Louisiana State Employees' Retirement System, Baton Rouge, has properly monitored its investment managers, consultant and custodian bank, according to an audit performed by the state legislative auditor's office. The $6.5 billion pension fund returned 8.8% on investments over the past 10 fiscal years, compared with an 8.25% assumed rate of return, and 10 of the system's 17 asset classes outperformed their relevant benchmarks over the past 10 years.
The audit was part of a 2004 state Senate resolution to examine investment policies and relationships within state retirement systems.
The auditor recommended that the system's written investment policy "should ensure that the use of index funds as an alternative to active management is ‘formally and regularly' evaluated," even though the pension fund "does follow this criterion in practice." The auditor also suggested that fund officials should implement written policies for formal reviews of consultants at least annually.
