MPERS’ objective is to provide service, disability, death and vested retirement benefits to members and their beneficiaries. To ensure a solid foundation for the future of the System, MPERS has developed an investment program designed to achieve the actuarially assumed rate of return over the long term, while prudently managing the risk of the portfolio. The pension plan is required to satisfy the need to pay accumulated/earned retirement benefits today, while at the same time be prepared for “uncertain” future benefits. This balancing of short-term versus long-term needs is a key tenant in the overall construction of the portfolio.
To assist with short-term versus long-term needs of the System, there are investment reporting procedures in place. The reports included on this page are just a few of the reports that are created quarterly as well as at the end of every fiscal year. A standard fiscal year is July 1-June 30.
Asset Liability Studies
An asset-liability study is a comprehensive toolkit for making decisions on a fund’s asset allocation and investment risk that align with the liabilities (i.e. benefit payments) those funds support.
Optimal decisions regarding pension plan management are made when they are based on a clear understanding of the assets and liabilities of the plan and how they interact. From these studies, we can better ascertain the risk preferences of the investment program to best achieve the plan goals.
Successful asset/liability studies:
- Increase a plan sponsor’s understanding of the pension plan’s current situation and likely future trends
- Highlight key asset and liability risks that should be considered
- Help establish a cohesive risk-management framework
- Analyze surplus return, standard deviation, funding status, contribution requirements and balance-sheet impacts
- Consider customized risk measures based on the plan sponsor, plan design and time horizon
- Help design an appropriate strategic investment strategy
- Provide insight into current market dislocations and practical implications for the near term
Asset-liability studies are completed at least every five years, or more frequently should circumstances dictate (e.g., material changes to the liability profile, etc.).
Investment Performance Reports
The Board has adopted a diversified asset allocation structure that assists with the short-term versus long-term balance of the System. The goal is to diversify the System’s assets within the traditional and non-traditional asset classes to reduce volatility, achieve above market returns, and to better protect the portfolio against difficult market conditions.
The general investment consultant provides investment performance reports throughout the year. The consultant also assists the Board in several manners:
- Determining and executing the overall asset allocation strategy of the Plan
- Advising on the investment policy of the Plan
- Facilitating investment manager searches (both traditional and alternative asset classes)
- Conducting custodial service searches
- Providing ongoing performance evaluation for each individual investment manager and the overall investment portfolio
- Providing pertinent education to the MPERS’ Board of Trustees
Select a report below to view the investment performance for the fiscal year.