Fla. Bill Increases State Pension Contributions

A bill introduced by the Florida state senate seeks to raise the employer-paid contributions for the $153.6 billion Florida Retirement System’s (FRS) retirement benefits by approximately $178.5 million annually beginning in fiscal year 2018-2019.

The public employers that will incur the additional costs are state agencies, state universities and colleges, school districts, counties, and certain municipalities and other governmental entities.

Among employer groups responsible for the additional contributions, Florida’s counties would be expected to kick in the biggest share at $66.4 million. School boards and state agencies would be responsible for $54.4 million, and $31 million, respectively, while universities and colleges would have to pony up another $16.6 million combined.

The rates are intended to fund the full normal cost, and the amortization of the unfunded actuarial liability of the FRS. With the modifications to employer contribution rates, the FRS Trust Fund will receive roughly $178.5 million more in revenue on an annual basis beginning July 1, 2018. In October, Florida’s State Board of Administration (SBA) lowered the pension fund’s assumed rate of return to 7.5% from 7.6%

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In its annual actuarial valuation of the FRS based on July 1, 2017, plan assets and liabilities, the state’s actuary Milliman, Inc. determined that the FRS had $28 billion in unfunded liability as a result of having total liabilities of $178.6 billion, and $150.6 billion in total assets.

“It’s an obligation of the state,” said Republican Sen. Rob Bradley, who is chairman of the Senate Appropriations Committee, according to The Palm Beach Post. “And we are comfortable with the current level of (pension) benefits in the Senate, with the understanding that when you change the assumptions, that requires more money to go to that area.”

For fiscal year 2017, which ended June 30, the FRS reported a 13.77% return on investments. As of June 30, the FRS consisted of 995 total employers, and had 637,643 active members.

Tags: Florida, Florida Retirement System, Florida State Senate, Pension

Consulting firm Mercer has acquired BFC Asset Management of Japan, which specializes in alternative investments. The buyout is a rare instance of an American company nudging into the Japanese financial sector, and comes amid mounting demand from institutional investors in the region driven by relatively reasonable valuations and potential catalysts in economic reforms.

Mercer, a unit of professional services giant Marsh & McLennan, bought BFC for an undisclosed sum. Japanese institutional investors are moving away from their traditional reliance on government bonds and seek a wide range of alternatives, including long-short funds, private equity, and real estate, Mercer said in a statement.

“BFC is a truly client-centric firm and one of Japan’s successful providers of alternative investment solutions focusing on hedge fund and private equity strategies,” said Tatsuya Kamoi, chief executive of Mercer’s Japan and Far East region, in the statement. Mercer has had a foothold in Japanese investment management previously. It established an outpost called Mercer Investment Solutions in Japan in May 2015.

The Financial Times reported that this buyout, with a foreign company taking over a Japanese financial firm, is uncommon. “This is a marriage after dating for many years,” the newspaper quoted Rich Nuzum, president of Mercer’s Wealth business, as saying.

BFC was spun out of Barclays Global Investors when Blackrock bought Barclays in 2009, the The Financial Times wrote.

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Tags: Japanese Investment Management, Marsh & McLennan, Mercer