Thanks to an improving national economy and careful portfolio management, the State Retirement and Pension System blew past its estimates and gained $6 billion in fiscal 2011, a 20% rate of return.
The performance was nearly three times the benchmark rate of return of 7.75%, set by the system’s board of trustees.
Retirement and Pension System spokesman Michael Golden said that the system’s success is through much of its diversification.
“It’s a combination of excellent management provided by our investment division and the turnabout of the economy,” he said.
The system made most of its money through private equity investments, which make up 47% of the entire portfolio, and had a rate of return of nearly 39%. Private equity and real estate also posted high rates of return – 24% for private equity, and 23% for real estate – but the system had invested substantially less in those areas.
There is no estimate of how this helps the pension system’s long-term unfunded liability because investment income is amortized over several years. However, Golden said, coupled with the legislative changes to contributions and future annuities that passed the General Assembly this year, it should make a significant difference. The most recent figures indicate that the pension system has funding for 64% of the pensions it has promised.
And yet the General Assembly decided to take 1% more away from teachers in the name of "pension reform", yet none of that money is actually going to a pension system that by all appearances is back on its way to financial success. Thanks a lot, General Assembly.
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