4 investments for $135M get Arkansas Teacher Retirement System's OK

New rule for paper checks to retired teachers approved

The Arkansas Teacher Retirement System's trustees on Monday authorized up to $135 million in new investments in funds for infrastructure, real estate and private equity.

They also gave the go-ahead for the system to no longer send paper checks to retirees whose monthly benefit payment is suspended because the recipient fails to deposit or cash two consecutive checks for at least a month. Paper checks would resume being issued only if system Director George Hopkins grants the retiree a waiver. About 800 retirees receive a paper check, Hopkins said.

The teacher retirement system is state government's largest retirement system, with more than 100,000 working and retired members and investments valued at $15.66 billion on March 31.

The investments earned a return of 13.7 percent in the year that ended March 31, ranking the system in the top 1 percent of the nation's public pension systems with more than $1 billion in investments, according to investment consultant Aon Hewitt Investment Consulting. The system's investment return averaged 6.2 percent a year over the 10-year period that ended March 31 to rank among the nation's top 4 percent.

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A preliminary report from the consultant totaled the investments at $15.79 billion on April 30, but the report said it doesn't include changes in investments such as private equity and real estate that are determined on a quarterly basis.

The new investments approved by the system's trustees include:

• Up to $50 million in the Melbourne, Australia-based Industry Funds Management Investors' Global Infrastructure Fund. The fund will target infrastructure investments such as airports, electricity distribution, telecommunications and toll roads, the system's staff said in a written report.

• Up to $30 million in the New York-based Altaris Health Partners IV. The private equity buyout fund will primarily target U.S. and European health care companies with a focus on "corporate carveouts," leverage buyouts and growth equity investments in pharmaceutical, medical device, and information and technology companies, the system's staff said.

• Up to $30 million in Irving, Texas-based NGP Energy Capital Management's NGP Natural Resources XII. The private equity fund will focus on sectors of the energy industry primarily related to upstream production and development of crude oil and natural gas in North America, the system's staff said.

• Up to $25 million in the Simsbury, Conn.-based Landmark Real Estate Partners VIII, an opportunistic real estate fund-of-funds focused on acquiring real estate partnerships in the secondary market. The secondary real estate market for limited partnerships is a way that pension plans, such as the teacher retirement system, can sell its partnership shares to another investor, including other pension systems, to obtain cash, according to the system's staff.

School districts and other system employers paid $408.6 million into the system in fiscal 2016, which ended June 30, while their employees contributed $128.6 million.

The system included 68,368 working members with an average age of 44.4 years, average service of 10.3 years and an average annual salary of $37,235 as of June 30, according to the system actuary Gabriel Roeder, Smith & Co. The system's 43,095 retired members were paid benefits totaling $984 million last fiscal year -- an average of $22,833 a year.

Some of the approximately 800 retired members who receive a paper monthly benefit check either don't regularly cash their checks for several months or they lose the checks.

Once three checks have been issued but not deposited, the system suspends the payment until the member has been contacted to ensure he is still alive and to make sure a change of address has not placed the payments in jeopardy of fraudulent activity, Hopkins said. In the past, the system would resume issuing paper checks once the retiree was found to be OK.

But now, Hopkins told the trustees, once a payment is suspended, the retired member will no longer be eligible to receive paper checks unless Hopkins grants a waiver.

Also, new retired members cannot obtain a paper check unless Hopkins grants a waiver, and he has not approved a waiver yet, he said.

Trustee Andrea Lea, who is the state's auditor, said, "I have to totally agree with you.

"I think paper paychecks are such a thing of the past," said Lea, a Republican from Russellville.

Metro on 06/06/2017

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