A Look at the ASRS Approach to Business

Here at your ASRS we generally agree with the adage that “What gets measured gets managed.” As a result, we measure and analyze an array of activities that fall into the following general categories: investment performance, member satisfaction, service standards & cost structure, and staff engagement, to ensure top tier performance. When there is not top tier performance – we take positive and supportive action.

Here’s a glimpse of our approach and results.

Investment Performance

The ASRS manages a portfolio of approximately $40 billion in support of your pension, health insurance, long-term disability, and defined contribution plans. These assets are invested broadly according to a strategic asset allocation plan. Once benefit levels are determined, investment performance is the main driver in keeping down the contribution rates paid by our members and employers, and ensuring our plans are sustainable in perpetuity for the benefit of our members.

We measure performance of the various investments against industry benchmarks (such as the S&P500), as well as against a peer universe.

The ASRS investment returns consistently rank in the top tenth percentile when compared with our peer group, as indicated in the table below.

By producing returns at a rate above the peer median, the ASRS has added approximately an additional $520 million to the fund last year, and an additional $5.8 billion over the past 10 years. These significant dollar amounts are in addition to the amounts that would be generated if the ASRS had generated median investment performance. These significant dollar amounts are important for the following reasons:  1. They cause contribution rates to be lower than they would otherwise be for our active members 2. They increase the likelihood that the ASRS will be able to generate a future Permanent Benefit Increase (PBI) for our retirees 3. They increase the security of all future pension payments

Member Satisfaction

We track member satisfaction across the spectrum - including phone calls, emails, in-person meetings, and online and in-person educational programs. Members have consistently provided an overall satisfied or very satisfied rating above 90 percent in most all interactions with us.

Service Standards & Cost Structure

The ASRS participates in an annual global benchmarking survey, which compares our performances against a group of public pension plans across the United States. In the most recent survey, conducted by CEM Benchmarking, the ASRS was shown to be a top-tier provider of services, while maintaining a lower-tier cost structure. Specifically, the ASRS total pension administration cost was $78 per active member and annuitant, which was $24 below the peer average of $102. In addition, the ASRS administration cost has been decreasing in recent years, compared with increased costs of our peer group.

And, at the same time, the ASRS total service score was 88, notably above the peer average of 82.

Staff Engagement

As a state agency, the ASRS is highly cognizant of both whom we serve and the fiscal responsibility we have in managing your trust fund. Our successes are the direct result of the efforts of our entire staff.

We are truly doing more with less and are accomplishing this with a highly engaged staff, as evidenced by the most recent Engagement Survey conducted independently by the Arizona Department of Administration. The survey was conducted independently and confidentially. This year, our engagement score was 9.5 – which places the ASRS in the category of an outstanding organization, as indicated below:

    • Average Organization:   1.8
    • Outstanding Organization:   9.0
    • ASRS:  9.5

And so the statistics are in – whether it is top tier investment performance, top tier customer service, strong cost effectiveness, or a highly engaged workforce – the ASRS is meeting the high standards that have been set.

And we are very proud to serve each of you – our retirees, active employees, and former employees who maintain credited service at the ASRS.

Annualized Investment Returns as of June 2018 image

by Paul Matson, Executive Director

Published in Expanding Your Financial Horizons digital newsletter August 2019 

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