Asset Liability Management
The Asset Liability Management Unit, in conjunction with an investment consultant, is responsible for establishing the Common Retirement Fund’s asset allocation. The process is designed to identify the optimal asset mix that provides maximum return commensurate with acceptable risk. The Unit developed and implemented a rebalancing policy to address deviations from the established asset targets.
The first step in constructing an optimal asset mix is to understand the financing needs and growth pattern of the pension liabilities. The Retirement System's actuary provides the Unit and the CRF's consultant with a structure for current pension payments and the funding requirements of the expected future pension needs. The next step in the process is to construct an efficient asset allocation that meets the near term funding needs and long term growth requirements in a variety of potential economic and financial market conditions. Once established, the efficient allocation of assets is maintained through constant monitoring and the periodic rebalancing of assets as required by the market performance of the various asset classes.