Home > News > Research > Pennsylvania SERS Reports 6.5% Return in 2016
Research

Pennsylvania SERS Reports 6.5% Return in 2016

Steps being made to successfully implement new law that moves new employees into hybrid pension plan.

By Chris Butera

The Pennsylvania State Employees’ Retirement System (SERS) returned 6.5% net of all fees and expenses in 2016, growing by nearly $1.6 billion, according to its 2016 Comprehensive Annual Financial Report (CAFR), released Monday.

This brings the total fund as of December 31, 2016, to $26.4 billion after paying out $3.2 billion in pensions to more than 127,000 retirees and beneficiaries. Of that $3.2 billion, $2.9 billion went toward Pennsylvania residents. However, the fund fell short of its 7.5% assumed long-term rate of return for 2016. In April 2017, the board lowered its assumed rate of return for the 2016 actuarial valuation to 7.25%.

In addition to 240,000 total members, SERS served 103 agencies and employers last year. Roughly 6,700 new retirees were added to the annuity payroll with an average annual pension of about $27,800. There were 4,000 retirees with an average yearly pension of $15,000 removed from the payroll.

SERS reported a funded ratio of 58.1%. The 2016 unfunded actuarial accrued liability was $19.9 billion, based on the actuarial methods used for funding purposes as of December 31. SERS’ net pension liability was $19.3 billion and its fiduciary net position as a percentage of the total pension liability was 57.8%.

For more stories like this, sign up for the CIO Alert newsletter.

Due to Governor Tom Wolf’s June 2017 signing of Act 2017-5 (formerly known as Senate Bill 1), most new hires starting January 1, 2019, and future retirees that choose to opt-in to the new plan will move into a hybrid retirement system where they will receive half of their benefits from the current taxpayer-funded plan and half from a 401(a) defined contribution plan. SERS says it will take the necessary steps to successfully implement these changes into its system over the next 18 months.

Tags: , ,

Home > News > Research > World’s Largest Pension Fund Reports 3.5% Increase in Q1
Research

World’s Largest Pension Fund Reports 3.5% Increase in Q1

Largest gains point to domestic, foreign equities.

By Chris Butera

Japan’s Government Pension Investment Fund (GPIF) reported a 3.5% return in the first three months of FY 2017 Friday, increasing its assets by 5.1 trillion yen ($46 billion) to a record 149.2 trillion yen ($1.3 trillion).

This is the fund’s fourth consecutive quarterly gain.

In the period ended June 30, domestic equities returned 2.3 trillion yen ($20.78 billion) upon the rise of the benchmark Topix index. Foreign equities increased by 1.9 trillion yen ($17.17 billion).

GPIF’s Japanese share holdings matched the Topix’s performance, returning 6.6%. Assisted by the yen’s 7.6% decrease compared to the euro, overseas stocks returned 5.5%.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

Roughly 30% of the fund’s assets were in domestic bonds, while domestic equities took up about 24% of the portfolio—almost even with foreign equities. Foreign bonds accounted for about 14% of GPIF’s assets, while short-term assets rounded out the allocation at about 8%. However, alternative assets were well below the 5% allowable limit—consisting of 0.1% of the fund’s holdings. A recent proposal was made to allow GPIF trade stock index futures, which could increase the alternative holdings. GPIF has also invested roughly 1 trillion yen into Japanese environmental, social, and corporate governance-scoring indexes.

“A positive market environment continued” in the June quarter, with good global economic data and corporate earnings supporting increases in stocks, GPIF President Norihiro Takahashi said in a statement Friday, as reported by Bloomberg. “The yen was in a weakening trend due to expectations that the Federal Reserve will raise interest rates and the [European Central Bank]will move toward normalizing monetary policy, while the Bank of Japan’s quantitative easing policy continued.”

Tags: , , ,

«