Brad Tillberg joined the Oklahoma Public Employees Retirement System as its chief investment officer in November 2009, taking the helm of the $8.1 billion pension fund’s investments just as the market was beginning to emerge from a spectacular meltdown. OPERS has a sizable allocation to passive strategies and takes a very no-frills approach to investment management, eschewing alternative assets such as hedge funds and commodities while emphasizing the importance of cost control and rebalancing. That methodology is serving the plan pretty well.
JOI: Would you talk about how the fund is set up, its assets under management and who it serves?
Brad Tillberg: In our system, we administer two defined benefit [DB] plans and two defined contribution plans. The largest DB plan is our namesake, OPERS, which is a multi-employer trust serving state employees, elected officials, local government employees and a certain classification of hazardous-duty employees. It has just over 80,000 members from nearly 300 participating employers. OPERS has about $8.1 billion in invested assets as of Nov. 30. It’s the second-largest DB plan in the state.
The second DB plan is the Uniform Retirement System for Justices and Judges serving justices of the Supreme Court, judges of the Court of Criminal Appeals, Workers’ Compensation Court, Court of Civil Appeals and district courts who serve in the state of Oklahoma. This plan is quite a bit smaller than OPERS—approximately $285 million in invested assets. We also administer two defined contribution plans—a 401(a) and a 403(b) plan, collectively known as SoonerSave. Those plans had just over $851 million in assets invested primarily in mutual funds.
The system is administered by a 13-member board of trustees. The board, which is the fiduciary for the investments and administration of the system, is appointed by either position or association. Our board has maintained a consistent investment philosophy throughout the years.
JOI: What is the funding level? Wasn’t there a big change that occurred around that in 2011?
Tillberg: Like everyone else, we have an actuarial valuation each year, and as of our most recent actuarial valuation, the funded ratio of the large plan was 81.6 percent. That stands in stark contrast to the 66 percent funded level at the end of fiscal year 2011. The change was primarily due to legislation that passed in 2011 that required the cost of delivering future cost of living adjustments [COLAs] to be prefunded and passed by the legislature.
What that effectively did was removed the COLA assumption from our liability stream, and thus dramatically improved the funding status of the plan.