The Minnesota Public Employees Retirement System (MPRS) is going private to raise funds to help pay for its own pension fund.
The $7.3 billion private-equity fund, backed by private equity firm Carlyle Group LP, will use its own money to cover about $2 billion of MPRS’ $7 billion annual operating costs, which is more than the $1 billion a year it pays to its union.
The fund will be funded by a mix of federal and state bonds, including bonds issued by the Federal Reserve.MPRs’ board of directors, which has yet to be filled, approved the private-fund purchase at its July 15 meeting.
The private-balance-sheet fund will invest $1.5 billion of the fund’s $7-billion annual operating budget into the fund, the company said.
MPRs will also hold the balance of the $6.3-billion retirement fund.MPS said the private fund will have access to the funds assets, including $1,800 million that it already holds in cash.
MPS said it is holding another $400 million in assets that will be invested in the fund.
Mps fund is also holding $300 million in savings, including savings in MPR.
The fund will receive a one-time payment of about $1 million annually.
Mprs said it will invest the money to repay the money the union received from the Treasury Department in 2015 for retiree health benefits and Social Security payments.
