Senate Bill 2115, sponsored by Sen. Angela Hill, would cap fees paid to outside money managers for the state’s defined benefit pension system and require annual reporting.
The Public Employees’ Retirement System of Mississippi serves most state, municipal and county employees (150,651 active employees and 107,844 beneficiaries) and is only 61.6 percent fully funded.
Its unfunded liability amounts to $17.6 billion or more than three years of all general fund tax revenue. While that liability isn’t due at once, the figure provides an insight into the health of PERS.
Last year, PERS’ plan investments earned $1.7 billion and total service fees represented more than $102 million of that total. In 2018, PERS’ investments earned $2.3 billion and manager fees added up to more than $103 million.
The bill, if signed into law, would require the PERS Board of Trustees to review all investment contracts and reduce investment fees by half by June 30, 2021.
The saved monies would be put back into PERS and the Board would have to report to the legislature on or before December 31 of each year on how much it spent for investment management services.
While this wouldn’t be a huge boost to PERS’ bottom line, reducing the amount PERS pays to outside money managers would allow more money to stay with the fund and provide more capital for investments.
MCPP has reviewed this legislation and finds that it is aligned with our principles and therefore should be supported.
Read the bill here.
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