In late February, global markets saw a dramatic increase in volatility. At the onset of this changed environment, PERA’s Chief Investment Officer, Amy C. McGarrity, shared how PERA’s long-term strategy accounts for such downturns. Ron Baker, PERA’s Executive Director, has explained how the organization adapted to rapidly changing circumstances while continuing its operations.
Now, in the new video below, the two PERA leaders discuss the status of PERA’s investments, PERA’s funded status, and the outlook for the days ahead.
VolatilityA state of unpredictable activity in financial markets, during which prices can experience significant and/or unexpected swings in either direction.
Please explain how PERA investment officers set aside the funds needed to pay current retirees into safe investments not affected by the economic downturns, or do they? Many of us retired when the PERA Trust Fund was fully funded in excess of 100% (early 2000s). Twice PERA has urged the legislature to reduce our promised and contracted annual benefit increases in 2010 and again in 2018. Can you put this answer into straight layman’s language? I think I know the answer, but others may not.
Hi Gary,
You can find details about PERA’s investment program on this site: https://www.copera.org/investments
PERA maintains a diversified portfolio. Some investments carry less risk (and a lower potential for returns) than others. Some carry more, with higher potential returns. Rather than singling out a particular investment, these various components, put together, help provide for retirees today as well as future retirees.
Thank you for the update. I wish all of you well and appreciate your efforts. If auto adjust is triggered changes will go into effect in July 2022? Not 2021?
Pamela,
Thanks for those kind words.
Yes, if the automatic adjustment provision is triggered due to results from 2020, the changes would be announced in July 2021 and would go into effect in 2022.
If auto adjust is triggered changes go into effect July 2022 not 2021?
Louder!!!!
No sound
Thank you for sharing this with PERA members. I really appreciate what you are doing to keep our pension safe. I am also well aware that there are forces in our state that would love to dismantle PERA. I think it’s important to involve members in standing up for this essential part of public education.
What’s the current status of the COLA that is set to begin at the end of July?
Hi Linda,
All eligible PERA retirees will receive the scheduled annual increase of 1.25% in July.
Would it be possible for PERA to just give PERA members a ball-park figure of what it has made profit-wise and what it has lost on a quarterly basis. I have to say I was extremely disturbed when PERA said it lost over $1-billion in a previous year! These kind of losses are NOT acceptable…PERA has to be more transparent!
Hi Bill,
Thanks for reading and for providing feedback.
PERA is committed to transparency and always releases its full financial statements every year. We occasionally post unaudited updates more frequently (most recently September 2019) here: https://www.copera.org/investments. While some types of investments see updated prices daily, like publicly-traded stocks, other investments, like private equity and real estate, don’t operate the same way. To make sure the information we deliver is complete and correct, PERA must compile returns for an array of investment types, followed by a third-party audit of that information. This process does take time. We will release the full financial report for the 2019 calendar year in June.
We also understand that seeing a decline in the fund’s value is not an outcome anyone wishes for. But being invested for the long-term means being exposed to the ups and downs of market cycles. Downturns are expected, and the swiftness with which they can occur often overshadows the rise in markets, even though positive market environments typically outweigh the negative impact of historical downturns. While the dollar amount you stated is large, remember that PERA’s overall holdings ended 2018 at nearly $50 billion: a change of only 2% in either direction represents about $1 billion. In 2018, PERA’s return was -3.5%, which slightly outperformed its benchmark of -3.7%. 2018 was a down year in nearly every sector. Individual investors were no different: the S&P 500, a financial index many individuals follow, finished 2018 down more than 6%.
The markets don’t always go up. However, we are confident that PERA is well positioned to continue to invest through the ups and downs of the market cycle, providing the opportunity to deliver the expected long-term rate-of-return assumption (7.25 percent) over the long term (30+ years).
Are we going to lose our pension checks every month?
Heidi,
No, you will continue to receive your monthly benefit.