State retirement investments doing well considering economy
August 20, 2008
The Public Employees Retirement System board was told Wednesday their investment portfolio did well over the past fiscal year despite the economic slump.
Chief Investment Officer Ken Lambert said even though the PERS portfolio dropped 3.4 percent in market value, the program did better than the market, which, overall, dropped 4 percent. He pointed out that with more than $22 billion in investments, that small difference is worth millions of dollars. Some other plans, he said, did much worse.
PERS provides retirement benefits to about 140,000 public employees in Nevada, nearly 40,000 of whom are retired. The system operates the Legislative Retirement System with $4.4 million in invested contributions and the Judicial Retirement System, currently at $37.7 million. All other public employees including state workers, police and firemen and school districts have an invested pool totaling $22.1 billion.
Lambert and consultant Paul Troup of Callan Associates recommended the board not make any significant changes in investment strategies this year, saying PERS earnings were in the top 30 percent of public pension plans nationwide and that its five-year performance has been a positive 8 percent growth.
Lambert described the investment strategy as “conservatively structured” to protect against huge annual swings. The result, he said, is that while it doesn’t see the gains some other plans get in good economic times, it also doesn’t suffer the declines in bad times like the past year.
More aggressive investments, Lambert said, could bring in more money during the good times, but could also cause increases in the amount of government and employee contributions required.
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Dana Bilyeu, executive officer of PERS, said the contribution rate is currently 20.5 percent split equally between the employer and employee.
This year, PERS has 40 percent of its money in U.S. stocks, down 5 percent from a year ago, and 15 percent in foreign stocks, up 5 percent.
But PERS has moved an additional 5 percent into U.S. bonds, now at 30 percent, taking that amount from foreign bonds, which are now at 5 percent of the total invested.
The remaining 10 percent is in private investments ” largely real estate.
Lambert said he is very happy with the performance of the existing investment structure.
“We’re making the same return as California but with much less risk,” said Lambert. “I think these folks are going in the wrong direction.”
– Contact reporter Geoff Dornan at firstname.lastname@example.org or 687-8750.