The investments of the Public Employees’ Retirement Association rebounded in 2009, rising 17.4 percent in value after a plunge of 26 percent in the recession year of 2008.
Net assets of PERA at the end of 2009 were $32.9 billion, compared to $29.5 billion at the end of 2008.
The pension system has 465,653 members, more than half of which are employees or retirees of school districts and state colleges.
PERA’s 2009 financial picture was discussed in depth Monday at a meeting of the Legislature Audit Committee, along with an audit of the agency’s books. No significant accounting problems were found by the audit.
Reform of the pension system was a major issue last winter for legislators, who ultimately passed Senate Bill 10-001, which reduced annual increases for retirees, increased employer and employee contributions and changed eligibility rules for some government workers.
PERA executives, auditors and actuaries repeatedly noted Monday that the new law has helped put the system on the road to financial solvency over the next 30 years. The law currently is being challenged in court by a group of retirees.
While PERA had a good run last year, agency documents noted that the market drop has hangover effects. The agency’s three-year investment return is calculated at -1.5 percent, the five-year rate at 3.9 percent, the 10-year rate at 3.3 percent and the 25-year rate at 9.3 percent. The agency’s long-term plans for solvency assume an average 8 percent rate of return over 30 years.
And PERA’s portfolio didn’t do as well in the first six months of 2010, when a loss of $1 billion was posted. The system reported an overall gain in net assets, to $33.8 million, because employer and employee contributions of $3.6 billion more than offset the investment losses and $1.7 billion in benefit payments.
Actuaries hired by PERA board reported that PERA’s four divisions are funded at the following percentages:
- State division (includes many higher education members) – 67 percent
- School division (includes all K-12 employees except DPS) – 69.2 percent
- Local government division – 76.2 percent
- Judicial division – 77.3 percent
The funded percentages of all divisions declined slightly from 2008 because of the carryover effect of investment losses.
The actuaries reported that the state, schools and local government divisions are projected to reach full funding in 30 years, based on current financial assumptions. Full funding of the judicial division won’t come in 30 years.
The 2009 financial report doesn’t include the Denver Public Schools pension system, which didn’t become part of PERA until Jan. 1, 2010, and will be included in the annual financial report a year from now.