Aug 8 Connecticut's two main pension funds had a
negative rate of return of 0.9 percent in the 2012 fiscal year,
which reduced their total assets to about $24 billion, a state
official said on Wednesday.
The negative return for the two funds, one for teachers and
one for other state employees, contrasts with the 21 percent
return for fiscal 2011, which was the highest return in 23
Along with many other states, from California to New York,
the results for Connecticut's pension funds were well below
their assumed rates of returns.
Ben Barnes, secretary of Connecticut's Office of Policy and
Management, said by telephone that the expected rate of return
is 8.5 percent for the teachers' fund and 8.25 percent for the
Continued underperformance could force states to increase
contributions, which would further strain budgets already under
pressure from the fragile economic recovery.
Barnes added that the funds' investment council planned to
modify the current mix of assets in its investments. Equities
had a negative return of 5 percent, while the return on fixed
income topped 7 percent. Alternative investments, a broad
category that includes hedge funds and commodities, rose more
than 5 percent.
Barnes said the new two-year budget plan that Governor Dannel
Malloy will unveil in 2013 for the fiscal year that starts on
July 1 might include a provision raising the annual pension
contribution by around $125 million.
"We would like to include that in the budget we will present
to the General Assembly in the spring....We face a number of
fiscal challenges and we're working to find the best mix," he
This would accelerate the governor's effort to compress
future contributions by paying in bigger amounts earlier. The
state boosted its annual contribution by $100 million, bringing
the total to more than $1 billion, in the current budget.