Largest funds outpace projections
HARTFORD — Positive investment returns for the state’s two biggest pension funds constituted “great news” for Gov. Dannel P. Malloy, who credited the fiscal-year development to state actions and the investment plan of state Treasurer Denise Nappier.
Over the 2013-14 fiscal year ending June 30, the Teacher’s Retirement Fund (TERF) posted a net investment return of 15.67 percent. That exceeded actuarial projections of 8.5 percent, and represents more than the “customized benchmark” of 15.25 percent, according to Nappier’s office.
During the same period, the State Employees’ Retirement Fund (SERF) marked a net investment return of 15.62 percent. The actuarial projection for this fund was 8.0 percent, and the customized benchmark is 15.41 percent.
The sum of investment gains was $3.8 billion.
“This is great news and I want to commend Treasurer Nappier for her good work,” said Malloy in a statement. “Over the past three and a half years, we have cut the state’s long-term obligations nearly $12 billion by reducing post-employment costs and increasing the state’s contributions to the pension fund. Our actions, together with the Treasurer’s investment strategy, have us on the path to get our long-term obligations under control.”
The two funds represent 91 percent of the state’s pension and trust fund portfolio.
Nappier noted that earnings for both funds have been in the double digits for four years of the last five. As of fiscal year end, the market value for TERF was $16.2 billion. For SERF, it was $10.5 billion.
As for the performance of TERF and SERF for the most recent fiscal period, “We are rightly proud of it,” according to Nappier. “The soundness of our strategic, diversified approach to portfolio design has enabled us to achieve returns that approach double their actuarially assumed rates of return.”
Overall, Connecticut Retirement Plans and Trust Funds increased in investment gains by $4.15 billion for the 2014 fiscal year. After factoring in net withdrawals, the net increase over the previous year was $3.5 billion.
“What is noteworthy about our investment experience over the past five years,” said Nappier, “is that pension fund assets have grown at a faster pace than the payment of benefits and other expenses. In light of the state’s significant unfunded pension liability, the substantial growth of the fund assets is good news for its beneficiaries and taxpayers. Our overall pension fund portfolio is positioned to perform well in a variety of economic environments.”
In addition to TERF and SERF, the remaining nine percent of CRPTF consists of assets held on behalf of the following: Connecticut Municipal Employees’ Retirement Fund; Probate Court Retirement Fund; State Judges’ Retirement Fund; State’s Attorneys’ Retirement Fund; Soldiers’ Sailors’ & Marines’ Fund; Endowment for the Arts; Agricultural college Fund; Ida Eaton Cotton Fund; Andrew Clark Fund; School Fund; Hopemead Fund; Police & Fireman’s Survivors’ Benefit Fund; and State of Connecticut Other Post-Employment Benefits Trust Fund.