Deals and People November 21, 2014

Callan Adopts Pension Risk Analytics Solution

Callan Associates will use RiskFirst’s pensions risk analytics platform, PFaroe, to help institutional investors conduct asset allocation and asset/liability studies.
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Callan’s capital markets research group will leverage PFaroe, a real-time analytics and reporting platform, to help plan sponsors with their strategic planning, asset allocation and asset/liability studies, aiding the implementation of effective investment strategies and de-risking solutions, such as flight plans. 

More and more clients are implementing de-risking flight plans, raising the importance of analytics to monitor funded status and decide when to execute changes in strategy, notes Jay Kloepfer, executive vice president and director of capital market and alternatives research at Callan. “We view PFaroe as a major step forward in the analytics we can offer, allowing us to perform more frequent and deeper simulation modelling, so that we have a real handle on clients’ risk positions,” he says.

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The breadth and depth of the platform’s analytics will allow Callan’s clients to grasp the true enterprise-wide impact of their pension plans, Kloepfer says, adding that PFaroe is nimble enough to capture some of the more interesting aspects of capital market quirks that the firm wants to simulate.

PFaroe will be used in conjunction with Winklevoss Technologies’ (WinTech) liability valuation software, ProVal, which Callan has used since 1995. RiskFirst formed a strategic partnership with WinTech in 2013.

Callan is an investment consulting firm with nearly $2 trillion in total client assets under advisement. More information is at www.callan.com. 

Compliance November 20, 2014

School District Settles Retirement Plan Age Bias Suit

A Phoenix, Arizona, school district has settled an age discrimination suit with the Equal Employment Opportunity Commission.
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In EEOC v. Murphy School District No. 21 (CV 14-00721-PHX-SRB), filed in the U.S. District Court for the District of Arizona, the EEOC alleged that since at least 2008, the school district has engaged in unlawful employment practices by utilizing a policy titled “Retirement of Professional Staff Members.” The EEOC said the early retirement incentive plan discriminated based on age by providing for older employees to be compensated at lower rates than are paid to younger employees.

For example, for employees retiring with five through nine years of service at age 64, benefits were calculated based on salary plus 3%; at age 63, salary plus 6%; at age 62, salary plus 9%; at age 61, salary plus 12%; at age 60, salary plus 15%; and at age 60 or younger, salary plus 15%. Incentives were cut off at age 65 for employees with five through nine years of service, age 63 for employees with 10 to 24 years of service, and age 61 for employees with 25 or more years of service.

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In a statement announcing the settlement, the EEOC said the school district established its plan in the 1980s. The Older Workers Benefit Protection Act, which became effective in 1992, amended the Age Discrimination in Employment Act (ADEA) to outlaw early retirement incentive plans which discriminated on the basis of age. The school district’s early retirement incentive plan then became facially discriminatory.

The settlement will substantially compensate more than two dozen retired employees. It also requires the school district to change its policies about age discrimination and provide training about the ADEA to its employees and administrators.

“People in their 60s should not be penalized merely because they want to continue working,” says EEOC Regional Attorney Mary Jo O’Neill.

 

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