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Commission reviews AIP/SIOP updates, including glide‑path examples and proposed tweaks to delegation and co‑investment rules
Summary
Staff presented annual AIP/SIOP updates: technical/conforming edits, stochastic table updates, a sample glide‑path illustration for contribution reductions, and proposed changes to delegation (convert 5% limit to a notice provision) and co‑investment sizing/reporting (target ~10 basis points; executive‑session reporting).
At the commission’s March 5 meeting staff began the required annual review of the Annual Investment Plan and Statement of Investment Objectives & Policies (AIP/SIOP), describing mostly technical and conforming edits following last year’s asset‑allocation exercise and highlighting two substantive items for commissioner comment.
Staff explained that stochastic tables and return/volatility inputs were updated to reflect Varys’ new capital‑market assumptions and the prior year’s returns. As an illustrative example (explicitly described as not a policy), staff modeled a sample glide path that would reduce contribution rates by 1% per year beginning in 2031 to show how timing and pacing affect the date to reach "normal cost." Staff stressed the example is a base case 50th‑percentile scenario and not a commissioned actuarial prescription.
On governance and delegation, staff proposed two notable changes: convert the current 5% between‑meetings aggregate delegation limit into a notice provision (staff would notify the commission if activity exceeds 5% and provide an estimate of expected additional commitments before the next meeting), and formalize co‑investment guidance. For co‑investments, staff recommended setting an expected sizing target of approximately 10 basis points of plan value for typical co‑investments and continuing to provide a confidential co‑investment summary in executive session to preserve negotiating flexibility.
Commissioners sought clearer labeling for probability statements and footnotes to prevent readers from inferring premature policy change; staff agreed to add clarifying language around the base‑case nature of example glide paths and to include actuarial probability statements where helpful.
Next steps: staff will revise AIP/SIOP language for commission consideration at the April meeting and incorporate feedback on clearer presentation of stochastic outcomes ahead of the May 1 statutory adoption deadline.
