Monday, April 13, 2015

Texas local public employee pensions grow their 20-year average returns

Texas public employee pensions for firefighters, police and municipal employees increased their 20-year average returns to 8.6% from 8.2%, which is above the average actuarial investment return assumption of 7.8%, according to the annual study of Texas’ local pensions investments.

The “Report on the Asset Allocation and Investment Performance of Texas Public Employee Retirement Systems,” created by the Commonfund Institute for the Texas Association of Public Employee Retirement Systems, was released at TEXPERS’ 26th Annual Conference in Austin in March.

The 52 pensions contributing to the 2014 survey represented approximately $53 billion in total assets for the fiscal year ending September 30, 2014. All the responding systems submitted data for the previous survey, providing integrity in year-over-year comparisons, the report said.

“Texas’ local pensions reduced their international equity exposure from 25% to 20% and increased their fixed income and short-term securities/cash holdings to 22% and 4%, respectively. The investment allocations reflect de-risking efforts,” said Max Patterson, the executive director for TEXPERS, representing 75 Texas retirement systems and their 400,000 active and retired members.

The report also showed that FY2014 dollar-weighted asset allocations were equally balanced at 27% for alternative strategies (real estate, private equity, energy, etc.) and domestic equities.

The closely watched 10- and 15-year average yearly returns were 7.2% and 6.4%, respectively, with most pensions performing well against the benchmark Wilshire Public Funds Universe on a risk-adjusted basis.

“The overwhelming takeaway is that Texas’ local pension systems continue to perform at acceptable levels for meeting or exceeding their actuarial assumption rate over the long-term,” Patterson said.

TEXPERS released its report to 600-plus pension Trustees, administrators, system members and investment professionals attending the “Discover Opportunities, Achieve Excellence” educational conference in Austin.

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