Nappier: CT pension investments earned big returns
Connecticut’s cash-starved pension funds for state employees and municipal teachers got a big boost last fiscal year, state Treasurer Denise L. Nappier reported Monday.
Preliminary, unaudited results showed teachers’ pension investments earned an average return of 14.4 percent in 2016-17 while state employee pension investments returned 14.34 percent.
These results also easily surpassed the investment-return benchmarks set for each fund: 8 percent for the teachers’ pension and 6.9 percent for the state employees’ fund.
Overall, Connecticut’s retirement plans and trust funds’ portfolio grew by $3 billion last fiscal year, boosting its overall value to a new year-end high of $32.4 billion.
Nappier said the returns were achieved despite market instability created by a wide range of factors, including the United Kingdom’s exit from the European Union, the U.S. presidential election, global monetary policy shifts and rising interest rates.
“Through all the volatility, our asset allocation strategy and asset manager performance proved resilient,” fully capturing the market upswing and adding significant additional value,” Nappier said.
Connecticut has a history of saving poorly for its public-sector pensions, a problem that dates back to 1939.
The state has enough assets to cover 35 percent of the long-term obligations in its pension fund for state employees. And earlier this year it struck a deal to shift $14 billion to $21 billion in pension contributions until after 2032.
The teachers’ pension holds enough assets to cover 56 percent of long-term liabilities.
Analysts typically cite a funded ratio of 80 percent as healthy.
“Every additional investment dollar earned is one less tax dollar needed to meet the state’s pension benefit obligations and, therefore, available to support funding for critical state programs and services,” Nappier said.
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