhD), Director of Investment Services
  • Bill ThatcherCFA (MBA), Portfolio Manager
  • Jefferson B. Weston IV Investment Analyst
  • Owen Zhao(MS), Portfolio Analyst – Risk
  • Kevin Chen(MS), Investment Accountant

PSPRS hires and uses several external investment consultants to provide industry knowledge across asset classes, research and assistance in identifying and vetting investment opportunities, as well as portfolio allocation guidance. Consultants serve PSPRS in an advisory capacity only and are selected based on recognized expertise and reputation.

Hedge Funds 
Albourne
Consultant: Lincoln Smith
https://www-us.albourne.com/

Private Equity
Stepstone Global
Consultant: Jay Rose
https://www.stepstoneglobal.com/

Albourne
Consultant: Tom Cawkwell
https://www-us.albourne.com/

Real Estate
ORG Real Property
Consultant: Ed Schwartz
http://www.orgrealproperty.com/index.html

Total Fund
New England Pension Consultants (NEPC)
Consultant: Allan Martin
http://www.nepc.com/

Source: “Investment Team”, Public Safety Pension Retirement System, 2017

Fact: Extensive Pension Reform has occurred creating new tiers in the system, abolishing crippling liabilities, and establishing new practices to limit risk.

“Overall, the reform plan will yield several key benefits to taxpayers, employers and public safety personnel:

  • Government agencies will save between 20% and 43% on the normal cost of retirement for each new employee hired, relative to the status quo.
  • The reduction in cost for each new hire is estimated to save taxpayers $1.5 billion over the next 30 years, relative to the status quo.
  • The reform will reduce the future accrual of total PSPRS pension liabilities by at least 36%.
  • The reform will reduce the taxpayer’s exposure to future market risk by more than 50%.
  • The reform will reduce the volatility in employer contribution rates by more than 50%.
  • All new employees will equally share costs and investment risk with taxpayers under this reform.
  • The reform creates incentives for the revamped PSPRS board to set more responsible actuarial assumptions in a way that minimizes the negative effects of underperforming investment returns.
  • For the first time, the reform will offer new public safety hires a choice in retirement benefits—either a 100% defined contribution plan or a defined benefit hybrid plan designed to be more sustainable than the current benefit structure.
  • New employees will pay lower annual employee contributions under the reform than the status quo.”

Source: Gilroy, Leonard, et al. “Arizona Enacts Groundbreaking Public Safety Pension Reform”, Reason Foundation, 16 Feb. 2016

“The ideal public sector pension reform always includes reducing taxpayer exposure to risk, ensuring the cost for government employers is affordable and stable, and providing sustainable and secure retirement for current and future employees. But rarely does a pension reform effort accomplish all of these in one multifaceted package, as Arizona has done with the reform to its Public Safety Personnel Retirement System (PSPRS).”

Source: Anthony Randazzo, Leonard Gilroy and Pete Constant, “Arizona’s Public Safety Pension Reform Will Help Improve the Plan’s Solvency” Reason Foundation, Feb. 22, 2016

YouTube PSPRS Reform Video

Fact: Despite significant loses in years past through the dot com bust, the housing market crash, and the Great Recession, PSPRS has been mended and is on the path to recovery.

    • ARIZONA PSPRS TRUST - TOTAL FUND UP 12.24% FISCAL YEAR TO DATE (AS OF 5/31/17)

Source: http://www.psprs.com/investments--financials/fund-performance

    • “This research, along with Arizona auditor general findings that PSPRS saved tens of millions of dollars on investment fees by negotiating lower prices, went unreported in favor of a more destructive narrative based on statistics pulled from the Pew report that even the report’s authors warn are unreliable and unfit for comparing pensions. Our fund is operating as it was designed to do. We’re taking less risk, our performance and peer rankings are dramatically improving and we put all of our results – good or bad – on full display for anybody to see. Great things are happening at PSPRS as we leave the past behind and move forward. We invite you to join us.”

Source: Smout, Jared. “My Turn: Republic Manipulated Findings on Pension Investments” AzCentral, May 1, 2017

Fact: PRESCOTT FIRE DEPARTMENT has experienced additional stressors placed on the unfunded liability with the reduction in force, unrealized growth, and rise of retirees. Fire fighters receive a modest salary while working and 50% of their salary in the form of a pension after 20 years of service. As the city recovers from the Great Recession, current pension reform is introduced, economic growth occurs, new members are added to the system, and retirees leave the system, the unfunded liability burden will be reduced.

    • LACK OF FIRE DEPARTMENT GROWTH- The City of Prescott has increased in size over the past few decades. As reported in the Daily Courier in the mid-2000’s, the city had identified the need to expand the fire department with a sixth fire station. Since then, the call volume for the fire department has increased, the population for the city has increased, and the staffing for the fire department has remained stagnant or even decreased. This need of expanding the fire department was so great that the city expended close to 1 million dollars for the purchase of the land and the design of the fire station. This identified need has yet come to fruition.

“Prescott Council studies need for millions in public safety projects”

“City pays $350,000 for Roadhouse 69 property”

“City moves ahead with design of fire station”

“Station design generates questions”

    • Annual Required Contribution- 14.9% CURRENT LIABILITY 76.71% UNFUNDED LIABILITY

7.65%-11.65% Employee Contribution

    • NUMBER OF MEMBERS CONTRIBUTING TO PSPRS- 49
        • NUMBER OF RETIRES COLLECTING PENSIONS- 65
    • AVERAGE RETIREMENT AGE- 50.2 years old (excludes disability retirements & spouse beneficiaries)
    • AVERAGE YEARS OF SERVICE- 23.1
    • AVERAGE SALARY FOR ACTIVE PRESCOTT FIRE FIGHTER- $72,283 (Gross Pre-Tax/Pre-PSPRS Contribution)
    • AVERAGE RETIREMENT PENSION- $50,908 (Gross Pre-Tax/No Social Security/No Health Benefits)

Source: Gabriel Roeder Smith & Company, Prescott Fire Dept. (023) Arizona Public Safety Personnel Retirement System, June 30, 2016

 

Ben Roché is the Secretary/Treasurer and the VP of Political Affairs for the United Yavapai Fire Fighters

Last modified on Wednesday, 16 August 2017 14:02
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Phone:928.458.5119

Prescott, Arizona