U.S. Public Pension Handbook: A Comprehensive Guide for Trustees and Investment Staff
Foreword
Introduction
PART I
Introduction and Current Marketplace
1 History of Public Pensions 3
Introduction
Early Pension Development
Public Pension Development
Early Twentieth-Century Development
Late Twentieth-Century Development
Chapter Notes
2 Public Pension Marketplace 21
Introduction
Global Retirement Market
Global Pension Trends
Population Aging
Global Regulatory Environment
U.S. Retirement Market
U.S. Public Pension Market
Members and Beneficiaries
Pension Coverage and Type
Public Pension Revenue
Public Pension Expenditures
U.S. Public Pension Trends
Public Pension Funding
Addressing the Funding Gap
Design Shift
Chapter Notes
PART II
Pension Plan Design
3 Defined Benefit Model
Introduction
Public Pension Designs
Defined Benefit Plan Design
Regular Service-Related Benefits
Normal Service Benefit
Early Retirement Benefits
Postemployment Benefit Adjustments
Service Credits
Ancillary Pension Benefits
Healthcare Benefits
Disability and Death Benefits
Deferred Retirement Option Plan
Pension Benefit Adequacy
Replacement Ratio
Social Security Coverage
State Tax Liability
Chapter Notes
4 Actuarial Valuation Concepts
Introduction
Actuarial Valuation
Demographic Assumptions
Economic Assumptions
Actuarial Cost Methods
Cost Method Classifications
Actuarial Cost Methods
Impact of GASB Changes
Chapter Notes
5 Beyond Defined Benefit
Introduction
Defined Contribution Plans
DC Plan Types
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DC Plan Services
DC Investment Options and Services
Comparison of DB and DC Plans
Persistence of the DB Design
Disadvantages of Defined Benefit
Advantages of Defined Contribution
Disadvantages of Defined Contribution
Pension Design Risk: DB vs. DC
Hybrid Plan Designs
Side-by-Side (or DB+DC)
Cash Balance Plan
Alternative Hybrid Designs
Chapter Notes
PART III
Investment Policy and Implementation
6 Investment Policy
Introduction
Investment Policy Statement
Statement of Goal, Purpose, or Mission
Identification of Decision-Maker(s)
Statement on Managing Risk of Overall Portfolio
Performance Measurement and Evaluation
Legal Standards
Chapter Notes
7 Asset Allocation Policy
Introduction
Why Asset Allocation Policy Matters
How Asset Allocation Policy Is Set
Peer Comparison
Mean Variance Optimization (MVO)
Determining Eligible Asset Classes
Establishing Capital Market Assumptions
Finding an Efficient Frontier
Choosing an Optimal Asset Allocation
Asset Liability Management (ALM)
Chapter Notes
8 Public Pension Portfolio
Introduction
Asset Allocation Data
Asset Allocation Trends
Equities
Fixed Income
Alternative Assets
Private Equity
Hedge Funds
Real Estate and Infrastructure
Environmental, Social, and Governance
Increasing Overall Portfolio Risk
Chapter Notes
9 Public Pension Performance
Introduction
Public Pension Performance
Performance Attribution
Performance Variation
Asset Class Performance Characteristics
Performance Benchmarks
Performance vs. Benchmark
Chapter Notes
10 Public Pension Contributions
Introduction
Contributions as Pension Revenue
Contribution Funding Policy
Annual Required Contribution
Managing Contribution Volatility
Funding Policy Best Practices
Employer Contribution Indices
Employee Contributions
DC Contributions
Chapter Notes
PART IV
Plan Governance
11 Governance Structure
Introduction
Legislative Oversight
Common Governance Structures
Governing Fiduciaries: Trustees
Board Composition
Core Competencies and Education
Financial E
In an ever-changing financial and political landscape, your job as a public pension fiduciary continues to get more difficult. Now, you have the help you need.
U.S. Public Pension Handbook is the only one-stop resource that covers the various areas of public pension policy design, governance, investment management, infrastructure, accounting, and law. This comprehensive guide presents critical data, information, and insights in topic-specific, easy-to-understand ways—providing the knowledge you need to elevate your expertise and overall contribution to your pension plan or system. U.S. Public Pension Handbook covers:
• Today’s domestic and global public pension marketplace• The ins and outs of the defined benefit model, the defined contribution model, and hybrid pension designs• Financial concepts central to the actuarial valuation of pension obligations• Public pension investment policies and philosophies• Asset allocations and how they have changed over time• State and local government pension contribution policies• The impact of governance structure and board composition on organizational results• Fiduciary responsibility and the general legal/regulatory framework governing trustees• How changes in trust law may affect public pension trustee fiduciary responsibility and liability• Best practices in pension governance and organizational design
Public pension trustees are the unsung heroes of the world of finance, collectively managing over $6 trillion in retirement assets in this country alone. U.S. Public Pension Handbook provides the grounding you need to make sure you perform your all-important job with the utmost expertise and professionalism.