Study: PSPRS asset growth rate led large U.S. pension funds

March 7, 2022

Public Safety Personnel Retirement System
State of Arizona

Contact: Christian Palmer
Phone: 602-296-3736

Study: PSPRS asset growth rate led large U.S. pension funds
National publication finds overall growth rate second to only Microsoft’s DC plan

ARIZONA – Aided by record-setting investment returns and employer pension debt payments, the rate of growth of PSPRS-managed plan assets exceeded that of all large U.S. pensions, according to the Pensions & Investments annual 1,000 Largest Retirement Plans report.

The publication’s data and reporting noted that the combined PSPRS-plan pension trust and defined contribution plan assets under management grew at a rate of 44 percent to reach $16.1 billion last fiscal year. The growth by percentage exceeded that of all public pensions in the top 200 of the largest 1,000 U.S. retirement plans surveyed by the media outlet.

The growth rate of PSPRS was sufficient to make the agency the 175th largest U.S. retirement plan, up from its previous position of 217. The PSPRS increase was second, among the largest 200 plans tracked by Pensions & Investments, only to the defined contribution plan maintained by Microsoft, the multi-trillion dollar software development corporation.

“The growth of PSPRS assets is inspiring, and the credit belongs to the employers and policymakers throughout the state who are paying down their pension debts to save taxpayers money and secure the retirement benefits for their first responders and corrections officers,” said PSPRS Administrator Mike Townsend. “We’re thrilled to recognize their achievement and to acknowledge the work of our outstanding investment team and to continue the great progress of our entire team as we work on behalf of Arizona.”

In the fiscal year ending June 30, 2021, PSPRS net of fee investment returns generated a record-setting 27.8 percent return to produce $3.1 billion of growth. During the same year, public safety and corrections employers contributed $1.58 billion towards paying down unfunded pension debts. The payments were made in addition to annually required contributions.

The combined impact helped PSPRS reduce its system-wide unfunded pension debt to $10.9 billion from its previous total of $12.5 billion. All three pension plans managed by PSPRS for public safety, corrections officers, elected officials, and members of the judiciary improved their funded status in fiscal year 2021.

“As an actuary, in my 20-plus years of practice, I’ve never seen a plan make this much progress in 12 months,” said Brad Heinrichs of Foster & Foster Consulting, which PSPRS contracts with for actuarial services. “It’s really been remarkable and the conservative policies adopted by the PSPRS Board of Trustees will add to the long-term savings and improve the system’s financial health for its membership.”

In fiscal year 2021, PSPRS staff consulted with more than 100 employers about pension expenses, reforms and cost-savings opportunities. Over the course of the year, 49 employers contributed $1 million or more towards their unfunded pension debt.

“The PSPRS Board of Trustees set out to help educate employers about pension financing and end the era of ever-escalating pension costs,” said Board of Trustees Chairman Scott McCarty. “The results achieved in the past fiscal year mark the next chapter of significant improvements for PSPRS.”

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