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Big Year For Pension Fund
Finally Recovered From FY08 Losses
MARCH 2014 VOICE: Year 2013 was cause for a modest celebration at the Commonwealth’s giant Pension Reserves Investment Management (PRIM) Board, chaired by State Treasurer Steve Grossman.
A strong market year saw PRIM’s Pension Reserves Investment Trust (PRIT) Fund earn 15.2%, and finally climb back and exceed its pre-Year 2008 value with a new high of $57.9 billion at year’s end.
At the outset of 2008, the fund was at its peak value of $53.7 billion. But when Year 2008 came to a close after an historic market crash, the Fund’s value had dropped to $37.8 billion, a staggering loss of 29 percent.
Year 2013 was the second consecutive year of double-digit earnings. In Year 2012, the return was 13.8%. Four of the five years since ’08 have earned 13 percent or better with one year, 2011, sandwiched in at a flat zero earnings.
Although 42 local retirement systems have placed all of their assets within the PRIT Fund for management and will mirror the PRIT earnings, by far the current dollar amount in the Fund is that of the State and Teachers’ Retirement Systems’ fund, the Commonwealth’s Fund – an estimated $58 billion. The 42 local systems have a combined $7.1 billion in the fund.
There are another 53 local systems that utilize PRIT on a “segmented” basis. That is they choose to invest in PRIT under certain asset categories, such as international equities or real estate for examples. These systems retain their overall investment strategy. The systems, known as purchasing systems, have $3.9 billion within the PRIT Fund.
“We don’t talk very much about what happened in ’08, but it’s always been on my mind, that reaching the pre-’08 Fund’s value was a significant goal,” says PRIM Board elected member Paul Shanley, a state retiree and Association Vice President.
“The market is due for a letdown, a correction this year, according to Wall Street pundits. If their predictions are correct, any return above our eight percent benchmark would be gravy. I’m optimistic that with the continued excellent guidance of Executive Director Mike Trotsky and staff, we will exceed the benchmark.”