March 8, 2004 – Despite positive news on the state of Government Employees Retirement System investments, Raymond James, board chair, expressed the board's continuing concern on Monday about having to use investment earnings to fund retiree payouts.
In a meeting at the GERS Building, representatives from Segal Advisors told the board that the system had investment earnings of $91.1 million for the fourth quarter of the 2003 calendar year. Segal Advisors oversees the entire GERS investment portfolio, comprising stocks and bonds handled by 17 investment managers.
"The market continues to be strong," Segal's Carol Sung said. "It has been a positive time for the stocks, and it continues to be."
However, $29.7 million of the system's fourth-quarter earnings were used to pay the benefits owed retired government employees.
"It's really the investment earnings that's keeping the system going," James said. "We're taking investment earnings to pay the retirees."
The government makes biweekly contributions into the system, James said, but additional contributions are needed because of increasing benefits paid out to retirees. He said there's currently a $50 million annual shortfall in contributions.
James said the GERS board is discussing the issue with central government officials to seek a solution. He said he doesn't expect a source of funding for the $50 million to materialize all at once, but "there must be some attack on the unfunded liability."
The value of the total GERS portfolio was $1.19 billion as of Feb. 29. The GERS board stipulates that 60 percent of its investments be equity and 40 percent be bonds/fixed income. James said the various investment managers decide on the stocks and bonds within their respective portfolios.
Four of the investment managers — Woodford Capital, MFS Investment Management, Union Heritage and Brandywine Asset Management — presented their performance reviews to the board on Monday. Union Heritage and Brandywine showed a return on their investments for the fourth quarter.
On Tuesday and Wednesday, the board will receive investment overviews from 10 other managers — Alliance Bernstein; Credit Suisse Asset Management; Duncan-Hurst Capital Management; Lord, Abett and Company; LSV Asset Management; MDL Capital Management; Oechsle International Advisors; Oppenheimer Capital; PIMCO; and State Street Global Advisors.
In addition, representatives of The West Indian Co. will present a financial overview of Havensight Mall, which WICO manages on behalf of GERS.
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