The new County Employees Retirement System (CERS) Board of Trustees continues to organize in preparation for the new group’s first meeting on April 1. A CERS ad hoc investment group met on Wednesday to discuss how the Kentucky Retirement Systems (KRS) manages investments.
CERS board members, KRS Executive Director David Eager and Chief Investment Officer Steven Herbert discussed concerns about current KRS investment consultants Wilshire. Herbert stated that he is reviewing current KRS investment contracts and is acquiring new bids if appropriate.
Wilshire provides asset allocation and liability studies every three years for KRS, along with performance reporting and other services. Wilshire recommendations led KRS to move away from private equity and into lower performing core fixed-income investments in 2018, and Wilshire has repeatedly championed the low assumption rates KRS adopted in 2017.
Two private equity firms acquired Wilshire in October. Eager told CERS board members during Wednesday’s meeting that the change has him concerned. “I think that when private equity firms get involved, they’re going to try to maximize their profits,” he said. “They were owned by their employees. Now they are owned by two private equity firms. That’s disturbing to me.”
Herbert stated that he plans to bring a proposal to the CERS and KRS boards after they take control of the separate pension systems. The CERS board will manage the CERS pension and insurance trust, and the KRS board will handle the state’s pension systems. The Kentucky Public Pensions Authority (KPPA) will provide administrative services for both systems.
New board members attended orientation on Tuesday, including former Greensburg Mayor Lisle Cheatham, who Governor Andy Beshear appointed to replace Brian Dineen as an investment expert representing the Kentucky School Boards Association (KSBA).
The CERS Board of Trustees will continue to hold ad hoc meetings throughout March before its first official meeting on April 1.