Florida State Board of Administration, Tallahassee, plans to re-evaluate its asset allocation, depending on the outcome of pending legislation that could close defined benefit pension plans to new employees or revise the benefit structure, according to action taken at its investment advisory council meeting Monday.
Hewitt EnnisKnupp, FSBA's investment consultant, might “know what hand they've been dealt” after the legislative session ends in May to recommend any asset allocation changes, said Dennis D. MacKee, communications director, adding that Gov. Rick Scott would have some time to consider whether to sign any bill into law.
HEK's recommendations could include tilting more to derisking the $132 billion Florida Retirement System defined benefit plan, which FSBA oversees. The fund now is split between almost 75% return-seeking assets and 25% risk-reducing assets, all fixed income.
As of Jan. 31, the actual allocation of the fund was 59.1% global equities, 22.5% fixed income, 7.6% real estate, 5% private equity, 4.8% strategic investments (consisting mostly of hedge funds, debt strategies, and infrastructure), and 1% cash. The target allocation is 52% global equities, 24% fixed income, 7% real estate, 55 private equity, 11% strategic, and 1% cash.
FSBA studies its allocation every year, although it hasn't changed the mix in the past two years.
HEK is expected to present its asset allocation recommendations June 24 to the investment advisory council.