The videos and reports of the the June meeting of the PERS
Investment Comittee. are posted below* The committee meets bi-monthly and is the
real nuts and bolts of PERS. The reports don't include the bloodbath that took place in the markets in the second quarter of this year but PERS still suffered a -3.5 rate of return at the end of March, shrinking the PERS portfolio by nearly $2 billion. Don't worry, PERS still enjoys assets of $33 billion.
PERS is all about the numbers so here are some numbers.
* Rate of return at the end of March is -3.5% (gross) for FY 2022. The fiscal year began on July 1. The returns for the various investments are:
Domestic equity (stocks): -1.9%
Global equity (stocks): -1.3%
Fixed income: -0.4%
International equity: -2.1%
Real estate: 1.7%
Private equity: 4.3%
* However, investments reflected the market declines of the past spring. The rate of return for April and May was -5.0%. Callan stated in the report (p.213):
U.S. Equities (Russell 3000) fell -9.1% over the last two months since the end of the first quarter of 2022. The index is down -6.0% for the fiscal year-to-date period.
● Broad non-U.S. equities have declined -5.9% since the end of the first quarter, and are down -12.0% fiscal year-to-date.
● As the Fed continues to tighten monetary conditions and rates have risen throughout the year, fixed income markets have delivered negative total returns to investors (both in the U.S. and aboard).
PERS uses the Russell 3000 Index as a benchmark.
* Assets were $33 billion, a decrease of $1.87 billion from the end of the first quarter. The net outflows reduced the assets by another $121 million.
* What is the asset allocation for PERS? Here ya go. (p.217)
 |
| Click on image to enlarge. |
The S&P 500 lost around 20% from July 1, 2021 to June 30, 2022 while the Russell 2000 lost approximately 15%. The next report will probably be rather ugly for PERS.
Market returns for PERS since 2000:
2000: 8.4%
2001: -7.1%
2002: -6.6%
2003: 3.5%
2004: 14.6%
2005: 9.8%
2006: 10.7%
2007: 18.9%
2008: -8.2%
2009: -19.4%
2010: 14.1%
2011: 25%
2012: 0.6%
2013: 13.4%
2014: 18.3%
2015: 3.5%
2016: 1.16%
2017: 15%
2018: 9.2%
2019: 6.8%
2020: 3%
2021: 32.7%
5-year average:13.34
10-year average: 10.3%
Assumed rate of return: 7.5%
Employer Contributions
2011: 12%
2012: 14.26%
2014: 15.75%
2019: 17.4%
The Callan report is posted below. Start on p. 207.
19 comments:
KF, get ready for a freak out from the "see no problem, hear no problem, ignore all problems" crowd.
No big deal. The Democrats bailed out pensions of Illinois and California. Who cares if the non-pensioned taxpayers have to eat this pile of poop?
I'm sure that flexible Wicker will "negotiate" a PERS bailout in exchange for his help to drive us into a more Marxist Union.
Won't surprise me after he sold out last week.
So, what is the percentage of its funding in relation to its present obligations? That's the number that makes everybody very happy.... or very nervous.
How did Wicker sell us out last week? This is my lone source of local news. I have no doubt that Wicker sold us out. He turrible.
As a state employee I wish I had the money I have been paying into PEERS. I have no choice in the matter. I have other investments in case PEERS bites the dust.
People act all hand-wringy to learn that the market sometimes goes down. That's kind of like worrying that the sun sometimes sets.
Meanwhile, the PERS portfolio exceeded its assumed ROR more than half the time over the last 22 years listed.
The real question seems to be is the actual performance sufficient, accounting for all other factors?
Hell, they’d get better results just putting it all in a online savings account.
@3:44 (1)
Why am I not surprised that a state employee doesn’t know their retirement is called PERS and is not pronounced peers?
To all at or near retirement...get more booster shots!
A 7% assumed return is the first crime. Sets the bar very low for the board. And gives them the excuse to ask for higher contribution rates. All the while how many 20 year periods has the market not made 9%. Use the actual return over the last 50 years as the expediter return. They lowered the expected return years ago due to low interest rates. Well, that’s over.
Thanks Joe. My deferred comp also took a hit last quarter of over 9%.
Legislators, every single one of them, is/are as guilty as Lamar Adams. They all are gaining a benefit while deferring the problem to our grandchildren. By the time somebody steps up and calls it out, it will fold as quick as the timber deeps scam. But these cats will be dead by then.
I don't know of anyone that works for the state that calls it PEERS.
Kingfish went to the trouble of posting a table called Market Returns Since 2000. I assume he did that for a reason. Even someone with average intelligence and just a few seconds of spare time can see that there are many more appearances of black numbers than of red numbers.
The 'coffin-tackers' and 'neighborhood nay-sayers' always come out of the knotholes when The Fish gets all orgasmic and giddy over a PERS report.
Wonder why he didn't offer his usual comparison of PERS with parallel status-reports of defined-contribution plans.
@9:14 AM
It's not the market returns that are the problem. Is that for decades, they have not required actuarially sound contributions and have been promising workers essentially that future taxpayers would pay their pension. What matters if the unfunded obligation, which I think was somewhere in the $17B range before this year's dip.
The "naysayers" are doing PERS participants a favor, by reminding them that PERS is eventually going to break, so if they're thinkging they are going to be receiving pers decades in the future, they need to plan for a significant haircut, just in case.
@August 9, 2022 at 6:38 PM
The 7% return is still considered relatively aggressive. Remember that PERS cannot just invest in stocks, so that is a combined return for their stocks and fixed income. By having it at 7%, rather than something more conservative, it allows them to report a lower unfunded obligation and allows them to avoid recommending that contributions be raised.
$19 billion I think in unfunded liabilities.
Ah, the sad old 'haircut guy' returns at 3:47. I wonder if he sings the same gloom and doom song regarding social security, which he would also call a ponzi?
Post a Comment