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State Employees' Retirement System plunges 18.7 percent


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POSTED: Tuesday, August 11, 2009

The value of the state of Hawaii Employees' Retirement System pension fund plummeted 18.7 percent in fiscal 2009, due largely to the global recession and despite a more than $695 million gain in the fourth quarter.

The portfolio decreased by $2 billion over the fiscal year that ended June 30. The 18.7 percent plunge is nearly three times the 6.7 percent drop that marked the portfolio's previous worst documented fiscal year loss, in fiscal 2001.

Rod June, ERS chief investment officer, focused on the most recent period.

“;The performance in terms of the last quarter of 2009 ... is one of the best quarters we've had in the last 10 years,”; he said.

               

     

 

LOSING MONEY

        The state Employees' Retirement System pension fund posted a big loss for fiscal 2009, which ended June 30.
       

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
  TOTAL ASSETS
FISCAL YEARGAIN/LOSS(IN BILLIONS)
2009-18.7%$8.8
2008-3.4%$10.8
2007+17.7%$11.5
2006+11.1%$9.9
2005+11.3%$9.2
2004+15.8%$8.6
2003+3.0%$7.7
2002-5.5%$7.9
2001-6.7%$8.8
2000+7.4%$9.9

       

        Source: State of Hawaii Employees' Retirement System

       

About 108,000 active and retired state employees are covered by the fund, which provides retirement, disability and survivor benefits.

The ERS' executive summary released yesterday attributes the “;significant volatility”; between losses for the year and the improvement in the fourth quarter to the impact of the economic crisis and the “;fledgling signs of near-term recovery,”; respectively.

June said he believes it is too early to say conclusively that the economy has turned around, “;but there are signs that things are getting better.”;

Unemployment numbers are “;showing signs of improvement, it looks like the credit markets are becoming healthier and the stock market, in the last month, has done extremely well,”; he said.

The 9.3 percent growth over the quarter fell 1.6 points below the policy benchmark of 10.9 percent. However, the portfolio outperformed both its policy benchmark over the latest five-year period and the median public fund over the one- three- and five-year periods.

The ERS' fixed-income asset class provided the strongest results during the quarter.

Oregon-based Pension Consulting Alliance Inc. and ERS plan to review the structure of the fund's international equity portfolio over the next several months, as it underperformed its benchmark significantly in the past year and over the three- and five-year periods.

PCA advises ERS trustees on investment decisions.