State pension reforms
An Associated Press article that appeared in the Dispatch
were” before sustainability legislation was enacted in 2010. This claim
used in the article to back up this claim average gain and loss
experiences of the funds over five years. Since only two years have
passed since the 2010 pension reforms, it is highly misleading to cite
these numbers and build a case that the funds are worse off.
fact, on a market — or real — value basis, the Minnesota State
Retirement System (MSRS) General Plan has improved from 65.6 percentfunded in 2009 to 82 percent funded in 2012, thanks in large part tothe 2010 reforms. The Public Employees Retirement Association (PERA)General Plan went from 53.8 percent funded in 2009 to 73 percent fundedin 2012. And the Teachers Retirement Association (TRA) went from 59.8percent funded in 2009 to 72.5 percent funded in 2012. In total, the2010 reforms reduced benefit liabilities for the pension funds by $5.9billion.
The articleunfairly cherry-picked a particularly bad investment return year tocreate the wrong impression about the period following the 2010reforms. The article stated that the State Board of Investment “sawonly a 1.5 percent rate of return” in 2011. True enough. But SBI alsoreturned 14.4 percent in 2010 and 13.7 percent in 2012, facts that thearticle omitted. Since 1980, the SBI has returned an average of 9.9percent per year, placing it in the top third among institutionalinvestors nationwide.
Theboards of directors, executives and stakeholders of the three statewideretirement systems continually monitor the funds’ health and have ahistory of recommending proactive reforms that the state legislaturehas adopted in a bipartisan manner to ensure financial stability.Skewed stories such as these do a disservice to our 729,000 active andretired members as well as taxpayers.
Laurie Fiori Hacking, executive director, TRA
Dave Bergstrom, executive director, MSRS
Mary Most Vanek, executive director, PERA