August 1, 2012 / 9:00 PM / 7 years ago

Florida's state pension ekes out small annual gain

TALLAHASSEE, Fla., Aug 1 (Reuters) - Florida’s $122.7 billion pension fund for government workers grew 0.29 percent in the fiscal year ended June 30, lagging double-digit percentage gains posted in the previous two years, state finance officials reported Wednesday.

The modest return brought its three-year average annual return on the mammoth fund to 11.8 percent, according to preliminary results from the State Board of Administration.

“The prior two years have delivered unusually strong back-to-back performances of 14 percent and 22 percent and we have been very fortunate, given the volatility of the financial markets, to hold on to those gains this past year,” said SBA Executive Director Ash Williams.

Meanwhile, the state’s $7.1 billion defined contribution retirement plan earned 1.07 percent for the year, slightly below the agency target of 1.17 percent. The plan was created in 2002 as an alternative to the traditional pension in an effort by the state to curb long-range costs.

“While we expect continued volatility, we are long-term investors and have positioned the portfolio to withstand short-term volatility in order to deliver the returns required to meet pension obligations,” Williams said in a statement accompanying the figures.

Over the past 20 years, the pension fund has seen an average annual return of 8.1 percent, above the 7.75 percent annual benchmark.

State investment managers, however, are likely to reduce the benchmark later this year.

“It seems reasonable to review the return assumption in light of ongoing deleveraging and modest global economic growth,” Williams said.

Florida’s results reflect generally modest returns recently reported by public pension funds.

In July, the $233 billion California Public Employees Retirement System, the biggest U.S. public pension fund, reported a 1 percent return for the year ended June 30, far below CalPERS’ 7.5 percent target.

The $150.6 billion California Teachers pension fund, or CalSTRS, earned 1.8 percent. Various New York City pension funds reported an annual return of 1.7 percent

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