Not All Public Pension Funds are Underwater: Florida SBA Reports

The Florida State Board of Administration (SBA) released its mid-year investment performance for the period ending December 31, 2009, highlighting an investment gain of 16.3% in the Florida Retirement System Pension Plan (FRS) since the fiscal year ending June 30, 2009. Last June, the fund had net assets totaling $99.6 billion, compared to $113.1 billion after distributions of payments to beneficiaries on December 31, 2009.

“We’ve suffered through a unique period in financial market history and are recovering reasonably well even if slowly,” said Ash Williams, executive director and chief investment officer of the SBA. “Our long-term outlook and disciplined approach seems to be working, although we are prepared to see some market corrections as we move forward.” The increase comes as a relief after a 19% negative return reflected in the 2008-2009 Annual Investment Report for fiscal year ended June 30, 2009.

“Our strategy to keep costs down, manage risk, and position our portfolio to meet required returns has helped make the pension fund one of the healthiest in the nation,” Williams said. “Those three objectives continue to be the focus of the SBA.”

The FRS Pension Fund also performed well relative to its peer group of public pension funds over the past calendar year. Wilshire Associates, an investment consulting firm with the largest database of peer comparisons in the industry, determined that the FRS is the top performing fund in its peer group of the 10 largest defined benefit pension plans in the United States for the year ended December 2009. Florida’s annual return was 21% compared to the median of 19%.

A separate study released this month by the Pew Center on the States offered an additional accolade, saying that the FRS stands out as a “solid performer” among public pension funds and praising Florida for its strong actuarial position and history of solid funding. Florida’s position as one of only four states with a fully funded pension plan going into the 2008 recession put it in a stronger position to weather the market downturn, according to the Pew Center study.

“Florida’s method for calculating annual contribution rates exemplifies the state’s careful approach to funding its retirement promises,” the Pew report said. “The state consistently has funded its actuarially required contribution and follows conservative policies in managing its obligations.” In recognizing the SBA Board of Trustees and the legislature for strong leadership and partnering to create a secure retirement for plan participants, Williams said the Florida pension fund offers reasonable benefits, prudent investing and responsible funding levels. “We believe the FRS has all the elements of a sound foundation in place and it appears other professionals agree,” Williams said.

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