Hawaii Pension Fund Gains 21% Through June
08/16/2011
Fotalia
Hawaii's public-employee pension fund performed well for the year ended June 30 — more than doubling its actuarial investment yield.
But the investment scene has dramatically changed since then, with the U.S. stock market this month seeing its biggest one-day drop since the global financial crisis of 2008. U.S. treasuries are producing record-low yields.
The Hawaii Employees' Retirement System's portfolio of investments produced a return of 20.7 percent for the year ended June 30, according to an investment report released Tuesday. (The report by Pension Consulting Alliance is not available online.) That compares to a 12 percent return for the same period last year.
The portfolio — which includes a mix of fixed income assets, equities, private equity investments and real estate — also saw its total value increase 18.3 percent to $11.6 billion as of June 30.
"The ERS portfolio produced positive absolute performance and exceeded the assumed actuarial rate of 8 percent in three of the last five 12-month periods ending June 30," the Pension Consulting Alliance report said.
The state's budget director called the report reassuring, but quickly noted that the gains are no longer relevant.
"If you look at the report by itself, they're definitely on a good trajectory for the ERS because they exceed the assumed rate of return," Budget and Finance Director Kalbert Young told Civil Beat. "But, of course, you don't get to look at these in a vacuum. In the context of today, they're not relevant anymore."
It's also unclear if the fund's $7 billion unfunded liability grew as a result of market instability. Hawaii's unfunded liability is calculated every two years.
