Indiana Public Retirement System, Indianapolis, on Friday will consider a recommendation from the state Legislature's Pension Management Oversight Commission to halt plans to privatize management of the retirement system's $5.5 billion annuity savings account, confirmed Jeff Hutson, system spokesman.
The commission on Monday asked the board of the system, which has a total of $28.3 billion in retirement assets, not to search for lifetime annuity providers to run the ASA, but the panel did not suggest the board reconsider its plans to change the ASA's rate of return for new retirees to one that's market-based from its current fixed 7.5% rate. According to staff at INPRS, the current market rate would be in the 4% to 4.5% range.
The retirement system can outsource management of the ASA without commission approval.
“We will very seriously listen to what (the commission) has to say,” Mr. Hutson said. “The board also will consider why they originally made the decisions to annuitize at the market rate and to outsource.”
Retirement system officials had looked to outsource management of the ASA, which currently is managed internally. An RFP for lifetime annuity providers issued earlier this year was withdrawn as board members considered other options for managing the account.
Callan Associates earlier this month was hired to help the retirement system develop an operational model for the ASA, and create and evaluate a new RFP, Mr. Hutson said. Strategic Investment Solutions remains the retirement system's general investment consultant.
All participants in the two pension funds overseen by INPRS — the Indiana Public Employees Retirement Fund and the Teachers Retirement Fund — also have ASA accounts; more than half of participants annuitize their assets upon retirement, while the remainder take lump sums.