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SFERS reports strong market gains, asks for new positions to manage alternative investments
Summary
Jay Huish, executive director of the San Francisco Employees' Retirement System, reported market value assets rising past $19 billion through April, described the system's funding goals and requested new investment and administrative staff to support alternative equities, hedge funds and real assets.
Jay Huish, executive director of the San Francisco Employees' Retirement System, briefed the Budget and Finance Committee on membership trends, funding levels and staffing requests tied to a recent asset-liability study.
Huish said SFERS' active membership exceeded 60,000 for the first time and that the system serves just under 35,000 active employees alongside more than 26,000 retirees. He reported market value assets of just under $12 billion at the end of the 2008–09 downturn, rising to about $17 billion at the end of a recent fiscal year and exceeding $19 billion through April. Those asset gains, Huish said, improved the market-value funding ratio from roughly 79% to 84% year-over-year.
Explaining actuarial practice, Huish noted the plan's assumed actuarial return (about 7.58%), the distinction between actuarial and market value of assets, and the charter requirement that the retirement board maintain a funding plan with the goal of fully meeting promised benefits. He said projected liabilities are approximately $20 billion and reiterated that the board's objective is 100% funding.
To support new investment strategies recommended by an asset-liability modeling study, SFERS asked for seven new investment division positions (with a phased hiring plan), additional retirement services staff and administrative support. Huish said the board prefers building in-house capacity so staff—not only consultants—can perform due diligence and reduce fund-of-fund fees in the long term.
Huish also reported deferred compensation program totals (about $2.6 billion in assets and 14,402 actively contributing participants as of April 30) and noted those administrative costs are reimbursed by the program's third-party administrator (Prudential).
Supervisors asked whether the charter requires a specific funding band; Huish said the charter does not mandate 100% funding but requires a board funding plan. Committee members and staff agreed to follow up next week on a recommended real estate tenant-improvement reduction affecting SFERS' budget.
The committee continued action on the retirement budget as part of items 1–3, with the expectation of further amendments.
