The Plan’s team of investment professionals implements the investment policies established by the Board of Trustees. The team recommends to the Board of Trustees the asset mix based on Asset-Liability Modelling studies. These periodic studies test the future potential outcomes of various asset mixes on the Plan’s funded status and DBprime contribution rates under a range of economic and demographic scenarios.
Asset mix aligned to liabilities
The Plan’s diversified investment portfolio falls into three broad categories: Interest-rate-sensitive, Inflation-sensitive, and Return-enhancing.
Interest-rate-sensitive and Inflation-sensitive assets help to offset the effects of changing interest rates and inflation on the valuation of the Plan’s pension payments. Interest-rate-sensitive asset classes comprise long and universe bonds while Inflation-sensitive asset classes comprise real assets (real estate and infrastructure), real-return bonds, and commodities. Return-enhancing assets, comprising public and private equities, help the Plan meet its expected rate of return and keep contribution rates appropriate and stable for members and employers.
Because pension plans like ours have an investment time horizon that is decades into the future, they can provide stable sources of long-term capital for investments such as infrastructure, real estate and private equity.Julie Cays Chief Investment Officer