WHAT WE LEARNED YESTERDAY Positive news is hard to come by, but we learned at yesterday’s Public Pension Oversight Board meeting that the full employer contribution being paid into the KERS non-hazardous is helping some. Employer contributions have totaled $322 million for the first half of the fiscal year. So if contributions stay the same for the rest of the year, the full ARC will amount to $644 million for the year, a significant increase over previous years. But the numbers are still grim. Investments aren’t doing well so far this fiscal year. The pension portfolio is down 0.98 percent for the first half of the year. If you’re like me, you wonder how you can hear about this great stock market rally and wonder why our investments aren’t doing better. The short answer is that the KRS portfolio is diversified. Yes, it has a lot of U.S. stocks, but it also has other investments that aren’t performing as well. In fact, foreign stocks are down significantly. KRS officials have crafted a portfolio that they acknowledge won’t take full advantage of a rising U.S. stock market, but shouldn’t experience as sharp a drop when the bull turns to a bear. The really bad news is that if we’re in the hole for the first half of the year, it makes it less likely that we will hit our assumed rate of investment return of 7.5 percent in the KERS non-hazardous fund for the entire fiscal year. It’s important for any pension fund it hit its assumption. For the nation’s worst-funded pension plan, it is infinitely more important.
Posted on: Tue, 27 Jan 2015 11:12:47 +0000
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