Nevada Retirement News

Public Employees Retirement System
Winter 1998

Each year the System publishes an annual report, which is submitted to the Governor, members of the Nevada Legislature, public employers, and employee and employer associations.

We are proud to announce the System has again received the Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting. The System was also awarded the Public Pension Principles Achievement award for 1998. This award is given in recognition of high professional standards in public employee retirement administration. The following is some of the pertinent information contained in our 1998 annual report. Any member who would like a copy of the report should contact the System.

Member/Retiree Demographics - The annual report shows interesting trends in membership and retirement data, as follows:
  

Legislation
ACR 15 of the 1997 session of the Nevada Legislature directed PERS to conduct a study of service credit and average compensation for Nevada's public employees. The primary purpose of the study was to address equity and plan comprehension issues as they relate to public employees who work non-traditional schedules (e.g. 10 or 12 hour daily shifts) and part-time work weeks. The report findings reflect that certain employees working the equivalent of full-time do not receive full-time service credit. It also revealed the need for PERS to place more emphasis on part-time employee retirement education.

Both legislative and policy recommendations were made to address these findings. Proposed changes to the Retirement Act and Retirement Board policies will provide the Board more flexibility to review public employer work schedule certifications. PERS has also augmented its budget request for the upcoming biennium to develop materials specifically for part-time employee education. These will include summary plan descriptions, videos and pre-retirement guides. The legislative recommendations will be considered by the 1999 session of the Nevada Legislature.

PERS will introduce legislation during the 1999 legislative session to increase certain survivor benefits and to modify the definition of compensation subject to retirement contribution. The survivor benefit improvements will provide for the maximum income protection possible under our plan for the surviving spouse of a deceased member with 15 or more years of service. Also proposed is an increase in the base payment amount for some survivor benefit categories. The request to modify the definition of compensation is being made to insure that contributions are based on an employee's base pay and not additional fringe benefits.   

Technology Improvements
PERS recently embarked on a business system replacement project, coined the C*A*R*S*O*N (Computer Automated Retirement System of Nevada) Project. PERS' existing computer system was developed in the early 1980's. While the system was well designed for the times, both technology and business issues have changed in the decade since implementation. The new system will be integrated so that information will be entered into the system once and each subsystem will access it, thus enhancing accuracy and workflow.

By way of background, in 1997 the System completed an assessment of current systems and organization. After that assessment was complete, the decision was made to move to a phased system replacement. An extensive RFP was issued and a vendor selected. Over a four-and-one-half-year period, PERS will replace the financial accounting system, membership system and benefits system.

To effectively manage a project of this magnitude, PERS is using a five-tiered approach to project monitoring, beginning with a user group designed to enhance communication with the vendor. A project management committee reviews priorities and staff/vendor resources and a steering committee evaluates contract issues. PERS assigned a full-time project manager to manage the vendor relationship and a quality assurance consultant reviews all deliverables. The contract includes several provisions designed to insure project success. Examples include the phasing of the project, as well as a performance bond, which will remain in full force for the life of the contract. This project will help PERS better serve our members and retirees through the streamlining of processes and better computer functionality.

PERS also introduced its web site in 1998. It includes online versions of summary plan documents and pre-retirement guides as well as information on the history of PERS, board members, newsletters, and other timely information. PERS' web site is www.nvpers.org.   

Strategic Planning

As part of its ongoing strategic planning process, the Board recently completed a study on the impacts of mandatory Social Security coverage of state and local government employees. The study focused on the proposals of several commissions that have recommended all newly hired public employees be enrolled under Social Security to help maintain the solvency of the Social Security System. The study concluded that mandatory Social Security would cause serious financial and administrative disruption to PERS.

Later this year, the Board will receive a report on the portability and preservation of retirement benefits. It will include a cost analysis of various plan design features that addresses pension portability and preservation.   

The Retirement Board employs 21 firms to invest PERS' assets. From time to time we intend to profile these firms so our readers learn more about the System's investment program. In 1986, Alliance Capital was hired to manage an S & P 500 Index Fund. Alliance, with $242 billion in assets under management, has achieved significant growth in its businesses over the years. Listed on the New York Stock Exchange, it is currently the nation's second largest publicly traded asset manager and the world's ninth largest investment manager. Alliance launched pension fund asset management in 1963, and currently manages retirement assets for clients in 35 states.

Alliance's investment advisory business includes products across the entire investment spectrum. Their joint ventures with companies in other countries have expanded the distribution of products and services. This diversification provides the Firm with multiple areas of growth and continued profitability.

Over the years, Alliance's relationship with Nevada PERS has grown significantly. It currently includes $1.45 billion of System assets. As a client, Nevada has had access to their broad investment and research resources and new investment strategies. In 1996, Nevada temporarily shifted assets to Alliance Capital's Large Cap Value Index. In 1998, the Alliance Value Index Fund was transitioned back to an active manager and Alliance Capital was awarded its first active assignment, managing a Large Cap Growth Portfolio.

Both active and index Alliance portfolios have met performance objectives. The S & P 500 strategy is designed to provide close tracking to the S & P 500 Index. This index also serves as the objective for PERS' total domestic equity allocation. Devoting a portion of assets directly to that market index is an important component in the Board's domestic equity structure. The Large Cap Growth portfolio objective is to add return over the S&P 500.

As an active growth manager, the Alliance Large Cap portfolio management team strives to identify and invest in companies with two to three year relative earnings strength, at an early stage and a reasonable price. Portfolios are concentrated in stocks whose prospective earnings growth rates are at least double the S & P 500's longer-term growth trend. The portfolio will typically have higher weightings in well-recognized growth companies in the technology, health care and consumer areas. However, the manager's broad definition of growth includes selected stocks in the financial, transportation and cyclical sectors with strong growth prospects selling at reasonable valuations.

Our Alliance portfolio managers have long tenure with the Firm. Judi DeVivo, portfolio manager of the S & P 500 Index Fund since its inception in 1986, has been with Alliance Capital for over 25 years. Jack Koltes, Alliance's Large Cap Growth portfolio manager, co-founded the Large Cap Growth Strategy with Alfred Harrison in 1978. Jack and Alfred have managed Large Cap Growth portfolios for the past 20 years and were largely responsible for building the successful, long-term performance record.

We appreciate our long-standing successful relationship with Alliance Capital.   

The Retirement System will be very active this session testifying on a number of bills appearing to affect the Retirement Act. The board approved no fiscal legislation for this session but our technical bill modifies several provisions within the Retirement Act. The Retirement Board will take positions on every bill affecting the Retirement Act as they are introduced.

Because of the shortened session, bills come out of bill drafting and are scheduled for hearing very quickly. For a complete update on legislation of interest to our members, please view the Retirement System's web site at www.nvpers.org.   

Retirement Program Available

Are you thinking about retirement? Do you have questions about how your benefit will be calculated at retirement? Do you know what your retirement benefit can do for you over the long term? The PERS staff is ready, willing and able to meet with your group to answer your questions and provide basic information about PERS benefits. We have a new program that we'd like to share with you. All we ask is that you coordinate the program through your employer's liaison officer so we have proper authorization to meet with you or to use your facility. We are available during the day or after working hours as long as we have time to make plans. Call the Benefits Division to make arrangements. We look forward to meeting with you!

When you have questions about PERS benefits, call us. Don't make decisions based on hearsay. Keep in mind, we do not charge for our services. If someone approaches you and says they represent PERS and they can provide information for a fee, they are not from the PERS staff.   

Interested In Knowing More About Your Retirement System Pers Video Available To Active Members

A PERS video explaining survivor, disability and service retirement benefits is now available through your Agency's Personnel or Human Resources Department. Your Agency has been authorized to make copies of the video for satellite offices. Please contact your Personnel Department or Human Resources Department directly to obtain information regarding viewing the video. If you would like to comment on the video, please send your letters to the attention of the Retirement System's Support Services Division.