Indiana Public Retirement to hunt for lifetime annuity provider

Indiana Public Retirement System, Indianapolis, will issue an RFP on Jan. 1 for a lifetime annuity provider for its $5.6 billion annuity savings program.

The search for an external provider is being conducted despite a recommendation in October by the Indiana Legislature's Pension Management Oversight Commission to continue managing the program internally, though without increasing the pension fund's liabilities. The pension fund board wants an external provider that would use a fluctuating market-based rate of return.

Steve Russo, executive director of the $28.6 billion pension fund, said at the board meeting Friday that he told commission members and other legislators that internal management under the current system, with a fixed 7.5% rate of return, would raise liabilities. As a result, commission members no longer completely agree on what the pension fund should do.

“There probably will be a variety of bills concerning this introduced during the legislative session that begins early next year," Mr. Russo told the board.

The annuity provider RFP will be posted on the pension fund's website.

The retirement system can outsource management of the ASA without commission approval but would be bound by any legislation passed by the Indiana General Assembly. All INPRS participants have ASA accounts; more than half of them annuitize their assets at retirement, and the rest take lump sums.

Separately, the pension fund committed $100 million to Mesa West Capital for an open-end real estate fund. The commitment moves the pension fund closer to its 7.5% real estate target allocation.

The pension fund also made a private equity commitment of $75 million to Crestview Partners III, a U.S.-focused buyout fund, and $50 million each to York Special Opportunities II-A, a North American distressed debt fund run by York Capital Management, and Vista Foundation Fund, managed by Vista Equity Partners, which targets middle-market buyouts.