Administration October 21, 2011

Ohio STRS Funding Below 60%

October 21, 2011 (PLANSPONSOR.com) – A report from the Ohio Teachers Retirement System’s actuary dampens the good news about its investment return for the last fiscal year.
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The PricewaterhouseCoopers (PwC) report found that even though the system reaped its strongest investment return in nearly three decades during fiscal year 2011 (see Ohio Teacher System Posts Near 23% Return), the funding period for the pension fund remains “infinite,” and the funded ratio declined slightly from 59.1% to 58.8%. The fund experienced a small actuarial gain of about $181 million during the fiscal year.  

A press release explained that STRS Ohio uses a common accounting and actuarial technique called “smoothing” to spread market volatility over four-year periods. This method helps pension funds recognize investment returns for a given year over a four-year window rather than a one-year “spike.” The smoothing technique is more apparent when the returns are especially high (as they were in 2011), or unusually low (as they were in 2009). Some of the significant investment losses from fiscal year 2009 are still being absorbed into this year’s valuation, which is part of the reason for the overall decline in funded ratio. The pension fund has a net $5.5 billion in unrecognized gains being deferred to future years.  

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Other findings of the valuation included: 

  • A net gain for the system in individual salary increases – these increases were smaller than expected; 
  • Net losses for the system in retiree mortality – retirees are living longer than expected and collecting benefits for a longer period of time; and 
  • A net loss in the system in retirements/terminations/withdrawals – the system saw a greater number of retirements than expected. 
Deals and People October 21, 2011

SEC Names Leader of Investment Adviser/Company Examinations

October 21, 2011 (PLANSPONSOR.com) - The Securities and Exchange Commission announced that Andrew J. Bowden has been appointed Associate Director to lead the National Investment Adviser/Investment Company Examination Program in the SEC’s Office of Compliance Inspections and Examinations (OCIE).
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Bowden, who starts November 1, will oversee a staff of approximately 450 lawyers, accountants, and examiners responsible for the inspections of U.S.-registered investment advisers and investment companies.  Bowden succeeds Gene Gohlke, who retired from the agency earlier this year after 35 years of public service. Since then, OCIE Deputy Director Norm Champ has served as the Acting Associate Director of the program.  

According to a news release, early in his career, Bowden worked at Legg Mason, Inc., and later for Legg Mason Capital Management in various roles, including General Counsel, Chief Operating Officer, and ultimately Executive Director for Sales, Client Service and Marketing. He also has served on the Board of Governors and Executive Committee of the Investment Advisers Association.   

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He holds a Bachelor of Arts degree in the Honors English Program at Loyola University in Baltimore and a law degree from The University of Pennsylvania.

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