The Rhode Island Retirement Board was presented with a progress report on the state’s pension reform law last week. The state’s actuary, Joseph Newton, prepares a report every year to help lawmakers determine how much money needs to be set aside for future pension benefit payments, among other things.
The report shed light on the pension fund’s performance in fiscal year 2013.
The Providence Journal summarizes the findings:
The fund, with a market value of $7.6 billion, had an 11-percent rate of return for the year that ended June 30, 2013 — far better than the 1.4-percent rate of return the previous fiscal year and exceeding the fund’s 7.5-percent target. (Nationwide, the median return for public funds with more than $5 billion in assets was 12.4 percent.)
But when averaged over the last five years, the rate of return for the Rhode Island fund is 6.17 percent. Over 10 years: 7.24 percent.
The number of active state employees — whose contributions are important in keeping the pension fund healthy — has dropped slightly (1.6 percent) since 2003 to about 11,280 as of June 30, 2013. Meanwhile, the number of retirees has increased by about the same number to 11,139.
Annual cost-of-living adjustments were suspended under the 2011 pension overhaul law until the fund is 80 percent funded. Combined, the state employees and teacher pension plans are 57.3 percent funded. Annual COLAs are currently projected to remain suspended until 2032.
Rhode Island’s sweeping pension reform became law in 2011, and immediately decreased the state’s unfunded liabilities from around $7 billion to $4.5 billion, where it stands now.
Joseph Newton said his report “confirms that all the [reform] strategies put in place then are working right down the line of what we were expecting.”