Illinois SURS commits to private equity, to seek $1.5 billion in contributions

Illinois State Universities Retirement System, Champaign, committed a combined $125 million to two Pantheon Ventures private equity funds, according to Daniel L. Allen, chief investment officer.

The board of the $14.1 billion pension fund on Thursday committed $85 million to Pantheon USA Fund IX and £30.5 million ($39.4 million) to the Pantheon Europe Fund VII.

Callan Associates, Illinois SURS' general consultant, assisted.

Also Thursday, the board approved requesting $1.509 billion in contributions from the state for the next fiscal year, which starts July 1, 2013. That amount is a 8% increase from the $1.402 billion requested for the current fiscal year.

A factor in the increased contribution request was the gap between Illinois SURS' actual 0.5% return on investments for the recently concluded fiscal year, ended June 30, 2012, and the pension fund's 7.75% assumed rate of return, although a 4.6% actuarial value rate of return was used for the analysis, Mr. Allen said in an e-mail. Illinois SURS uses “a five-year actuarial smoothing process as directed by legislation,” Mr. Allen said. Illinois SURS' investment benchmark returned 1.7% for the same 12-month period, he said.

The increase also reflects “changes due to actuarial experience differing from assumptions” in retirement, terminations, mortality and salary increases, Mr. Allen added.

Illinois SURS plans to submit the contribution request Nov. 1 to Gov. Pat Quinn and General Assembly leaders.

The board expects the state to pay the full contribution, Mr. Allen said.