Arizona Pension Nabs Canadian Administrator for Top Job


The Arizona Public Safety Personnel Retirement System (PSPRS) concluded its months-long search for a new executive this week.

The fund’s Board has selected Kevin Olineck to take over as administrator, according to the Arizona Republic.

More on Olineck, from the Arizona Republic:

Olineck is scheduled to assume his role with PSPRS in October, contingent upon receiving H-1B visa approval from the U.S. Citizenship and Immigration Service, according to PSPRS.

Olineck, of Victoria, B.C., currently works as vice president of member experience for British Columbia Pension Corp., which provides services to five public-sector pension plans that together have more than 500,000 members and more than $80 billion in assets.

Olineck has more than 15 years of experience in strategic and operational positions with both public-sector and private-sector pension systems, and has been a frequent visitor to Arizona for more than 20 years.

PSPRS manages over $8 billion in assets.


Photo credit: “Entering Arizona on I-10 Westbound” by Wing-Chi Poon – Own work. Licensed under CC BY-SA 2.5 via Wikimedia Commons –

Outside Legal Expenses Strain Budget of Arizona Pension


Arizona’s Public Safety Personnel Retirement System [PSPRS] was scolded in 2014 for racking up over a million dollars in outside legal bills related to investment advice and administration issues.

But the spending has continued into 2015, and now the legal bills are expected to push the system 10 percent over its budget for this fiscal year.

More from the Arizona Republic:

The state Public Safety Personnel Retirement System is projected to exceed its budget by at least $1 million because of unexpected expenses for outside legal advice.


The fund was told last fall to reduce its legal tab after its large outside legal fees caught the attention of the Arizona Attorney General’s Office.

However, spending on outside counsel has continued under acting Administrator Jared Smout, and the trust is projected to be at least $1 million over budget with four months left in the fiscal year.


The trust runs on an $11.2 million annual budget that pays for personnel, operating expenses and outside consultants such as private attorneys. Legal bills are paid from various accounts.

The $1 million in excess legal fees means the trust is projected to exceed its budget by nearly 10 percent.

Christian Palmer, a fund spokesman, said most of the additional legal expenses stem from hiring outside attorneys who specialize in investment advice. Records show 70 percent of the additional legal costs arose from investment issues, while 30 percent involved administrative issues.

“It’s a good problem to have. We had older investments that came to realization,” Palmer said. “As older investments have realized a return, we had to find new investments. You have to bring in a due-diligence process.”

PSPRS manages over $8 billion in assets.


Photo credit: “Entering Arizona on I-10 Westbound” by Wing-Chi Poon – Own work. Licensed under CC BY-SA 2.5 via Wikimedia Commons –

Three Candidates Remain For Top Job at Arizona Public Safety Fund

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The Arizona Public Safety Personnel Retirement System is searching for a new director, and the fund has reportedly narrowed the field to three candidates.

The candidates, according to the Arizona Republic:

– Jared Smout, acting administrator at PSPRS. Smout was the organization’s deputy administrator from September 2011 to July 2014, when he was promoted to his current job. He also has done accounting, budgeting and financial consulting. He has a Master of Public Administration degree from Brigham Young University.

– Kevin Olineck, vice president for client services for British Columbia Pension Corp. Olineck has been in this position since May 2009, and he previously was vice president of pension services for the Alberta Pensions Services Corp. He has a bachelor of arts degree in the Advanced Program in Public Administration from the University of Saskatchewan.

– Deric Righter, former chief executive of ThyssenKrupp USA, a Michigan-based holding company for a German conglomerate. Righter also was a vice president of public banking for JPMorgan Chase in Detroit. He has a Master of Business Administration degree from Northwestern University.

More from the Republic:

The pension system is significantly underfunded, and the new director likely will work with the Arizona Legislature on state laws and policy issues for PSPRS members and retirees.

The job, which pays up to $269,000, attracted roughly 70 applicants.

The three finalists were selected from a group of five semifinalists, who recently interviewed with a selection committee. One of those who didn’t advance was Maricopa County Supervisor Andy Kunasek, who withdrew from consideration, according to Palmer.

The job came open when the previous administrator, Jim Hacking, reached a settlement in July to leave the trust after The Arizona Republic uncovered evidence that he had given raises to his investment staff without state Department of Administration approval, as required by law.

The fund plans to hire one of the candidates by the end of January, according to a spokesman.


Photo credit: “Entering Arizona on I-10 Westbound” by Wing-Chi Poon – Own work. Licensed under CC BY-SA 2.5 via Wikimedia Commons

Arizona Pension CIO Counters Claims of Being States Worst-Performing System

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Ryan Parham, chief investment officer of the Arizona Public Safety Personnel Retirement System (PSPRS), penned a piece in the Arizona Capitol Times on Thursday defending his fund against claims of being Arizona’s “worst-performing pension plan.”

But Parham says the raw return numbers don’t tell the whole story. Here’s what Parham has to say:

All too often, fiction and gossip move faster than truth and reason. As such, it is often stated by our detractors that our $8 billion portfolio is the state’s “worst-performing pension plan,” which gives the impression that our investment staff is incompetent and responsible for the trust’s sagging pension funding levels.

The truth is: the Arizona Public Safety Personnel Retirement System has an enviable investment record. Prominent industry consultants rank PSPRS among the top 4 percent of all U.S. pension funds in risk-adjusted returns for the past three years. We also join the top 11 percent of all U.S. pension funds for the past five years. While these facts might not make for a provocative headline, they matter to our beneficiaries, our contributors, our staff and our elected officials.


Last fiscal year, PSPRS outperformed national risk-adjusted averages by one half of 1 percent. It sounds miniscule, but it meant an additional $380 million in value to the trust. Our actively managed strategy is simple: Diversify assets and reduce exposure to publicly traded equities, the greatest driver of market volatility. High-risk strategies and lack of diversification have proven disastrous for PSPRS, as evidenced by $1 billion losses suffered in the 2000-2001 “dot-com” market crash.

While it is true that in recent years PSPRS’ returns have been less than its sister plan, the Arizona State Retirement System (ASRS), it is important to remember our innovative, low-risk, moderate return strategy is by conscious design, due to a pension benefit that PSPRS alone must pay to pensioners. This benefit, called the Permanent Benefit Increase, or “PBI,” siphons and distributes half of all returns in excess of 9 percent to eligible retirees. Not only are these increased payment levels made permanent, the investment gains only serve to increase – not decrease – unfunded future liabilities.

Read the entire column here.


Photo: “Entering Arizona on I-10 Westbound” by Wing-Chi Poon – Own work. Licensed under CC BY-SA 2.5 via Wikimedia Commons

Arizona Public-Safety Pension Cleared of Wrongdoing in Federal Criminal Investigation

The Arizona Public Safety Personnel Retirement System has been cleared of any wrongdoing as federal officials close an investigation into the fund’s real estate valuations.

The U.S. Attorney’s Office and the FBI were investigating whether fund staff inflated real estate values to trigger bonuses.

More from the Arizona Republic:

“Based upon our joint investigation with the FBI, at this time we do not believe that PSPRS committed any criminal misconduct,” U.S. Attorney Elizabeth Strange wrote in a letter to the pension system. “This office takes no position on civil or administrative liability, however, as our review focused exclusively on whether PSPRS engaged in criminal conduct in violation of federal law.”

Trust officials, including PSPRS Chairman Brian Tobin, said during a news conference Monday at the organization’s headquarters in central Phoenix that they were vindicated.

“We knew we were innocent of any wrongdoing,” said Tobin, flanked by junior-member PSPRS staff. “We kept our heads down and focused on the work and … the outcome we believed would come did. … We, this agency, our board, this staff have done nothing wrong.”

The leader of a police organization who called for the inquiry noted, however, that it was unclear whether individuals at PSPRS had been exonerated.

The investigation began after four high-ranking employees quit in protest last year over how PSPRS was reporting the values of trust real-estate assets managed by Scottsdale-based Desert Troon. The 13,000-member Arizona Police Association responded last fall by calling for a criminal investigation.

Viewpoint: Arizona’s Pension Whistle-Blowers Deserve State Protection

Entering Arizona

This week, Arizona’s Department of Administration agreed to pay the legal tab of four ex-employees of the Public Safety Personnel Retirement System (PSPRS).

The ex-employees are being sued by a real estate investment firm, Troon, for “defaming” the firm by raising questions about how it values assets.

The employees quit PSPRS last year in protest of the allegedly inflated real estate valuations.

The fact that the government is footing the ex-employees’ private legal bills has divided observers into two camps: the camp that believes the public shouldn’t be obligated to cover private legal bills, and the camp that thinks the state is doing a service to whistle-blowers who tried to expose misconduct within the pension system.

Here’s an editorial from the Arizona Republic editorial board, which falls into the latter camp:

It is hard to fathom that four highly educated, highly paid employees of the state’s pension system for first responders would quit their jobs in protest if they didn’t see something that raised serious concerns.

And so it is right that the state that employed them should protect them now that they are under heavy legal fire.

Last year, three investment managers and the in-house counsel for the Public Safety Personnel Retirement System made a powerful statement: They could no longer work for a system they believed had gone rogue.

The four unwittingly made themselves targets for legal action by asking serious and difficult questions about the valuation of the trust’s real-estate investments managed by Desert Troon.

They wanted to know whether the PSPRS used inflated real-estate values for Troon-managed investments to trigger bonuses.

Troon manages large swaths of trust real estate in Arizona, Colorado, Texas and Utah. In return, the trust has paid Troon at least $12 million per year. And Troon enjoys a minority-ownership stake.

As reported by The Republic’s Craig Harris, Troon-managed properties are among the poorest-performing real-estate investments for the system in recent years.

Lost value from the Troon-managed real estate is adding to the larger problem of a pension system for police and firefighters that is short more than half the money it needs to fund current and future retirement payments for those enrolled.

The trust also manages pension systems for public officials and correctional officers. Those funds, along with the others, creak under an unfunded liability of $7.78 billion.

After PSPRS investment managers Anton Orlich, Mark Selfridge and Paul Corens and in-house counsel Andrew Carriker quit their jobs, they found themselves defendants in a Troon lawsuit accusing them of engaging in a conspiracy to defame senior management at the company and the pension system.

The legitimacy of the four men’s concerns will play out over time, but those concerns can’t be called frivolous. They’ve led to a federal criminal investigation into the PSPRS. And a federal grand jury has gone after 100 trust documents, many involving Troon-related real-estate investments.

The former employees have paid dearly for sounding the siren on the state’s pension system. Legal bills have stacked up, and until recently, they did not know how much financial and emotional strain they would have to bear, given they were sued after they left the PSPRS.

Fortunately, the state has affirmed it will cover their legal defense, and there are no financial limits to that coverage. In fact, the state is required to provide legal defense for current or former employees when sued for “acts within the course and scope of employment.”

Without that protection, Arizona would be compelling silence in its employees who perceive wrongdoing in the workplace. It would also make whistle-blowers susceptible to punitive lawsuits meant to shut them up.

Unless we’re looking at the unfathomable, and these four former employees were motivated by malice when they quit their jobs, they did something courageous and decent that requires the state of Arizona to have their backs.

Arizona Taxpayers To Foot Legal Bills For 4 Ex-Pension Employees

Arizona sign

Four ex-employees of the Arizona Public Safety Personnel Retirement System are being sued by a real estate investment firm for “defaming” the firm by raising questions about how it values assets.

The lawsuit is private, but the legal costs incurred defending the ex-employees will be paid with public money, according to the Arizona Republic:

The state Department of Administration has agreed to pay the private legal tabs of four former high-ranking employees of the Public Safety Personnel Retirement System who are being sued by Scottsdale-based Desert Troon, a real estate partner with the trust that manages some pension fund assets.

The four ex-employees have raised questions about the valuation of the real-estate assets managed by Troon. Troon has in turn accused the four former PSPRS employees in a lawsuit of engaging in a post-employment conspiracy to defame and falsely disparage senior management at the company and the pension system.

Jeff Grant, ADOA deputy director, said the state agreed to pay for the legal defenses of the men in response to a request from their attorneys. The four are Andrew Carriker, former PSPRS in-house counsel; and ex-investment managers Anton Orlich, Mark Selfridge and Paul Corens.

Grant said the state is obligated to provide a legal defense for current or former employees when sued for “acts within the course and scope of employment.” He added that state law does not set a financial limit for a legal defense.

Grant said the state can withdraw defense funding if “facts reveal later that it is not obligated” to cover the cost.


The PSPRS employees targeted in the Desert Troon lawsuit quit last year in protest over how PSPRS was reporting the values of trust real-estate assets managed by Desert Troon. The ex-employees raised questions about whether real-estate investment values were inflated to trigger staff bonuses. Desert Troon and PSPRS have denied any wrongdoing.

The claims of inflated asset values triggered an FBI investigation, but no charges have been filed.

It isn’t the first time the pension fund’s legal costs have come under fire. Pension360 has previously covered how the fund spent nearly $2 million on outside legal advice last year despite having in-house counsel.

Arizona’s Gubernatorial Candidates Both Vow To Address Pension Woes, But Specifics Hard To Come By

Both of Arizona’s gubernatorial candidates (Republican Doug Ducey and Democrat Fred DuVal) have said they will try to find a solution to the funding problems plaguing the Arizona Public Safety Personnel Retirement System (PSPRS). The system is only 49 percent funded.

But neither candidate offered much in the way of specifics during interviews with the Arizona Republic’s editorial board. From the Arizona Republic:

Neither Republican Doug Ducey nor Democrat Fred DuVal, during interviews with The Arizona Republic, offered specific plans to fix the troubled Public Safety Personnel Retirement System. 

Both said they would try to develop a consensus among employees, employers and lawmakers to find a solution for the $7.78 billion unfunded liability that has put a crimp on local communities’ ability to hire police officers and firefighters.

DuVal and Ducey say working with all groups involved in the pension systems is the only way to avoid litigation, which thwarted pension reforms the 2011 Legislature enacted.


DuVal said PSPRS is financially unsustainable, but court rulings have made it clear that state constitutional changes, which would require voter approval, may be needed for reform.

“We want to approach this in a way that has long-term solutions,” DuVal said. “We need to make sure everyone is involved. We are looking at broad participation to avoid litigation.”

Ducey said basically the same thing.

“The biggest concern is to look at the unfunded liabilities,” Ducey said. “There are a number of reforms, and lot of different options. I want to talk to leaders of all the organizations.”

He also said he would embrace recommendations by a pension-reform task force he led as state treasurer, including limiting retirement benefits to base-salary compensation. That proposal would prevent using lump-sum payouts of vacation and sick time and prevent the artificial inflation, or “spiking,” of pensions.

The Arizona PSPRS saw its funding ratio drop dramatically over the course of fiscal year 2013-14 – from 58.7 percent to 49.2 percent. It isn’t the only Arizona retirement system in trouble. From the Arizona Republic:

The funding ratio for the Corrections Officer Retirement Plan dropped from 69.7 percent to 57.3 percent, and there are $1.1 billion in unfunded liabilities. The average pension is $26,299.

The funding ratio for the Elected Officials’ Retirement Plan dropped from 56.5 percent to 39.4 percent and there is a $482 million unfunded liability. The average pension is $50,338.


The plan for elected officials, which includes judges, is in the worst shape. It has less than 40 percent of the money it needs to pay for current and future pension obligations. The fund may run out of money in 20 years if no significant changes are made. That plan is closed to newly elected politicians, and is expected to eventually cease, but additional public funds may be needed.

PSPRS is shouldering $7.78 billion of unfunded liabilities. Since 2010, it has reduced its assumed rate of return from 8.5 percent to 7.8 percent.

Major Pensions Commit To Asia Private Equity Fund


A handful of pension funds have recently committed over $200 million collectively to the Baring Asia Private Equity Fund VI.

Pension systems making investments in the fund include the Texas County & District Retirement System, the Pennsylvania Public School Employees’ Retirement System, the Arizona Public Safety Personnel Retirement System and the San Francisco City & County Employees’ Retirement System.

From the Asian Venture Capital Journal:

Texas County & District Retirement System (TCDRS) has committed $50 million to Baring Private Equity Asia’s sixth pan-regional fund, which recently reached a first close of $3.2 billion.

The pension system, which had $24.5 billion under management as of June 2014, invested $40 million in Baring Asia’s previous fund. Earlier this year, it also allocated $40 million to the private equity firm’s first dedicated regional real estate vehicle, which is looking to raise $500 million.

Baring Asia Private Equity Fund VI has already exceeded its initial target of $3.2 billion. AVCJ was previously told that the vehicle has a hard cap of $3.85 billion, not including the GP contribution. Fund V closed at $2.46 billion in January 2011, beating its original target of $1.75 billion after just six months in the market.

Other disclosed investors in Fund VI include Pennsylvania Public School Employees’ Retirement System (PSERS) – also an LP in Baring’s previous three funds – which has committed $100 million, and San Francisco City & County Employees’ Retirement System, which is putting in up to $50 million. The Arizona Public Safety Personnel Retirement System is investing $20 million.

TCDRS has planned to increase its private equity holdings. Its current allocation is 8 percent, but its target is 12 percent.

In fiscal year 2013-14, TCDRS’ private equity portfolio returned 22 percent.

Arizona Fund Gives CIO Retention Bonus, Contract Extension In Midst Of Federal Investigation


An Arizona pension fund, already embroiled in controversy, voted yesterday to sign its Chief Investment Officer to a two-year contract extension and gave him a $50,000 retention bonus. That bonus is in addition to a $75,000 bonus the CIO was already scheduled to receive later this year, on top of his $268,000 annual salary.

The move is controversial because the fund—the Public Safety Personnel Retirement System (PSPRS)—is in the midst of a federal criminal investigation over actions that happened under the CIO’s watch.

The fund’s Chief Investment Officer is Ryan Parham.

In January, the FBI began investigating the fund over suspicions that investment staff were inflating the value of real estate investments to trigger performance bonuses.

A federal subpoena, reluctantly released by the fund this week after a court order, indicates the inflated assets had to do with investments made with Desert Troon Companies.

According to the Arizona Republic, Ryan Parham was directly involved with Desert Troon Companies investments.

The Arizona Department of Administration, which approves state contracts, has already voiced its apprehension about Parham’s contract, especially in light on illegal raises given earlier this year by the fund. From the Arizona Republic:

The Arizona Department of Administration, prior to Monday’s vote, formally raised concerns about the contract. However, the state does not have the power to reject it outright. All employment contracts, however, need formal review from ADOA.

Administration Department Director Brian McNeil in a July 31 letter to the trust said he was not giving any “formal consultation” on the contract until the board clarifies its intention to extend Parham’s contract.

The board by a 3-2 vote (with two members absent) on Jan. 15, authorized Hacking to negotiate a contract extension with Parham, but Hacking did not do so. Hacking was forced out on July 16.

The trust submitted Parham’s amended contract to the state two days later.

McNeil said in the letter his department has concerns about the “significant gap” of time between the board’s action and contract submittal. In addition, McNeil said, he’s concerned about “the circumstances surrounding the days/weeks prior” to receiving the contract.

Phoenix City Councilman Sal DiCiccio is calling for the Attorney General’s Office to investigate the raises given by PSPRS over recent months.

“This is insane. They have the worst financial record of any of the (state) funds, and they are giving him a bonus?” said DiCiccio.

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