Overview:
The Florida Retirement System (FRS) Pension Plan is the fourth largest public retirement plan in the U.S. and comprises roughly three-quarters of total assets under SBA management. Our commitment to maximizing returns over the long term, subject to risk considerations, is key to ensuring the FRS Pension Plan continues to help over 280,000 retirees meet their financial goals. Plan assets are broadly diversified across and within eight public- and private-market asset classes.
In 2008, Standard & Poors reported the FRS Pension Plan with the third highest ratio of actuarial valuation of assets to liabilities, or “funded ratio,” among state retirement plans. The Trustees’ strong leadership, the Florida Legislature’s good public policy, and our solid investment performance formed the basis for this exemplary accomplishment. The Pension Plan continues to be one of the best funded plans in the nation.
SBA's investment policy objective for the FRS Pension Plan portfolio is to provide investment returns sufficient for the plan to be maintained in a manner that ensures the timely payment of promised benefits to current and future participants and keeps the plan cost at a reasonable level. To achieve these objectives, the Board has determined that a long-term real return of 5.0% per annum (compounded and net of investment expenses) should be attained.
In investing the FRS Pension Plan assets, the SBA follows the Florida Statutes' fiduciary standards of care, subject to certain limitations. As always, in keeping with our commitment to disciplined trust management services, the Investment Advisory Council provides independent oversight of the FRS Pension Plan's general objectives, policies, and strategies. Some of the key guidelines specific to the investment of FRS Pension Plan assets include:
- No more than 80 percent of assets can be invested in domestic common stocks.
- No more than 75 percent of assets can be invested in internally managed common stocks.
- No more than 3 percent of equity assets can be invested in the equity securities of any one corporation, except when the securities of that corporation are included in any broad equity index or with approval of the Board; and in such case, no more than 10 percent of equity assets can be invested in the equity securities of any one corporation.
- No more than 80 percent of assets should be placed in corporate fixed income securities.
- No more than 25 percent of assets should be invested in notes secured by FHA-insured or VA-guaranteed first mortgages on Florida real property, or foreign government general obligations with a 25-year default-free history.
- No more than 20 percent of assets should be invested in foreign corporate or commercial securities or obligations.
- No more than 5 percent of any fund should be invested in private equity through participation in limited partnerships and limited liability companies.