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Report says Oregon PERS 'best-earning' pension in U.S.
Posted On: Mar 08, 2013

While the Oregon Legislature continues to wrangle over how to best "reform" PERS, Oregon Treasurer Ted Wheeler has just release

While the Oregon Legislature continues to wrangle over how to best "reform" PERS, Oregon Treasurer Ted Wheeler has just released a report showing that the Oregon Public Employees Retirement System posted the best investment returns over the past decade of any similar-sized public retirement system fund in the nation.

 

The analysis compares gross investment returns as of Dec. 31, 2012, and found that the performance of Oregon PERS was the highest among public funds with assets of more than $1 billion for the past one-, three- and 10-year periods.

 

"It's yet more evidence that PERS is structurally sound, and that any current 'problems' are directly attributable to the 2008 stock market crash," says longtime Oregon AFSCME PERS lobbyist Mary Botkin. "This should be proof to current legislators that huge overhauls of PERS are not necessary. This is not a system on the verge of collapse, as many have tried to paint it."

 

Oregon PERS' independent ranking comes from the Wilshire Trust Universe Comparison Service, a benchmark of asset positions and performance data for investment funds of different sizes.

 

"Oregon's investment division has served Oregonians well and we will continue to seek the right strategies," said Wheeler. "To maintain strong performance on behalf of Oregon, we will need to stay ahead of the curve, and that includes constantly improving the investment program to respond to new opportunities and risks."

 

The annual average return for the past three years was 9.57 percent, and it was 8.7 percent for the past decade. The assumed long-term rate-of-return for the PERS fund is 8 percent and has been since 1989, but Wheeler's office says that figure could be challenging to maintain given current low interest rates and lower projected returns for private equity investments. The PERS board is widely expected to lower the assumed rate for the first time in 24 years later this year; it is anticipated they will set the rate at either 7.75 or 7.5 percent

 

The PERS fund relies on investment returns to pay roughly 70 percent of the benefits negotiated for public sector retirees.

 

The Oregon Investment Council, which oversees state investment policy, is asking the 2013 Legislature to approve the Investment Modernization and Cost Reduction Act. That proposal will increase the capacity to manage the PERS portfolio by converting the Investment Council to a public corporation.  By increasing internal capacity, the investment division also would be able to limit outsourcing the management of parts of the portfolio, allowing the fund to potentially save millions of dollars in fees annually.

 

 


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