Pension Board Delays Decision on Outsourcing Annuity Management
Indiana's pension board is putting off a decision on whether to outsource the administration of an annuity program for retirees.
On Monday, a legislative oversight panel warned against hiring a private firm to handle the annuity program. But INPRS executive director Steve Russo says that contradicts a simultaneous directive not to incur any unfunded liability. He says even the safest investment carries a risk of falling short of income projections.
If the state farms out the program to a private fund manager, retirees would buy their annuity directly from that firm, and it would be the company's assets at risk, not the state.
Legislators have said they're concerned about the possibility a private firm could go bust and take retirees' investments with them.
The board will revisit the issue in December, and ask legislators for clarification in the meantime.
iNPRS oversees the pension fund for state employees and teachers. Fund members have the option of setting up an annuity savings account alongside their regular pension. When they retire, they can either cash out the account in a lump sum or roll it into an annuity. It's the management of that option that's under scrutiny.
Representative David Niezgodski (D-South Bend), who serves on the oversight commission, calls the delay “disturbing and disappointing” -- he says the panel's wishes to keep the annuity in-house are clear. Niezgodski says the fund’s own staffers should be capable of making sound decisions to minimize risk.