Mississippi pension system loses money on investments

By Steve Wilson  /   June 23, 2016  /   News  /   1 Comment


A report by the Public Employees’ Retirement System of Mississippi shows the state’s pension fund lost money in the past year, which could further damage PERS’s already weakened bottom line.  According to the third quarter report, the fund has been hit with total losses of 0.47 percent so far this year, with the biggest hits coming in stocks. International equities lost 7.36 percent, global equities were off by 4.26 percent and U.S. equities lost 2.42 percent. Stocks represent 60 percent of the plan’s investments.   If the trend holds in the fourth quarter, it’ll be the first year in the red since 2009, when the fund lost 19.4.

In the past decade, the annual rate of return for the plan’s investments has been 8.69 percent.  Phillip Thomas, a Jackson-based attorney who has written about the retirement system’s woes of on his blog, Mississippi Litigation Review,  says one of the reasons PERS has so much of its funds in the stock market is because of what he considers an unreasonable annual rate of return.   Last year, the PERS governing board voted to cut its expected rate of return from 8 percent to 7.75 percent, but it still believes the pension will become 80 percent funded by 2042.   “Since bonds don’t yield anywhere close to that, they have to go chase returns in stocks,” Thomas said. “Ironically, bonds are still performing better than stocks because yields keep going down. Sixty percent in stocks is so risky right now.”

And it could get worse, he said.....To Read More......