Sunday, September 22, 2019

Bob Buerkle, STRS Ohio Retirement Board, September 19, 2019

Who is Steve Edmundson, this 47-year-old investment director of Nevada PERS, whose 1, 3, 5 and 10-year returns have bettered all of the other big public pension systems? Is he a super investor? Is he taking excessive chances? Is he gambling with the Members' Pensions? The answer is NO to these last three questions. Steve is just following the investment protocol that the Nevada Legislature has established. It describes four Asset Allocation areas, along with a range of percentages, that the index funds can be invested in. I am providing a copy of this legislative investment protocol for you.
I guess Nevada took Warren Buffett's advice seriously over a decade ago. Buffett has stated for decades that "pension systems should stop trying to beat the market, which they always fail at over the long term, and just accept what the market delivers. They should use index funds and that way they will not lose a greater percentage than the market in a downturn."
Edmondson works out of a modest office in a one-story building in Carson, City. It was larger than he needed, so he let the room be walled off for other workers. He himself has no co-workers. On his desk is a stapler, a tin cup of paper clips and his business cards. He has a small conference table and 4 chairs. In 2015 his salary was reported in the WSJ as $127,121.75. Market turmoil, volatility, oil prices and elections have no effect on his workday. He does as little as possible on a daily basis. His investment plan is in place and outperforming his peers. Last year Nevada earned an 8.5% return while STRS earned 6.9%. Nevada has grandfathered its retirees and has never eliminated its COLA.
According to CALLAN ASSOCIATES, the STRS Investment Advisors, who also track expenses of numerous other retirement plans, "Nevada's outside management bill is about one-seventh the cost of the average public pension system."
Calpers Spokeswoman Megan White said "Nevada Demonstrates the benefits of reducing the complexity, risk and costs of a portfolio." Nevada has handily outperformed CALPERS returns for all periods over the last decade.
According to Stephen McCourt, co-CEO of the Meketa Investment Group consultants, "The pension world is definitely migrating toward Nevada."
For your additional information, I am also including a copy of the actuary's signature sheet. As you can see, it's Segal Consulting and Kim Nicholl, Senior Vice President and Consulting Actuary for Nevada. Kim Nicholl was also the STRS Senior Consulting Actuary for about 25 years dating back to her employment with Buck Consultants in the early 1990's.
Lastly, in Ohio, if your last workday is June 2nd, your first pension check is paid on July 1st. In Nevada if your last workday is June 2nd, your first pension check would be paid as of June 3rd, which means your pension is paid more like you were paid when you worked. This also means that Nevada Retirees are paid one more check in retirement than our STRS Retirees receive.