The Maryland state pension system achieved a 10.6% return on its investment portfolio for the fiscal year that ended June 30, bringing the fund assets to a total of $40.2 billion, Chief Investment Officer Melissa Moye told the pension trustees Tuesday.
The return exceeded the system’s target of 7.75% annual return, and was far better than the dismal results of less than 1% for fiscal 2012.
Read MoreThe state pension board on Tuesday lowered its target for investment return on the $41 billion retirement fund from 7.75% to 7.55%, a move it’s been considering for over a year
The 14-member Board of Trustees of the State Retirement and Pension System also lowered its projection of inflation from 3% a year to 2.8%, and phased in both steps over the next four years.
Read MoreThe General Assembly’s Joint Pensions Committee unanimously recommended Wednesday abandoning a pension funding method that has allowed the state to pay hundreds of millions less each year into the state retirement system than actuaries said was needed.
Read MoreMaryland’s $37 billion state retirement and pension system for employees and teachers earned only .36% on its investments in the fiscal year that ended June 30. This is far below the 7.75% that is the system’s target. “The last 12 months presented a challenging environment for investors, particularly in international equity,” said chief investment officer Melissa Moye.
Read MoreThe state pension system’s investment officers say that the $52 million it has paid a British company in currency management fees has resulted in some lower rates of return, but is likely to stay because it has achieved its goal of reducing volatile ups and downs in foreign stock values.
Read MoreOfficials from the State Pension and Retirement System disagree with the potential cost savings that could come from firing Wall Street managers touted by an independent analyst at a budget hearing this week.
Read MoreThe Maryland pension system had a good year in fiscal 2011, earning 20% on its investments — up from 14% in 2010 — and giving it $37.6 billion in assets. But the Maryland system did not perform as well as most large pension systems around the country, showing earnings worse than four out of five of them, according to a report from the Department of Legislative Services.
Read MoreA proposal to change the funding method for state pensions that will reduce state contributions to the system and delay reducing the state’s unfunded liabilities was criticized by two private sector representatives on the special commission studying retirement benefits. “The pension plan will never get to 100% funding,” said George Roche, former chairman and president of mutual fund giant T. Rowe Price, at a hearing Monday. “The workers are really exposed to a lot of risk and I don’t like it.”
Read MoreA new national study found that many state pension systems over-invest in their own states and lose money, but Maryland is not one of them.
The study, published earlier this month by two faculty members at Northwestern University’s Kellogg School of Management, looked at whether state pension systems seemed to be biased toward making investments in their own states. The study found that when states keep their pension investment dollars close to home, they tend to lose more.
Read MoreThe House of Delegates and Maryland Senate this past week have both voted to cut pension benefits for state teachers and employees as the legislators raised contribution rates and retirement ages, ostensibly to cure a massive $18 billion underfunding of the pension system.
But millions of the savings from the reduced benefits are not going to shore up the pension plans at all, but will instead funnel money into the operating budget. This prospect has drawn fire from liberal and conservative lawmakers and the teachers union, as well as strong objections from the head of the retirement system.
Read MoreThe state’s pension system portfolio has increased in value by more than $4 billion, according to a news release from the Maryland State Retirement and Pension System.
The fund returned 14.3% on investments as of Dec. 13, 2010, the midpoint of the current fiscal year. The earnings raised the system’s assets to $36 billion, $4.2 billion more than at the close of fiscal year 2010 on June 30.
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