For the second year in a row, Maryland’s retirement and pension system beat its target return on investment, earning 8.06% and raising the fund that pays for retired teachers and state employees to almost $52 billion, a gain of $2.8 billion.
According to a national tracking firm, Maryland’s return was about average for large public funds, largely fueled by returns on public and private equity stocks.
Last year’s return was 10%, the highest in years, but in the long-term, Maryland still falls below its 7.50% annual target. It has earned an average of 7.15% over the past five years and 5.5% over 10 years, leaving the fund with about $19 billion more to make up for the promises it has made to provide pensions for state employees and teachers.
“Private equity provided 19.6% net of all fees and expenses and continues to be the best performing asset class for the System. Public equities provided 10.6% return, closely followed by private real estate at 9.5%,” said Chief Investment Officer Andrew C. Palmer. “At the other end of the spectrum the rate sensitive portfolio provided modest positive returns despite ten-year U.S. Treasury yields rising more than 0.5% for the year.”
State Treasurer Nancy Kopp, who chairs the pension system board, emphasized the long-term sustainability of the system. Detailed figures are not available for fiscal 2018, but last year the various pension plans for teachers, employees, law enforcement and judges paid out over $3.6 billion to 156,000 retirees and beneficiaries. The payout figure is more than matched by investment earnings plus current contributions from employees and taxpayers.
Click here to read the rest of the article written by Len Lazarick over at the Maryland Reporter