[r65] PERF/TRF Change Nets Big Savings (3/13/2010)

Saturday, March 13, 2010

Start Date: 3/13/2010 All Day
End Date: 3/13/2010
STATEHOUSE-Legislation co-authored by State Representative Eric Koch (R-Bedford) could save an estimated $44.6 million annually by combining the investment management of the Indiana Public Employees' Retirement Fund (PERF) and the Indiana State Teachers' Retirement Fund (TRF). Today House Bill 1205 passed the House 86 to 0 and the Senate 49 to 1. The bill now advances to the governor's desk for final approval.  

House Bill 1205 requires the board of trustees of the Public Employees' Retirement Fund (PERF) and the board of trustees of the Indiana State Teachers' Retirement Fund (TRF) to appoint a common director for PERF and TRF. It further requires the PERF and TRF boards to cooperate in administering and investing the assets of the funds and in hiring investment managers, investment advisors, and other service providers.

The Legislative Services Agency has estimated an annual increase of $44.6 million in investment return based upon an additional 0.2% increase in investment return achieved from the savings. As of November 30, 2009, PERF net assets were $14.2 billion and TRF net assets were $8.1 billion. A 0.2% increase on the combined net assets of $22.3 billion yields approximately $44.6 million in increased annual investment returns.

"The savings from the economies of scale achieved through the coordinated investment management of these funds is one of the biggest - if not the biggest - cost-saving measures we have initiated this year," said Rep. Koch. "During these tough economic times these savings will greatly benefit the state general fund, schools, and local units of government for years to come."

Rep. Koch serves House District 65, which includes parts of Bartholomew, Brown, Jackson, and Lawrence Counties, and is Assistant Republican Caucus Chairman.