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Connecticut’s largest pension funds return more than 16% in 2017
Investors - MARCH 22, 2018

Connecticut’s largest pension funds return more than 16% in 2017

by Jody Barhanovich

Connecticut’s two largest pension funds, the State Employees’ Retirement Fund (SERF) and the Teachers’ Retirement Fund (TRF), generated robust investment returns, net of expenses, of 16.51 percent and 16.33 percent, respectively, for calendar year 2017, according to State Treasurer Denise Nappier.

The strong returns helped propel the overall value of the Connecticut Retirement Plans and Trust Funds (CRPTF), which includes six pension plans and nine trust funds, to $34.4 billion, its highest level ever at the end of a calendar year. Overall, the CRPTF exceeded the investment performance of 70 percent of its peers, according to Wilshire Trust Universe Comparison Service data.

Connecticut’s SERF and TRF outperformed their benchmarks by 74 basis points and 63 basis points, respectively, and exceeded their respective actuarial investment assumptions of 6.9 percent and 8.0 percent. Together, the retirement funds represent 91 percent of the state’s pension and trust fund portfolio.

Treasurer Nappier described the pension funds’ performance as “a much needed boost for the asset side of the pension fund ledger.” She added, “This outperformance is especially needed at a time when the state is facing serious fiscal difficulties. When we perform above expectations, those gains can help trim the state’s pension contributions going forward.”

In addition, the Connecticut Municipal Employees’ Retirement Fund (CMERF), the State’s third largest fund, earned 14.53 percent, net of expenses, exceeding its benchmark by 50 basis points. CMERF has a funding ratio of 86 percent, and it also outperformed its investment return assumption of 8.0 percent.

The performance of the CRPTF was led by the emerging, domestic and international developed equity markets, which returned 34.9 percent, 24.3 percent and 21.8 percent, respectively. The emerging market debt portfolio of the CRPTF returned 14.2 percent. Additionally, the real estate and private equity portfolios had strong performances, posting returns of 7.3 percent and 12.9 percent, respectively.

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