State retirement system faces a deficit againThe market values of the public-pension plan’s investments are down about 5 percent from where they stood July 1, state investment officer Matt Clark reported Thursday.
By: Bob Mercer, The Daily Republic
PIERRE — The South Dakota Retirement System is under water again financially.
The market values of the public-pension plan’s investments are down about 5 percent from where they stood July 1, state investment officer Matt Clark reported Thursday.
That puts the system back into a deficit situation again, according to Doug Fiddler, the system’s senior actuary consultant.
Fiddler told the SDRS board of trustees that if the investments finished down 5 percent for the fiscal year ending June 30, 2012, there would be a negative gap of $469 million between the investments’ total value and the benefits currently promised for the next 30 years.
Fiddler said the market-funded ratio of assets to benefits would be 91 percent at that point. That would affect the size of the cost-of-living adjustment for SDRS beneficiaries in the next year.
State law sets a scale of 2.1 percent minimum for the COLA, and up to 3.1 percent, depending upon the market-funded ratio. The 3.1 percent increase is possible only if the market-funded ratio is 100 percent or better.
The system had finished the past fiscal year at a market ratio of 103 percent, enabling the trustees to grant the full 3.1 percent COLA.
The trustees have set a target of 7.75 percent average annual gain in order for the system to be financially balanced.