The PERA Board of Trustees met in Denver on Jan. 20 for its first meeting of 2023.
Trustees discussed the 2023 PERA-related legislative landscape, continued work on the Board’s strategic vision for the future, and heard updates from PERA staff.
The 2023 legislative session kicked off earlier this month, and the Board’s agenda included discussing recently introduced legislation pertaining to PERA.
One such bill, SB23-056, would require the state to make an additional payment of $35,050,000 to PERA. That amount, in addition to the amount included in HB22-1029 from last year, is meant to fully recompense PERA for the state’s direct distribution payment of $225 million, missed in 2020. The Trustees support efforts to increase funding to PERA.
Two other bills concern PERA’s investments: SB23-016 would require the PERA Board to adopt a proxy voting policy that ensures any voting decisions align with the state’s greenhouse gas emission reduction goals, as well as require PERA to include in its annual Investment stewardship Report a description of climate-related investment risks, impacts and strategies. HB23-1092 would require PERA staff to make investment decisions solely on financial factors and would prohibit consideration of social, political, or ideological interests. The PERA Board opposes efforts to restrict PERA’s investment options or compel PERA to invest in a way that prioritizes a policy outcome over fiduciary duties.
Click here for a regularly updated list of PERA-related bills and their status.
The Board continued its yearlong process of developing a new strategic plan that will guide the work of the PERA Board and staff for the next half-decade. The plan’s goals will build on PERA’s mission and vision statements: To provide retirement security for our members while ensuring the sustainability of the fund, and to innovate and build on a tradition of service by being a trusted partner in order to meet the changing needs of our diverse membership.
The Board will continue working on a draft plan throughout the year, with the goal of adopting a new strategic plan for 2024 through 2029 by the end of the year.
Market and portfolio update
Chief Investment Officer/ Chief Operating Officer Amy C. McGarrity provided the Board with a market and portfolio update, in which she presented details on economic conditions and PERA’s investments.
While McGarrity did not have final details on PERA’s investment performance in 2022, she noted that markets had a rough year in 2022, ending the year with broadly negative returns.
As an investor in most markets, PERA can expect it is not immune from market downturns. As a long-term, perpetual investor, PERA remains strategically invested in the markets with the goal of earning a return over decades, McGarrity said. In fact, PERA’s most recent 30-year rate of return (through Dec. 31, 2021), which reflects many market ups and downs, is 9.0% (annualized, gross-of-fees).
Full audited details on PERA’s investment performance for the year will be available with PERA’s Annual Comprehensive Financial Report, released in June.
Chair/vice chair election
Four positions on the Board are up for election this year, and candidacy is now open for those seats.
The next scheduled meeting of the Board of Trustees will take place on March 24, 2023.
StewardshipThe practice of overseeing or managing something entrusted to one’s care. PERA’s approach to investment stewardship is focused on ensuring the financial sustainability of the fund that pays benefits to retirees and beneficiaries.StewardshipThe practice of overseeing or managing something entrusted to one’s care. PERA’s approach to investment stewardship is focused on ensuring the financial sustainability of the fund that pays benefits to retirees and beneficiaries.Proxy votingThe process by which shareholders can vote on corporate proposals without being present at a shareholder meeting.FiduciaryA person who manages money on someone else’s behalf and who has a sworn responsibility to manage those funds in the best interest of the client. VolatilityA state of unpredictable activity in financial markets, during which prices can experience significant and/or unexpected swings in either direction. VolatilityA state of unpredictable activity in financial markets, during which prices can experience significant and/or unexpected swings in either direction.