The Public Employees’ Retirement System of Mississippi (PERS) had a great year in 2016 earning a 9.24% return on its investments. Here is the PERS Investment Report for the period ending December 31, 2016. That’s well above the 7.75% assumed return for meeting future obligations to state retirees. This is good news.
The bad news is that PERS Executive Director Pat Robertson has previously stated that PERS actually needs to earn 13% to get back to where it is 80% funded. Even at 80%, that would leave a 20% underfunded hole that someone would have to fill.
Some actuaries have questioned the assumption that an 80% funded pension plan is healthy. These experts argue that while 80% funded may or may not be ok under the circumstances, the goal should always be 100% funded. Otherwise, someone (government or retirees) will have to fill the gap.
But at least things are improving.
Monday morning update: This Bloomberg article by Danielle DiMartino Booth calls the public pension crisis too big for markets to ignore. It notes that government pensions are unfunded by $1.9 trillion. The article describes public pensions’ assumed rate of investment return as “fantasy figures.”