Florida State Board of Administration, Tallahassee, issued an invitation to negotiate for communication consulting firms to support an education program that includes assisting Florida Retirement System participants to make choices in selecting between the FRS defined benefit plan and the FRS 401(a) plan.
The FSBA — which oversees $176.8 billion in assets, including the $143.8 billion defined benefit and $8.6 billion 401(a) plans — is undertaking the search because the contract of incumbent Aon Hewitt expires June 30, said John Kuczwanski, FSBA communications manager. Aon Hewitt may rebid.
The ITN is available on FSBA's website. Responses are due Feb. 10. The FSBA expects to make a selection March. 10.
Separately, FRS's defined benefit plan will reduce its fixed-income allocation target to 18% from 24%, triggered by concern about risks of rising interest rates, said Dennis D. MacKee, FSBA communications director.
In the other allocation changes in the investment policy statement, FRS would raise global equity to 53% from 52%; real estate to 10% from 7%; private equity to 6% from 5%; and strategic investments, which consists of hedge funds, distressed debt, infrastructure and opportunistic strategies, to 12% from 11%. Cash would stay at a 1% target.
FSBA trustees are scheduled to discuss the issue Feb. 6.
The proposal won't result in any changes to investment managers, Mr. MacKee said.
In the interim, the FSBA has tactically managed interest-rate risk by reducing the fixed-income allocation and raising the equity allocation within the existing target policy ranges, Mr. MacKee said. The current actual allocation is 60.5% global equity, 20.5% fixed income, 7.2% real estate, 4.9% private equity, 5.4% strategic investments and 1.5% cash.
The proposed allocation changes are forecast, at a 90% probability level, to deliver an annualized 11.5% real return over 10 years vs. 10.8% for the current allocation. Annualized 15-year real returns are forecasted at 10.4% from 9.9%.
The board's actuarial assumed expected return on assets is 7.75% a year.
FSBA trustees will also consider changes to the FRS' 401(a) plan investment policy statement, including offering target-date funds for the first time and reducing the number of active investment options to use more multimanager approaches. The 401(a) changes would be effective July 1.