Newspaper article THE JOURNAL RECORD

Retirement Fund Could Cut Unfunded Liability / Says Daniels

Newspaper article THE JOURNAL RECORD

Retirement Fund Could Cut Unfunded Liability / Says Daniels

Article excerpt

The Oklahoma Public Employee Retirement System could generate $30 million of its annual unfunded liability if the retirement funds were invested according to nationally accepted standards, according to a report received Wednesday by an ad hoc committee of the Oklahoma Legislature reviewing investment of retirement system funds.

In the report, Daniels said that the current annual unfunded liability of the seven retirement systems is over $100 million. That amount could be reduced a third if nationally accepted standards regarding the retirement funds were adopted.

The report was prepared by Belden Daniels, president of Counsel for Community Development Inc., an organization which provides data and research on economic development and financial issues. Daniels drafted the report on which the Oklahoma Economic Recovery Act of 1987 was based.

"Based on our experience with other public retirement funds in other states which do operate according to these nationally accepted standards, in our professional judgment, we think it is not unreasonable to expect that prudent annual increased returns from the Oklahoma funds could generate something on the order of the annual unfunded liability, or approximately $30 million," the report to the committee said.

A five-point checklist of changes which Daniels said need to be made include:

- Replacement of the current list of permitted investments, different for each fund, with the prudent investor rule set forth by the Federal Employees Retirement Income Security Act.

That rule basically allows funds to diversify investments to minimize the risk of large losses unless "under the circumstances it is clearly prudent not to do so."

- Require each fund to develop an asset management plan which matches a liability management plan. …

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