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PERSI investment chief to retire next year, but his approach likely to persist

Maynard announced this month that he’ll retire in September 2022, when he’ll hit a full 30 years overseeing PERSI investments.

BOISE, Idaho — At the close of the last fiscal year on June 30, PERSI, the Public Employee Retirement System of Idaho, was 105% funded, ranking in the upper quartile of state pension systems.

The current value of the fund was $23.5 billion, up 27.9% for the year. It includes more than 800 public employers throughout the state, including state agencies, local governments and school districts. It has roughly 165,000 members, including about 50,000 retirees.

PERSI’s defined-benefit retirement pension will typically replace around 60% of a 30-year employee’s final average salary once they retire; the system also offers an optional 401(k) plan, which was added in 2001. Three sources: Employee contributions, employer contributions and investment earnings fund the system, with investment earnings by far the largest share annually at more than two-thirds.

And now Bob Maynard, chief investment officer for PERSI for the past three decades, has announced his retirement.

It won’t happen right away; Maynard announced this month that he’ll retire in September 2022, when he’ll hit a full 30 years overseeing PERSI investments. Maynard said he considers it “good form” to give that kind of notice, to allow a smooth transition.

When Maynard, 71, started at PERSI on Oct. 1, 1992, the system hadn’t been earning the kinds of kudos it’s routinely gotten both in Idaho and nationally for decades now. “PERSI was kind of seen as a disaster zone,” Maynard recalled. “We had terrible returns for a long period of time. We were very much underfunded.”

He arrived as the fourth chief investment officer in four years. “So there was a feeling that things were in turmoil, but the bones were good,” he said. “The Legislature had passed a statute cleaning up a lot of things that were causing issues. The board was a good board, a new board and a good board. And basically, we just kind of steadily got the investment program right, the board’s always made great decisions, and the Legislature and the constituency have been stunningly supportive, even in bad times.”

“It’s paid off,” Maynard said. “Our returns are in the top quartile across the board, of peer public funds.”

“By the way, that’s not a reflection of investing genius,” he added. “It’s just not screwing up. We basically are a garden-variety 70-30 well-diversified institutional fund.” That means the mix of equities — stocks — and fixed income investments — bonds — is about 70% to 30%.

Maynard is known across the institutional investing world as a “stickler for a conventional investing style,” according to a profile published in January on an industry website, ai-cio.com, titled, “How Bob Maynard turned PERSI around.” He’s also won numerous industry awards and recognitions.

Maynard told the Idaho Press, “It’s more the people doing exotic and complicated things tend to lose money over time.”

Looking back, he said, “The full 30 years have been tremendous.” He noted that “during the good years in the ’90s,” the fund was able to provide additional options to its members, including gain-sharing for the supplemental 401(k) program, a one-month contribution holiday for employers and an extra check for retirees.

“What they didn’t do, what a lot of other legislatures did, was increase benefits without paying for them,” Maynard said, a course many other state pension funds followed then. “This basically allowed us to not take on more long-term obligations.”

Don Drum, PERSI executive director, said, “People pay their contributions. We are conservative in our estimates. And we don’t fund benefit enhancements with anticipated gains; they are funded with ongoing revenues.”

Drum said PERSI also reports its funded status daily, rather than “smoothing” that over time to hide dips and jumps. In August, the PERSI board voted to drop its assumed rate of return, based on long-term market expectations, from 7% to 6.3%. That gives it an easier goal to reach without having to impose contribution rate changes. “It lowers that hurdle,” Drum said. “So we were able to do that and stay at 100%.” As a result, he said, “I don’t think we’re at 100% today, but we’re real close.”

“We are now the fifth-lowest major pension system on assumed lowest rate of return in the nation,” Drum said. “We won’t change the way we invest. We’ll keep the same investment allocation.”

Maynard said some state pension systems have assumed rates of return “as high as in the 8’s.”

“We don’t have to swing for the fences,” he said. “As long as we are in the ballpark, everything is good. Which is different from a lot of other pension funds that are in trouble.”

He called a PERSI retirement “a good, solid, run-of-the-mill benefit for a defined benefit plan,” and said it’s particularly good for rural Idaho residents.

“Our mantra is we’re simple, we’re transparent, we’re focused and we’re patient,” he said. “We can keep that up. They don’t need me.” When he retires, he said “I’ll miss it, but they won’t miss me.”

Drum said, “Bob has been very instrumental to our success, but Bob leaving is not going to devastate this fund,” because, he said, “It’s a structure, it’s a system.”

Jeff Cilek, chairman of the PERSI board, said in a statement, “For 30 years, Bob has played an instrumental role in transforming PERSI into the strong and stable fund it currently is. Bob’s insight into the global economy and steady hand will be missed.”

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