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Auditor General releases PSPRS performance audit


Public Safety Personnel Retirement System
State of Arizona

September 18, 2015
Contact: Christian Palmer
Phone: 602-486-1447

Auditor General releases PSPRS performance audit
Sunset review includes investment performance, fund selection and fee management

PHOENIX – The Arizona Auditor General today released their performance audit of the state Public Safety Personnel Retirement System as part of the 10-year sunset review of PSPRS. Included in that performance audit was an independent operational review of PSPRS investment activities.

This independent report, performed by Gallagher Fiduciary Advisers, LLC, reviewed PSPRS investment performance, alternative investment selection procedures and management of investment fees paid to external fund managers.

The firm noted the system exceeded a majority of peers in terms of risk-adjusted investment returns while its total performance trailed most peers over the last 10 years. The review also advised the system operates a distinctive low-risk asset allocation strategy due to its specific liabilities and that pension plan investment objectives can vary according to investment objectives and risk appetite.

Other operational findings include:

• The PSPRS trust portfolio is highly diversified and protected against adverse economic events
• Discontinued joint-venture real estate agreements contributed to trust underperformance
• Large negative returns in 2008-2009 had significant impacts on cumulative 10-year returns
• PSPRS has maintained sufficient liquidity to pay benefits
• The system maintains adequate controls on investment selection and investment fee matters
• PSPRS saved approximately $40 million on investment fees through negotiations conducted through legal counsel

The independent review conducted by Gallagher Fiduciary Advisers can be viewed at

Performance Audit Report:
Report Highlights:
PSPRS Response:
Independent Operational Review:
PSPRS Response: