Nevada Retirement News

Public Employees Retirement System
Spring 2000

The PERS' investment fund experienced a positive 1999, ending the calendar year with $12.9 billion in assets and an 8.5% net one-year return, versus our long-term assumption of 8%.

1999 was volatile in the investment markets. International equities (represented by the Morgan Stanley EAFE Index) generated the highest return of PERS' assets with a 33% return, U.S. stocks (represented by the S&P 500) generated a 21% return and real estate (the NCREIF Index) ended the year with an 11% return. Both international and U.S. bonds lost ground, with the U.S. bond market generating a -1% return and international bonds returning -5% for the year.

Exhibit I below, reflects the month to month performance of the S&P 500. Investors accepted a significant amount of volatility to capture stock market returns in 1999. Exhibit II plots total PERS' fund performance over the same time period. The PERS' fund experienced less volatility than the stock market as a direct result of our diversification measures.



PERS' longer-term return continues to be positive relative to our 8% goal. Thanks in large part to a favorable investment environment, PERS' 10-year return, net of fees, is 11.4%. This is compared to a return for our blended market objective of 11.1%.

Another aspect of performance analysis is a comparison to other public pension funds. This analysis is significantly impacted by differences in PERS' asset mix and the asset mix of the average public fund. Notably PERS allocates a more conservative 40% of total assets to stocks, while the average public fund maintains a 60% weighting. Therefore, we expect our lower risk portfolio to generate lower relative returns in "hot" stock markets. That was the case throughout most of the 1990's.

To compensate for these asset allocation differences, we also compare performance to peers on a risk-adjusted basis. When comparing PERS' return per unit of risk to that of our public fund peers (Callan Associates database), PERS ranks in the top 7% for the last 10-years.

Given the volatility experienced in 1999 (and that which we have seen so far in the year 2000), we feel confident that the PERS' fund is well positioned to balance investment risk and return over the long term.

The new millennium brings many changes to the Public Employeesâ Retirement System. One of the most exciting new changes is our expanded member annual statement format. We are pleased to be able to provide information that will assist our members in planning for their financial future. This yearâs statements include sections on our Purchase of Service Program, Estimating Your Retirement Benefit, Disability Benefit and Survivor Benefit Programs, and definitions of key terms related to retirement.

The statements are being distributed through our employers in sealed envelopes to insure that individual information provided in the statement is confidential. Personal account information is provided on page 3 and 4. It is important to note that the personal account information is valid through the date of last posted contributions indicated on page 3. Please remember that the personal account information reflects what was posted to your account as of the date of last posted contributions. Information regarding optional service time agreements can be found on page 6. Any pending agreements and/or agreements in progress will be captured in this section.

On this yearâs statements, the family and beneficiary information will not be provided. While we retain your family and beneficiary information in our prior computer system, we do not have social security numbers for these individuals. We need each of our members to complete the Change of Member Account Information form on page 11 and 12, sign the form and return it to PERS. The information provided on the form will be input into each memberâs account and retained for future reference. Please be aware that we will need the name, birth date and social security number for any person listed as a family member or beneficiary.

Planning for retirement can never begin too early. By providing our members with a better understanding of their PERSâ coverage, we hope that each of our members is better able to plan for their financial future.

  

Strategic and tactical planning are key to the successful management of the Retirement System. They must address both external and internal elements ranging from federal legislative efforts to staffing levels necessary to meet the service demands of our members and beneficiaries. One issue currently under review is that of pension portability.

In 1999, Segal began a study of pension portability and benefits preservation as part of the Retirement Systemsâ overall consideration of benefit design. The central focus of this exercise addresses the ability of short-term public employees to retain more control over their retirement benefits and to preserve the value of those benefits.

The need to study retirement benefit portability and preservation issues arises out of concerns nationwide that traditional defined benefit systems do not adequately protect the value of accrued benefits for many plan members. In fact, a recent report by the National Conference of State Legislatures titled "PENSIONS AND RETIREMENT PLAN ISSUES IN 1999 STATE LEGISLATURES" states that the major themes for state pension legislation in 1999 were issues of pension portability and preservation.

Benefit portability is defined as the features of a retirement plan allowing participants to move all or a portion of the value of their benefits in the plan. Benefit preservation is defined as the features of a retirement plan that act to maintain the value of a participantâs benefits for use during retirement.

Segal indicated in the report the value of benefit portability and preservation must be judged in the context of the mission of the Retirement System. NRS 286.015 states in part:

·It is the purpose of PERS to provide public workers with a reasonable base income at retirement and to encourage those workers to remain in government service for such periods of time as to give public employers and the people of the State of Nevada the benefit of their training and experience.

From Las Vegas	486-3900
From Reno or Carson City	687-4200
From anywhere else in Nevada	1-800-992-0900, extension 4200

PERSâ Retirement Board -

Joyce Woodhouse, Chairman	Judy Holt, Member	Steve Cozine, Vice Chairman
Marvin Leavitt, Member	Eldon Anderson, Member	Earl Greene, Member
	Charles Silvestri, Member
Executive Staff -
George Pyne, Executive Officer	Dana Bilyeu, Operations Officer	Laura Wallace, Investment Officer

1. Where does the Retirement System obtain the information reflected on your member annual statement?



Answer: Your name, birth date, and beneficiary information are taken directly from your enrollment form as completed by you and submitted by your public employer. The service credit, salary, and contribution data are taken directly from monthly contribution reports provided by your public employerâs payroll center.

2. If I am unable to continue the monthly payments on my purchase of service agreement, what are my options?



Answer: You may pay the remaining balance in a lump sum, receive a refund of all monies paid, or receive service credit in the proportion that the principal paid bears to the principal due under the agreement.

3. If both my spouse and I are vested members of the Retirement System and one of us passes away, will the surviving spouse be eligible for two benefits?



Answer: Yes. Since both husband and wife are contributing members, each would be eligible for survivor benefits as a surviving spouse, and for a service retirement benefit based on his or her service and average compensation.