Indiana Public Retirement System, Indianapolis, withdrew an RFP for a lifetime annuity provider for its $5.6 billion Annuity Savings Account.
The RFP was removed from the $28.6 billion retirement system's website after Indiana Gov. Mike Pence on March 26 signed legislation banning the use of a third-party ASA provider until Jan. 1, 2017.
The retirement system's board wanted to shift management to a third-party manager that would use a market-based rate of return; currently the ASA is managed internally with an assumed 7.5% fixed rate of return. System officials had said maintaining internal management with the higher rate of return would increase the retirement system's liabilities.
The legislation signed by Mr. Pence would set the return rate at 5.75% from Sept. 30 through Oct. 1, 2015, and then would base it on standard market rates but at a minimum of 4.5%, according to the Indiana General Assembly's website.
INPRS may issue an RFP without legislative approval, but the new law bans it from doing so specifically for the ASA.
In October, the Indiana Legislature's Pension Management Oversight Commission recommended that the retirement system keep ASA management in-house but without increasing the pension fund's liabilities. In a letter to the commission approved by the INPRS board in December, the retirement system said that wasn't possible.
“INPRS adheres to federal and state laws,” said Steve Russo, the system's executive director. “We anticipate reissuing the RFP in 2016.”