TEXPERS Pension Observer Vol. 4, 2020

UP-FRONT FEATURES

TEXPERS Launches How pension funds are
redesigned website coping with remote work

To get noticed, your fund
has to participate

When governments ask for your input,
rise to the occasion. pg. 8

We guide so
you can lead.

At PFM, we combine our local expertise with collaboration and
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Tim Stidham, CIMA Mallory Sampson, CFP
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213.415.1627 512.614.5336

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For important disclosures please go to pfm.com/disclosures

CONTENTS

» p.6 up-fRONT
» p.12
Column: Everyone is facing new challenges, thanks to the
pandemic. TEXPERS rose to the occasion by offering new
programs for members. pg. 5

Pensions Buzz: Read a roundup of the latest Texas pension
industry news. pg. 6

FEATURES

Participation Matters: Discover why your pension fund needs to be
vocal this legislative session. pg. 8

Coping with Work-from-Home: Survey allows pension system
administrators to gauge remote work policies of industry peers. pg.
12

Best practices

Personal Development: Guest columnist Dr. Gleb Tsipursky explains
why public pension system officials need to learn to let data be
their guide. pg. 17

Strategic Management: Guest columnist Dr. Mary Kathryn Campion
says it is okay for pension system trustees and administrators to
miss the ‘old,’ just don’t forget to embrace the ‘new.’ pg. 18

» p.17 » p.18
www.texpers.org | TEXPERS Pension Observer

4 UP-FRONT

OFFICERS & BOARD OF DIRECTORS

President
Paul R. Brown
Big Spring Firemen’s Relief & Retirement Fund

First Vice President
Jim Smith
San Antonio Fire & Police Pension Fund

Second Vice President
John D. Jenkins
Dallas Employees’ Retirement Fund

Secretary
Sherry Mose
Houston Municipal Employees Pension System

Treasurer
Larry A. Reed
San Antonio Fire & Police Pension Fund

BOARD OF DIRECTORS

• Carla Brewer
Dallas Employees Retirement System

• Jose Cavazos
Dallas Area Rapid Transit Retirement Plan and Trust

• Tyler Grossman
El Paso Firemen & Policemen’s Pension Fund

• Larry Knott
Dallas Area Rapid Transit Retirement Plan and Trust

• Billy Samuel
Fort Worth Employees’ Retirement Fund

• David Stacy
Midland Firemen’s Relief and Retirement Fund

ADMINISTRATION

• Art Alfaro
Executive Director

• Carolyn Butterworth, CMP
Director of Conferences & Member Relations

• Lena Terrell
Membership & Financial Supervisor, CAP

• Allen Jones
Communications & Public Relations Manager

• Samantha Polsgrove
Membership Services Specialist

CONTACT INFORMATION

Texas Association of Public
Employee Retirement Systems
1504 San Antonio St. Suite 206

Austin, TX 78701
Telephone (713) 622-8018
E-Mail: [email protected]

Copyright ©2020. TEXPERS Pension Observer is the
official magazine of TEXPERS, published quarterly.
Contributions to TEXPERS Pension Observer are
welcome, but the right is reserved to select material to
be edited and published. Publication of any article is not
to be deemed an endorsement of the views expressed
therein, nor shall publication of any advertisement be
considered an endorsement of the product or service
involved.

TEXPERS Pension Observer | www.texpers.org

UP-FRONT 5

COLUMN

PANDEMIC PRODUCES CHALLENGES
FOR PENSION FUND BOARDS AND STAFF

by Paul R. Brown
President, TEXPERS

The pandemic created by the novel cor- Photo/Markus Spiske from Pexels
onavirus, the respiratory illness that causes
COVID-19, has produced many new chal- Throughout the COVID-19 pandemic, There will be a new Speaker of the Texas
lenges for all of us, including occupational TEXPERS staff have seamlessly made sure House, along with new committee assignments.
exposure issues, staff shortages, dramatic life- the programs, services, and assistance for our The elected representatives you send to Austin
style changes, concerns for our families’ safety, members continue despite the widespread are those individuals that TEXPERS will have
and new mental stressors about the disease’s shutdown, restrictions, and social distanc- to work with regarding your pension issues. It
unknown. ing. TEXPERS staff have adapted to working is imperative that all of you participate in the
remotely, using video conference tools for quick election process to ensure that your pension
COVID-19 has gripped the attention of the video chats and major meetings involving mul- systems are well protected.
world and fundamentally changed every aspect tiple participants. Many events have been can-
of our lives. We all currently face an unprece- celed or postponed. However, training continues I want to personally thank those of you who
dented combination of stressors in today’s pan- through video conference platforms. Though have participated in the Pension Review Board
demic, fear of contracting the novel coronavi- TEXPERS staff looks forward to the end of the committee meetings and Board meetings. And,
rus on the job, significant disruption to our daily pandemic and a return to the office, the virtual thaI appreciate those who have responded to
lives (including quarantine), community unrest, environment has not hampered or reduced the the PRB with your concerns on the Investment
a weakened economy, layoffs, and budget cuts. association’s ability to perform critical work on Practices and Performance Evaluations. Your
The pandemic has fundamentally changed how behalf of members. voices are heard and go to the full board on
we live and work and affected all of us in many Nov. 12. The PRB will then submit its report to
ways. It is especially tragic for the families that Be sure and visit our redesigned website the legislature at the end of November.
have lost love ones to this deadly virus. at www.texpers.org to learn more about online
learning opportunities. The early filing of legislative bills also
COVID-19 has brought many challenges, begins in November. Please keep TEXPERS
inconsistent and flawed guidelines, and eco- GOVERNMENT PARTICIPATION informed if your system will submit any legisla-
nomic uncertainty. tive changes this upcoming session.
COVID isn’t the only thing on our minds.
The damaging financial fallout from this This is an election year. On Nov. 3, Americans Please continue to follow safety guide-
pandemic is without precedent as people limit will elect a president, and Texans will make sig- lines to protect yourself, your families, and each
social interactions; businesses temporarily nificant changes in state and local elections.
close and place restrictions on service; and other. Paul R. Brown
companies implement hiring freezes, furloughs,
or lay off workers. These widespread efforts to
contain the virus have slowed taxable economic
activity. Many local governments report losses
of revenue needed to fund operations, including
property taxes and sales taxes, leading to antic-
ipated budget shortfalls through 2020 and 2021.

Many states have re-opened but have had
to reinstate stringent guidelines for businesses
and residents as infections soar. With a possi-
ble surge in COVID-19 infections this fall as the
flu season approaches, this public health crisis
is a very fluid situation with few certainties. In
terms of its economic repercussions, we need to
prepare for a protracted recovery period lasting
through the end of 2021. Efforts to stimulate the
economy amid the pandemic have also helped
limit the damage imposed on municipalities.
Still, the total economic price tag of COVID-19
will ultimately depend on when proper medical
interventions permanently contain the disease.

www.texpers.org | TEXPERS Pension Observer

6 UP-FRONT

PENSIONS BUZZ

TEXPERS LAUNCHES
REDESIGNED WEBSITE

TEXPERS recently launched its rede- Screen shot of TEXPERS’ redesigned website at www.texpers.org
signed website. The website, www.texpers.
org, offers a user-friendly browsing experience Richard Van Houten, a TEXPERS in June that the association canceled its
for the association’s members, prospective Retirement System Member with Forth Worth Annual Conference in San Antonio due to
members, and business partners. Employees’ Retirement Fund, has joined social distancing restrictions. The board and
Pension Technology Group. staff recognized that although it could not hold
“The new design offers streamlined an in-person event, association members still
menus, clear navigation, and a responsive Van Houten is the director of public safety need to fulfill state-mandated training. The staff
layout for multiple platforms such as desktops, markets for the company, which provides has developed a series of online seminars
tablets, and mobile phones,” said Art Alfaro, public technology services for public employee as a practical and free alternative for system
TEXPER’s executive director. “The associ- pension funds. The company is a Vendor member trustees and administrators to con-
ation staff are excited to have this project Member of TEXPERS. tinue their education.
completed.”
According to an email from Pension As an Accredited Sponsor of the Pension
Features and benefits of the newly Technology Group, Van Houten spent 29 Review Board of Texas, TEXPERS is providing
designed site include: years in law enforcement. He retired from the credit hours of training to pension plan trustees
Fort Worth Police Department with the rank and administrators. Several sessions formerly
• A more connected membership with of sergeant. As an active police trustee and to be held during the Annual Conference have
social networking support vice chairman of the Fort Worth Employee been reconfigured for online presentations that
Retirement Fund, he supported defined benefit allow first-year and continuing trustees and
• Simple tools for membership to stay pension systems nationwide. In addition to his administrators to earn credit hours.
in touch work with the department and retirement fund
service, he represented members of the Fort New and Continuing Trustees and
• Space for members to share Worth Police Officers’ Association for more Administrators may earn 1 credit hour per des-
resources and information than 10 years. ignated webinar. Each online session is lead
by pension or investment industry experts.
• Ability for members to keep records EARN STATE-MANDATED
of their Continuing Education credit TRAINING CREDIT THROUGH To earn a credit hour, attendees are
hours online ONLINE LEARING required to sit through an entire presenta-
tion, participate in polling questions during
• Serving as primary source to collect The outbreak of the novel coronavirus, the the session, and answer a survey after the
membership dues and support event respiratory illness that causes COVID-19, has webinar.
registrations adversely impacted TEXPERS’ ability to host
its Annual Conference and Educational Forum A code will appear on the screen after
TEXPERS members who want to track this year. However, the association’s staff is each webinar and attendees will need to
their Continuing Education training credit hours lining up online events offering members the provide it in the survey as proof that they sat
will need to log into the site. Once logged in, ability to develop their professional skills and through the session to the end.
visitors will see a “welcome” notice on the page earn credit for their state-mandated training
along with the user’s name. Once the visitor hours. Online sessions took place in May and
has accessed their member site, users can July, and three more were held in September.
click on the “Your CE Credits” tab in the Quick TEXPERS’ board of directors announced The association staff is busy putting together
Links panel on the right of the site page. additional educational programming through
November.
Once logged in, TEXPERS members may
also update their profile or organization infor-
mation, access a directory of members, and
find links to the association’s bylaws. The the
site provides a news feed of the association’s
blog as well as live updates of TEXPERS’
Twitter feed. Also, members should frequent
the site to stay up to date on the association’s
latest events.

The newly designed TEXPERS website is
hosted through MemberClicks, which provides
software solutions to help member-based orga-
nizations such as TEXPERS with membership
management, event registration, and database
needs.

SYSTEM MEMBER JOINS
VENDOR MEMBER GROUP

TEXPERS Pension Observer | www.texpers.org

UP-FRONT 7

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for new and continuing board members and World”. should be watching
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8 FEATURES

TEXPERS Pension Observer | www.texpers.org

FEATURES 9

The virus that causes COVID-19 could make
Texas’ 2021 legislative session the most
unusual among all 87 regular sessions in
the state’s history. Elected representatives
will consider how they might address the
pandemic’s impacts on Texas, and pension
funds could face a double whammy.

by Joe Gimenez, Guest Contributor

Legislators will make COVID-19 related decisions that affect deferrals and modifications for loans held by Fannie Mae and
pensions’ city sponsors and the general economic environment Freddie Mac. IBAT also explained how its independent bank
where systems invest. But even more directly, pension funds will members worked with customers to submit timely loan applica-
be affected by Pension Review Board intent to change 2015 and tions to the Small Business Administration for Paycheck Protection
2019 laws for actuarial health and their investment decision making. Program funds.
If successful, 32 or more systems may find themselves in Funding
Soundness Restoration Plans. And public pension fund boards TEXPERS asked its membership base of 80-plus systems to
will have to answer more directly for investment decision making. respond to the House committee request to create a summarized
report. Only two pension funds accepted the opportunity to describe
“Given the stakes that we know of now, this could be one of the pandemic impacts. Given the low participation, TEXPERS decided
most important legislative sessions for the future of pension funds,” it could not use those responses to take a position on behalf of
said Art Alfaro, executive director of TEXPERS. “We are seeing more members.
some early signs that TEXPERS members are willing to partici-
pate in the process, but it sure would helpful if more become willing Encouragingly, the reports submitted by The Port of Houston
to do more in the run up to the Legislative Authority and the Houston Firefighters’ Relief and Retirement Fund
session.”

Opportunity to Inform

Take, for example, how officials of were quite good and probably reflective of other systems’ expe-
several associations recently used an oppor- riences. The reports detailed the impacts of COVID-19 on board
tunity to inform lawmakers about the impact and committee meetings, compliance with Senate Bill 2224 and
of COVID-19 on their members. The Texas House Bill 322, member services, office operations, technology,
House committee for Pensions, Investments
and Financial Services asked organizations
under its purview to catalog challenges they
faced due to COVID-19. Other associations
used responses from their members to
compile statistics and begin pre-positioning
their legislative agenda.

The Consumer Service Alliance of
Texas, for example, offered a counter-nar-
rative to its critics: “Predictions made by
special interest groups about an overwhelm-
ing tsunami of payday and auto title loans
have proven untrue. Repayments of outstanding short-term loans
during March and April of this year reached unprecedented highs.”

And the Independent Bankers Association of Texas described
how its members implemented the CARES Act through payment

10 F E A T U R E S

and investments. It is impor- PRB guideline recommendations developed in 2017-18, for plans
tant for Legislators to hear good to achieve 30 year amortization periods by 2025. (As an aside, the
news, like the Port of Houston entire process reflects how guidelines eventually become laws. Early
Authority’s statement that “Our participation in guideline formation, which TEXPERS attempts reg-
Pension Plan is well funded ularly, often has future ramifications.)
and is not subject to Intensive
Reviews or Funding Soundness “Participation matters. Associations can’t operate without infor-
Restoration Plans.” The Houston mation and participation from members,” Alfaro said. “The temptation
firefighters’ system confirmed may be to ignore requests for information, but the resulting outcomes
that it worked with their city may have greater consequences given the increasing intensity of
sponsor throughout the COVID- Pension Review Board oversight. As the 2021 Legislative session
19 crisis to comply with very nears, pension systems, and their association, TEXPERS, will need
complex mechanisms in a 2017 to increase its dialogue and situation reports. That is the only avenue
law explicitly written for all the for minimizing the unintended consequences and unfunded man-
Houston plans. dates in any future legislative changes.”

“Our pension system is com-
mitted to actively engaging with
the members of the Legislature
and the Pension Review Board
whenever productive opportu-
nities arise,” said Ralph Marsh,
executive director of HFRRF.
“They need this sort of infor-
mation to make informed policy
decisions. Due to the pandemic,
our staff and members have had to adapt to using technology to
conduct the fund’s business and be more efficient. We lost a beloved
member of our staff to COVID-19 and three others required hos-
pitalization. We thought it was important to show the real conse-
quences of the virus to our operations.”

Otherwise, pension funds have also been relatively quiet in their
response to Pension Review Board requests for input on legislative
changes. In late August, PRB staff asked systems to comment on
possible changes to the funding policy and funding soundness res-
toration plan statutes. Only four pension systems responded out-
right, but representatives for multiple systems, like TEXPERS and
two actuaries, also responded (see Figure 1 on page 9).

Actions Impact Pension Funds

The Pension Review Board has been responsive to pension Joe Gimenez is a public relations counselor to TEXPERS and
systems’ concerns, but only when they are voiced. the Houston Firefighters’ Relief and Retirement Fund.

For example, in June, TEXPERS sent a detailed letter explain-
ing its concern about changes that might cause 3/4s, or 75, of the
99 Texas pension systems monitored by the PRB to go through
funding soundness restoration plan processes. Even though a Board
member recently expressed that number in a somewhat tongue-in-
cheek manner, it represents a spirit of aggressive change with which
Board members and staff seem comfortable.

On Sept. 29, staff and Board members worked on hybrid,
nuanced, and tiered approaches to FSRP triggers and requirements.
If adopted by the Legislature, those changes might only snare 32
plans in FSRP processes. (See Figure 2)

The complex system they developed seemed more attuned to
concerns TEXPERS raised and, additionally, reflective of previous



12 F E A T U R E S

WOCROKP-FINRGOWM-IHTHOME

by Allen Jones, TEXPERS Communications Manager

SURVEY ALLOWS PENSION SYSTEM ADMINISTRATORS TO
GAUGE REMOTE WORK POLICIES OF INDUSTRY COHORTS

The novel coronavirus pandemic has forced many companies to find new ways to operate
as federal and state health departments continue to promote social distancing. For their
employees' wellbeing, private- and public-sector employers alike have had to develop new
or expand existing remote work policies - and that includes public pension systems.

F E A T U R E S 13

As the pandemic continues, NASRA survey results are typically made avail- When asked about employees who are inel-
many workplaces are attempt- able only to NASRA members. Because of the igible to work remotely, systems indicated call
ing to figure out how remote unique, pervasive, and significant effects of the center staff and IT personnel along with member
work has impacted their pandemic on the broader community of public service representatives such as receptionists.
operations, what their priori- retirement systems, the association made the Other responses provided:
ties should be, and what the future may hold results of this survey more widely accessible.
for remote work. The National Association of To encourage full and candid participation in • Front desk
State Retirement Administrators recently sur- NASRA’s surveys, Brainard said the associa- • Mailroom staff
veyed its members to see how their pension tion does not share survey results attributable • Those who cannot perform essential
systems’ remote work policies have changed to individual survey respondent.
since the novel coronavirus pandemic forced services remotely.
many workplaces to operate under social dis- Written Policies • It is up to the manager of the depart-
tancing recommendations of national and local
health departments. Of the 28 systems participating in the ment, but typically managers and
The NASRA report doesn’t offer best-prac- survey, 20 had a written policy governing employ- supervisors would only telecommute
tices as much as it compiles responses from the ees working remotely. Eight responded they did on an ad hoc basis.
various retirement system members who partic- not have a remote work policy. • Workers whose job requires resources
ipated in the survey. The nonprofit association’s only found in the building (Facilities
members are the directors of the nation’s state, Thirteen of the 20 systems with a written Services, Mail Center Printshop, etc.).
territorial, and largest statewide public retirement policy reported that the policy was in place before • Essential staff needed to maintain
systems. Because those members are responsi- the pandemic. Six systems developed a remote remote operations.
ble for their systems’ day-to-day administrations, work policy in response to the pandemic. One Some systems required employees such as
NASRA researchers wanted to find out how their system had a policy in place before the pandemic those who can perform their work remotely, field
members are responding to the pandemic in but updated it during the health crisis. representatives, employees under quarantine
terms of workplace policies and practices. who can complete their job responsibilities, staff
The expectation, NASRA Research Director Survey respondents also gave various deemed to be “at-risk” of contracting the novel
Keith Brainard said in an email, is that public answers to a question asking which groups of coronavirus, to work remotely. Only staff con-
retirement systems will glean helpful insights employees could work remotely and which ones sidered as essential to operations could come
from their fellow systems’ responses. were ineligible. to the office.
In August, NASRA invited all 90 of its Another system asked those it allowed to
members, including 20 directors of local retire- Seven systems indicated that all employees remote work to come to the office two days a
ment systems who are NASRA Educational could work from home. Eight systems responded week. The required in-office days were subject
Alliance members, to participate in the survey. that all employees could work from home except to change based on local virus conditions and
Out of the 90 members invited to take the survey, essential employees or those whose duties will did not forbid any employee from entering the
28 retirement systems in 24 states participated, not allow. Additional responses from NASRA system’s offices.
including Texas’ Employees Retirement System members include: One NASRA member system indicated that
and the state’s Teacher Retirement System. roughly 66 percent of its staff are teleworking on
“I was impressed by how effectively and • As a response to the pandemic, we are any given day and 34 percent working from the
seamlessly responding systems appear to have allowing employees who are able to office. Another plan reported allowing three man-
transitioned to conducting their work primarily complete job responsibilities remotely agers to work onsite regularly while the remote
from the homes of system employees,” Brainard with health or childcare issues to work staff was not allowed in the system building. For
said. “This appears to be the result partly of tele- remotely at the discretion of their divi- a staff person who had to come to the office,
commuting and disaster recovery policies and sion director. the system required them to undergo a wellness
practices that were in place for many systems screening in advance of arriving.
prior to the onset of the pandemic. Notably, some • Decisions as to who may work remotely One system indicated that its remote
systems reported that they do not have a policy are made on a case by case basis. workers are “fully remote” and must get per-
for employees working remotely, although those Most of our administrative, accounting mission from their senior manager to enter the
systems also appear to be weathering the expe- and customer service personnel are system office building. According to the respon-
rience without major disruption.” capable of remote work. dent, the rule is to maintain the health of the small
What surprised Brainard the most about the essential workforce needed to process incoming
survey responses is how universally systems • Been employed more than six months, payments and documents.
appear to have effectively transitioned to having have at least ‘effective’ performance,
substantially all of their major functions con- be able to work independently, work in Office Supplies and Equipment
ducted from employees’ homes rather than in a role that lends itself to remote work.
a central office. NASRA also asked its members about
The seven-page report lists questions pro- • Investments, Finance, Legal, office supplies and equipment provided to those
vided in the survey along with responses pro- Executive, IT. allowed to work remotely.
vided by their participating members. Access to
• Managerial discretion. Computers, monitors, keyboards and other
• Technically, no employees are “eligible” peripherals, telephones, and headsets are
among the equipment one system made avail-
to work remotely. Almost all employ- able to staff.
ees, except for some staff in opera-
tions, are working under a temporary
telework arrangement.
• Majority of staff. Remote connectivity
dictates ability to work remotely.

www.texpers.org | TEXPERS Pension Observer

14 F E A T U R E S

One system issued laptops to remote staff. was required, staff without proper equipment was scaled to provide the needed
For field representatives working 100 percent were provided tools needed to work remotely. technology performance to handle
remotely, the system provided cell phones and increased demands on computer,
vehicles so they could continue to travel through- Cybersecurity email, and communication conferenc-
out the state. Another system even provided ing programs.
remote staff with adjustable height workstations, NASRA researchers also asked respon- • Required operating system require-
if ergonomically required. dents to describe any cybersecurity systems ments and approved anti-virus soft-
that are in place for remote workers. Among the ware. Employees are also trained on
A system installed a cloud-based phone selected responses: cybersecurity monthly.
system to accommodate remote workers. • To access VPN (a virtual private
Another reported providing printers, envelopes, • A new cybersecurity curriculum was network), we utilize Cisco AnyConnect.
and postage for a few administrative staff to send created to emphasize work from home Employees must first log into Cisco
correspondence that is not system generated, security best practices while continu- AnyConnect using a third-party authen-
such as letters from the director’s office. One ing to adhere to existing data protection tication code; then, they are allowed
system allowed employees to submit requests standards. Various delivery methods to access their office desktop through
to take their office chairs home. were employed to address adoption of VPN.
topics, from interactive videos to daily • Multifactor authentication. Monitoring of
One NASRA member indicated that before emails converting remote work secu- connections. Log tracking and evalua-
the pandemic, because teleworking was optional, rity tips. tion through two vendor partners.
and staff provided their own equipment. During
the pandemic, however, because teleworking • Our system’s network infrastructure

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ùıɰğıĄŁČùŅğıĘĬŠɰĄĶİĿĬČşɰğıřČŅŋİČıŋɰĬùıĊŅĄùĿČȇɰ the USAA Investments logo is a trademark of United Services
>ŎŁɰğıřČŅŋİČıŋɰĿŁĶĖČŅŅğĶıùĬŅɰùŁČɰŅŎŁŁĶŎıĊČĊɰ Automobile Association and is being used by Victory Capital and its
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For more information , please contact:

MIKE THISTLETON
Managing Director, Institutional Markets
210.697.3616 | [email protected]

STEPHEN SIMPKIN
Director, Institutional Markets
210.697.3617 | [email protected]

www.vcm.com |

F E A T U R E S 15

• McAfee login for laptops and FortiClient (and every possible combination in between).” remote working was not allowed before the pan-
two-factor authentication to access the network. Among the survey’s selected responses, a demic. The respondent wrote that the system
would not implement a long-term remote work
Post-pandemic Practices respondent wrote that the system’s work from policy.
home policy would remain the same after the
In addition, NASRA asked its members if pandemic. The respondent anticipates approxi- According to another survey respondent, the
they expected their systems’ policies and prac- mately 50 percent of the system’s staff will con- system’s remote work policy is used in limited
tices regarding employees working remotely to tinue to work remotely for at least two to three scenarios - generally as accommodations for
change after the pandemic, and, if so, in what days per week. health reasons. The system quickly created
ways. One member responded with a “yes,” work-from-home guidelines at the start of local
explaining that teleworking has taught system Another respondent wrote that the system’s and state social distancing requirements, but the
administrators that certain divisions can be more standard telework policy is likely to be reworked system had not made a policy because admin-
productive using teleworking than in the building. to make it less complicated and not require istrators want to set policies based on post-pan-
as much documentation. The respondent also demic circumstance. Changes, according to the
“We will be open to each division finding reported that most employees would probably survey respondent, would require employees
the right balance between work from home and be doing some telework due to weather, child- to enter the building periodically, require speed
in the office to maximize productivity,” wrote the care, or delivery issues as well as be required minimum on home internets, require that remote
unnamed survey respondent. “In rough terms, to demonstrate this about once a month just for work employees acquire childcare/adult care ser-
I suspect that we will see about 50 percent of business robustness and continuity operations. vices as they would if they were coming into the
work done remotely ranging from full-time work office, and require remote workers to turn on
from home employees to full-time in the office One answer indicated that the system’s video form home for meetings.
remote work policy is only for those impacted
or potentially impacted by COVID-19 and that

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16 F E A T U R E S

Challenges and Benefits telecommuting has been ideal for the winter benefits of organizations like NASRA, Brainard
weather in the system’s state. According to the said, is that it can facilitate compilation and
Some survey respondents offered chal- respondent, system employees are happy with sharing of information about the broader public
lenges resulting from the implementation of the program, and service levels remain high. retirement system community that can help
remote work. One NASRA member said the retirement systems learn from the insights and
retirement system’s rural state has less than For a more in-depth look at how remote experiences of one another.
ideal connectivity options, which presents logis- work policies and guidelines are impacting retire-
tical challenges for some staff. Another survey ment systems, visit www.nasra.org. Currently, NASRA does not plan to conduct
respondent wrote that system administrators are further research or surveys on remote work pol-
seeking ways to maintain communication and “I would expect that these results will help icies. However, Brainard said that should the
workplace culture when most employees are inform public retirement systems to better under- need arise, based on observation or in response
working from home. stand the challenges and potential solutions to to a request from membership, the association
planning and implementing policies and practices may perform additional work in this area.
Others listed the benefits of remote work. for employees to work from home,” said Brainard,
Among the responses, a system director indi- NASRA’s research director. “Beyond the immedi- Retirement systems looking for additional
cated that business metrics such as retirement ate need generated by the COVID-19 pandemic, information on creating remote work policies
application processing and telephone service this information may also be helpful in develop- may turn to the Government Finance Officers
level were not negatively impacted due to tele- ing and refining public retirement system disas- Association, which published a primer, Working
working. The respondent also stated that system ter recovery policies and practices.” Remotely: A Guide for the Public Sector, that
data also shows a decrease in staff absenteeism. public sector employees might find beneficial.
NASRA does not have an official policy on
Another respondent indicated that or expertise in public retirement system work- The guide is available at www.tiny.cc/
from-home or remote work policies. One of the GFOAprimer.

AUSTIN BASED

Responsible Investing | Asset Liability | Fixed Income

Helping public retirement plans invest
for a sustainable future.

Sage Advisory Services | sageadvisory.com | 512.327.5530

B E S T P R A C T I C E S 17

PERSONAL DEVELOPMENT

ADOPT POLICY THAT LETS DATA
GUIDE YOUR RETIREMENT SYSTEM

by Dr. Gleb Tsipursky choices daily. Our intuition is to treat each one Photo/energepic.com from Pexels
Guest Contributor as a separate situation. Yet, these choices form
part of a broader repeating pattern where our talking about huge bet-the-fund risks - which
It’s your lucky day! You meet a kind intuition tends to steer us toward losing money. require a different approach - but the kind of
stranger who offers you your choice of small decisions that add up to large sums over
a great deal, something for nothing. No That gut reaction is called loss aversion, time. If you just go with your gut instead of doing
tricks, really: you’re getting a free lunch. one of the many dangerous judgment errors the calculations and going with the data, you are
She gives you $45. Then, she asks if you that result from how our brains are wired, what likely to lose much more money by not taking the
want to keep that money, or give it to her in scholars in cognitive neuroscience and behav- course that feels most risky.
exchange for a coin flip, where if it’s heads, she’ll ioral economics call cognitive biases.
give you $100, and if tails, you get nothing. To prevent your intuition from leading you
Which do you choose? Do you want $45 in Fortunately, recent research in these fields astray, adopt a policy of letting the data lead
cold, hard cash in your pocket, or are you willing shows how you can use pragmatic strategies to you, instead of relying on your intuitions. For
to take a chance with the coin flip? Decide before address these dangerous judgment errors. In each decision you face, envision it as a repeat-
reading further. regard to loss aversion, you need to recognize ing pattern, instead of a one-time decision: run
When I present this scenario in my speeches that your professional life – anyone’s professional the numbers, account for the role of uncertainty,
to audiences of professionals, including public life – is made of 100,000 coin flips. The strang- and take the course most likely to lead to the
pension fund administrators and trustees, about er’s gift represents the series of opportunities biggest profit.
70-80 percent say they’ll take the $45 from the we face in our lives, and we can either win $5
kind stranger. I made that choice when I first million or $4.5 million depending on the choices Treating each choice as part of a broader
learned about this scenario, and so do most we make for each one. pattern might feel counterintuitive, uncomfort-
people in studies of similar choices. able, and unsafe. Yet the course that feels most
After all, the $45 is a sure thing. Wouldn’t The same applies on an organizational safe of avoiding losses is actually much more
I feel foolish if I took a risk and lost it all for just level. Let’s say your pension fund has $2 billion dangerous for your bottom line.
a chance at getting the $100? My gut reaction in assets, and a return of 9% over the last year,
was to avoid losing out. After all, who wants to $180 million. If you or others in your fund are About the Author: An internationally-re-
be a loser, right? going with their gut to avoid losses, you are nowned thought leader known as the Disaster
Well, let’s run the numbers. The chance of missing out on an additional .9% of returns, or Avoidance Expert, Dr. Gleb Tsipursky is a cog-
getting heads is 50 percent, so in half of all cases $18 million. nitive neuroscientist, writer, consultant, coach,
you’ll win $100, and in the rest you won’t win trainer, speaker, and the best-selling author
anything. That’s equivalent to $50 on average, Every day, you face a series of situations of Never Go With Your Gut: How Pioneering
versus $45. where you need to decide whether to take the Leaders Make the Best Decisions and Avoid
Imagine you flipped a coin 10 times, 100 course that feels most comfortable by avoiding Business Disasters. Online, visit disasteravoid-
times, 1,000 times, 10,000 times, and then losses, or the course that feels less comfortable anceexperts.com/NeverGut.
100,000 times. At 100,000, on average you and leads to more gains over time. We’re not
would get $5 million if you chose the coin flip for
$100 each time, versus $4.5 million if you chose
$45 each time. The difference: a cool $500,000.
Thus, unfortunately choosing $45 as my gift
actually results in losing out. The right choice –
the one most likely to not cause me to be a loser
– is to choose the coin flip as the gift. Otherwise,
over multiple coin flips, you’re pretty much guar-
anteed to lose.
But wait, you might be thinking: I presented
this as a one-time deal, not a repeating oppor-
tunity. Maybe if I told you it was a repeating sce-
nario, you’d have thought about it differently.
Here’s the problem. Research shows that
our gut treats each individual scenario we see as
a one-off. In reality, we face a multitude of such

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18 B E S T P R A C T I C E S

STRATEGIC MANAGEMENT

MISSING THE ‘OLD’ AND
EMBRACING THE ‘NEW’ NORMAL
by Mary Kathryn Campion, Ph.D., CFA, AIFA
Guest Contributor

Change is our new Trust is expected to be allocated monitoring of risk? Photo/Ian Panelo from Pexels
normal. Thinking in such a way as to attain a 7.25% The most important and
outside the box for return, then the Trust is expected About the Author: Dr. Mary
investment oppor- to be allocated in such a way as most neglected part of best prac- Kathryn Campion is the founder
tunities and strategies is required to attain a volatility of about 10%? tice investment management pro- and president of Champion Capital
of us, as public fund trustees. Or is it 15%? An IPS is expected cesses is Monitoring. How do Research. The firm is a research
Adjusting work schedules, shifting to define not only an expected you assess your manager’s value oriented institutional investment
daycare responsibilities, working return but also the expected risk add to the portfolio? How do you management company. The firm’s
remotely, remodeling, avoiding required to be assumed to achieve assess your investment consul- clientele includes public defined
gatherings of large numbers of the expected return. tant’s value add to the investment benefit and corporate defined con-
peoples, and missing TEXPERS management process? What tribution plans, as well as founda-
conferences, sadly, is our new Speaking of risk, volatility (as metrics do you use consistently in tions and non-profits. Champion
normal. measured by standard deviation) is these evaluations? Capital Research has the distinc-
What remains constant from not the only risk fiduciaries monitor tion of being the first firm to certify
the “old” regime to the “new while managing the Trust’s assets. A fiduciary’s job is a continuous for fiduciary excellence (CEFEX)
normal” regime? The Investment Allowing the portfolio to deviate too one. Every year, Trustees should a 2.5B public defined benefit plan.
Policy Statement (“IPS”). The IPS much from strategic or target asset take a few minutes to read through The firm has conducted fiduciary
should be written to ensure smooth allocation is an example of another the Trusts IPS. There are things to assessments for public and corpo-
transitions from one regime to risk. So is investment manager learn and things to improve upon rate plans whose combined assets
another. The IPS should be written concentration. How does your each year. Let us in Texas, put our exceed thirty billion (30B) in assets.
to ensure smooth transitions from Trust’s IPS express its tolerance best foot forward and ensure your Additionally, the firm donates nearly
one set of board members to the to expected drawdowns and its Trust’s IPS includes these essen- five percent of its profits to chari-
next. The IPS should be written to tial elements. ties annually.
ensure fiduciaries follow a process
that is prudent and consistently
applied, across changing economic
and political regimes.
Broadly speaking your Plan’s
IPS should include a statement
about the Purpose of the Trust. It
can do this by defining the purpose,
structure, and intent of the Trust.
The IPS should make clear who
is responsible for the IPS and its
reviews and revisions. Because
asset allocation and rebalancing
are central to a robust IPS, defin-
ing who is responsible to ensure
the Trust remains allocated and re-
balanced properly is simply good
Governance.
It has been said that 98% of
a portfolio’s variance can be fore-
casted by its risk / return profile.
Fiduciary best practices require that
an IPS is thoughtful about stating
the Trusts investment return and
risk objectives. For example, if the

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