When Brian Reed joined Computer Sciences Corporation (CSC) as the director of
retirement plan assets in 2012, the company was
involved in a major restructuring. Reed was tasked
with managing a $3.4 billion frozen plan that was
still shaking off poor performance from the 2008
Upon arrival at his new post, he had two
options: hope that a liability-driven investing
(LDI) strategy could eventually get CSRA’s frozen
pension to fully funded status, or go active and
make sure goals were met. Reed went active, and
hasn’t looked back.
Over the next three years, as CSC merged
with SRA International to form CSRA, Reed led
a transformation of the organization’s retirement
assets, creating new defined benefit and defined
contribution plans, and changing the investment
strategy from passive to active. Reed reorganized
the retirement program’s traditional 60/40 portfolio into a 31/23/25/21 plan, including allocations to stocks and bonds, as well as risk parity,
global tactical, and alternative strategies.
According to Reed, the new asset mix allows
the retirement program to manage long-term
liabilities and simultaneously shore up the overall
funded status. Reed carries the Chartered Alternative Investment Analyst (CAIA) designation,
and relied on his training in alternatives to help
the pension fiduciaries craft a portfolio that would
meet both goals.
He also enlisted the help of the pension’s
consultants to help members of the board understand what the portfolio redesign would mean.
“We worked closely with our advisors at NEPC
and I leveraged information from the CAIA
For Reed, an active approach made more sense
than going to a LDI strategy, because he wasn’t
convinced that bond yields were going to help the
pension meet its return goals. Going active gave
the investment team more options. The decision
to make a significant allocation to active strategies
also makes CSRA stand out against its peers—a
move which Reed stands by.
CSRA’s active management plan is still relatively new—implemented a little more than two
years ago with an initial six-year lockup for the
hedge fund strategies. The investment team meets
twice a year to assess the total portfolio and determine if any adjustments are needed.
The shift to an absolute return strategy
enabled the plan to participate in the current
bull market and add to the overall stability of the
pension plans. Reed notes that anecdotally, his
peers are starting to look at more innovative portfolios in the style of what he has accomplished at
CSRA to keep momentum going.
“In some cases, plans with a lower funded status
that adopt LDI have realized that getting to 105+%
funded wasn’t helped by periodically reducing
the return-seeking component,” Reed says. “Our
committee decided to maintain the return-seeking
portion in the plan, but developed a more diversified equity strategy than before so we are better
prepared to run to the finish line.” —Bailey McCann
Brian Reed, Director, Retirement Plan Assets, (Falls Church, Virginia)