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State pension fund posts stronger than expected earnings


Published:   |   Updated: August 19, 2014 at 04:59 PM

The state’s pension fund beat expectations last fiscal year, earning a 17.4 percent return on investments and ending 2013-14 with a market value of $149.1 billion, the State Board of Administration announced Tuesday.

That return was stronger than the previous fiscal year’s 13 percent return in 2012-13.

All of the fund’s investments paid off last year, the board’s press release said. That resulted in a $16.7 billion reserve, even after paying out $5.9 billion in benefits last year.

The board manages and invests funds for the Florida Retirement System, to which about 900,000 current employees and retirees are members.

“While recovery of the financial markets continues and we are certainly pleased with our current performance, we can’t lose sight of the fact that it is the long-term performance that matters most,” said Ash Williams, the board’s executive director and chief investment officer.

House Republicans, most notably outgoing Speaker Will Weatherford, R-Wesley Chapel, have wanted to close the pension plan to new hires and shift them to a 401(k)-style “investment” retirement plan.

Weatherford and other critics have been concerned about the pension pool’s gap between the money it has and the money it needs to cover current and expected future payouts.

The system was 86 percent funded as of 2012-13, records show. Financial experts generally agree that pension plans are healthy if they’re at least 80 percent funded.

Weatherford has said the fund still requires an infusion from general revenue, money that could be used elsewhere.

“Over the last two years, Florida taxpayers have spent $570 million to shore up our so-called ‘great pension system,’” he said in an email Tuesday. “Only in government is such a shortfall considered ‘great.’”

But state Rep. Jim Waldman, D-Coconut Creek, has said that subsidy is just “a cost of doing business” and works out to about $500 for each active employee and retiree in the FRS.

Advocates of the current pension system also say that cutting the pension plan off from new members will starve the fund of contributions from new employees and employers.

Legislative efforts to change the pension fund, including forcing new hires into a 401(k)-style plan, have failed the last two years.

State workers make up about a quarter of pension plan members; the rest are teachers and local government workers, including law enforcement and firefighters.

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