Texas public employee pensions invested heavily in U.S. and international stocks in 2012 to exceed the long-term investment rate of return assumptions needed for the retirement benefits of retiring police, firefighters and municipal workers, according to a report released today at the 24th Annual Conference of the Texas Association of Public Employee Retirement Systems. A link to the TEXPERS’ “Report on the Asset Allocation and Investment Performance of Texas Public Employee Retirement Systems” is available at the end of this article.
The TEXPERS report shows that the average asset allocation of respondents to its annual survey was 26.0% percent in U.S. equity, 17.5% in non-U.S. equity, 26.1% in fixed income, 10.2% in real estate, 7.7% in private equity and 12.5% in other asset classes. The 52 survey respondents had $23.8 billion in total market value in 2012, compared to $21.4 billion for 54 reporting respondents in 2011.
And two key long-term measures for the success of pension system investments – the 10- and 20-year average rates of return – came in at composite averages of 8.9% and 8.3% respectively compared to the average actuarial investment return assumption of 8.1%. Overall, Texas’ local pensions beat the 8.1% composite average assumption rate in the one-, three-, ten- and 20-year return periods. The five and 15-year returns came in below the assumption rate, reflecting the bear markets of 2008 and 2002.
“Texas pension systems are doing a great job of staying focused on long-term investment horizons, reflecting their effective handling of financial markets, economies, and the manner in which benefits are paid out over time to public sector retirees,” said Max Patterson, the executive director for TEXPERS, an organization with more than 80 pension plans and representing nearly 300,000 individuals. “These long-term returns are good indicators of the overall positive health of Texas’ local public pensions.”
Mr. Patterson acknowledged the following standout systems for their average yearly performance over the 20-year period ending September 2012:
- Dallas Police and Fire Pension System 9.11 percent
- El Paso Firemen and Policemen’s Pension Fund 8.81 percent
- Houston Municipal Employees Pension System 8.79 percent
- Austin Police Retirement System 8.77 percent
The Texas Association of Public Employee Retirement Systems (TEXPERS) is a statewide voluntary nonprofit association to provide quality education to trustees, administrators, professional service providers and employee groups and associations engaged or interested in the management of public employee retirement systems. Today, TEXPERS’ member systems represent approximately 300,000 active and retired participants and approximately $22 billion in assets. The organization is based in Houston (www.TEXPERS.org).
To download a free copy of the TEXPER’s report, “Asset Allocation and Investment Performance of Texas Public Employee Retirement Systems”, click HERE.
© 2013 PEPD • Private Equity’s Leading News Magazine • 3-6-13