Hedge Fund Focus

Arizona State Retirement System

• Website: https://www.azasrs.gov/web/Home.do
• Location: Phoenix & Tucson, AZ
• Phone: +1 602.240.2000 & +1 520.239.3100
• Regulations:
• Other:

Description From Website:

History

In 1912, Arizona’s first year of statehood, the first teacher retired with an Arizona State teacher’s pension. From 1912 until 1943, Arizona teachers were granted pensions by the State Legislature if they had at least 30 years of service in Arizona schools and were 65 years of age or older. All teachers’ pensions were $50 per month; there were no member deposits or survivor benefits.

During the late 1930s and early 1940s, there was intense activity to create a retirement plan for Arizona teachers. The Legislature created the Teachers’ Retirement System, effective July 1, 1943. All certified, full-time teachers were members, contributing to a retirement plan with a fixed benefit formula. The employer contribution rate varied, but could not exceed 5.03 percent of the first $3,600 of teachers’ salaries.

In 1953, the ASRS was created to provide retirement and other benefits for state employees, including university faculty and employees of the state’s political subdivisions who signed a membership contract. Active teachers voted to join the ASRS in 1954, and transferred to ASRS on January 1, 1955. The Teachers’ Retirement System continued to pay retirement benefits to retired teacher members who were ineligible to join the ASRS.

In 1970, the Legislature agreed to enact the current Arizona State Retirement System Fixed Benefit Plan if 70 percent or more of state employees and teachers voted to transfer to the new plan. More than 80 percent of eligible members voted for the new plan, which became effective July 1, 1971. Most political subdivisions subsequently voted to join.

Today, the ASRS membership includes the State of Arizona, the three state universities, community college districts, school districts and charter schools, all 15 counties, most cities and towns, and a variety of special districts.

Investment Goals

The financial health of the ASRS depends on our ability to generate optimal returns from our investments while minimizing risk. This assures the security of retirement benefits and helps keep down the ongoing funding costs to our employers and active members. As a result, the following are the ASRS investment goals:

• Achieve a total fund rate of return equal to or greater than the actuarial assumed interest rate.
• Achieve a total fund rate of return equal to or greater than the asset allocation benchmark.
• Achieve a total fund rate of return equal to or greater than the amount projected in the most recent Asset Allocation Study.
• Achieve asset class net rates of return equal to or greater than their respective broad asset class benchmarks.
• Achieve portfolio-level net rates of return equal to or greater than their respective portfolio benchmarks.
• Ensure sufficient monies are available to meet cash flow requirements.

Asset Allocation Policy

• U.S. Equity: 45%
  • Large Cap: 31%
  • Mid Cap: 7%
  • Small Cap: 7%
• U.S. Fixed Income: 26%
• International Equity: 18%
• Real Estate: 6%
• Private Equity: 5%

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