Retirement fund has ‘good rebound’

BOISE – Idaho’s public employee retirement fund gained a billion dollars on its investments in the past year, and fund officials say it’s healthy, despite a $2.8 billion unfunded liability over the long term.

“We’ve just made a good rebound,” said Patrice Perow, Public Employee Retirement System of Idaho spokeswoman. “We’ve been healthy – we’re in good shape, particularly compared to our peers.”

PERSI ended the fiscal year 77 percent funded, up from 73.3 percent a year earlier, when the unfunded liability hit $3 billion. That figure prompted Idaho House Republicans to push this year to block a scheduled 1 percent cost-of-living increase for state and local government retirees. The move angered retirees, who said lawmakers were taking away their money, not the state’s, and it fell short in the Senate.

House Speaker Lawerence Denney said: “Well, I hope they’re right. Seventy-seven percent is better than most states, but it still means that there’s about 23 percent that’s unfunded, and that’s a liability on the state, which is still a concern. I hope that the economy has picked up and that things are going the way we hope they go.”

Idaho’s fund, which covers 33,000 retirees from 728 employers, the largest of which is the state, gained $1 billion on its investments over the last fiscal year, which ended June 30. That’s a gain of 12.4 percent, to $10.08 billion. The fund still is 3.3 percent below where it stood three years ago, but it’s 4 percent above the mark from five years ago and up 7.7 percent over the past 15 years.

Experts recommend that pension funds be 80 percent funded as a benchmark; Idaho’s was funded at 105.1 percent as recently as 2007, and 2009 and 2010 are the only fiscal years in the past decade that it fell below 80 percent.

“Yes, we’re down, I mean, who isn’t?” Perow said. “But we’ve certainly made a healthy gain, and I think our recovery is certainly under way and we’re in a positive position.”

The ups and downs over the past decade “just speaks to market volatility,” Perow said. “Everybody knows what happened 18 months ago, and it impacted us like everyone else that’s in the pension industry.

“We don’t change our strategy,” she said. “We stick with a really conservative investment policy, and we do it whether we’re going up or going down. We’re constant, and that has served us really well over the years.”

PERSI is sticking with its schedule for a 1.48 percent contribution rate increase on July 1, 2011, which it told lawmakers this year would happen regardless of whether retirees got their 1 percent COLA this year. The rate increase is split, with employers to pay two-thirds and employees one-third.

“We’re suggesting to our members and our employers: Plan on it,” Perow said. “The likelihood that it goes in is probably high.” However, she said, if there were a big rebound in markets, the state could cancel the scheduled rate increase; that’s happened before.