The South Carolina Retirement System Investment Commission should rehab governance and investment processes to better manage the state's $29.9 billion in retirement assets, a fiduciary performance audit found.
Even before the final report from the legislatively mandated audit was presented May 1 to the Columbia-based panel, commissioners were reviewing the 124 recommendations made by Funston Advisory Services LLC and planning to implement the most critical changes.
“This is a work in progress,” said Reynolds Williams, commission chairman, in an interview.
Among the significant changes recommended by Funston: adding an executive director; moving control of the pension fund's custodian to the commission; increasing the number of commissioners to nine from seven; and removing commissioners from the manager due diligence process except for educational purposes.
Some of Funston's most important recommendations are about increasing and improving the commission's investment oversight, including developing the board's first statement of investment principles and turning commissioners' attention to the pension fund's asset class approaches more than once per year, and providing strategic guidance over investments, rather than advising about specific money managers and due diligence.
Others — such as the executive director and increasing the size of the commission — are designed to improve the commission's working relationships. There has been tension for two years between state Treasurer Curtis M. Loftis Jr. and the other six commissioners and the commission staff.
The fiduciary performance audit, commissioned in November by Patrick J. Maley, state inspector general, was released April 18.
Of the 124 recommendations in the audit report, 108 can be addressed by the commission directly. Of those, 38 require board action; 12 require action by the South Carolina Legislature; and four require action by the office of the state treasurer, according to Funston's presentation at the May 1 commission meeting.