Kansas Public Employees Retirement System, Topeka, plans to invest the proceeds from a $1 billion pension obligation bond sale with existing managers, spokeswoman Kristen Basso said in an e-mail.
“The system will be investing the pension obligation bond proceeds fairly immediately across all asset classes, except real estate and private equity, which have longer time frames for deployment of capital,” Ms. Basso said Wednesday, the day the state issued the bonds.
There are plans to eventually invest part of the proceeds in real estate and private equity, Ms. Basso said.
Allocations to specific managers have not been finalized, but will follow the current asset allocation targets. The $1 billion injection is expected to increase the pension plan's funded status to 66% from 60.7%.
The $16 billion pension fund has a target asset allocation of 26% domestic equity, 25% international equity, 13% fixed income, 11% real return, 10% real estate, 8% yield-driven investments, 5% private equity and 2% cash.
The State Finance Council signed off on the bond issuance in July, a few months after it was approved by the governor and General Assembly.
In reports earlier this week, Moody’s Investors Service and Fitch Ratings stated pension obligation bonds are not a form of pension reform. Any gains from their issuance are temporary without more fundamental reforms to contribution practices or benefits, the ratings agencies said.
