Re: “The truth about PERA,” May 11 guest commentary.
On one point, the Colorado Public Employees’ Retirement Association agrees with guest columnist Blaine Rollins: Hope is not an investment strategy.
In fact, hope has never been part of PERA’s investment strategy.
PERA has instead relied on solid investment strategies created under the direction of the board of trustees with the help of highly experienced staff and consultants. PERA’s investment strategies match its mission, with an investment horizon of decades and a focus on maintaining the stability of the fund.
As a result, our investment portfolio is broadly diversified across and within asset classes. Since PERA adopted a benchmark for comparison purposes in April 2004, PERA’s actual investment returns have exceeded it by more than $1 billion, according to our most recent annual financial report.
As a very large investor with $40 billion in assets, PERA has access to attractive investments that aren’t available to the typical individual investor. Our costs for managing investments are also far lower than those paid by a typical individual investor.
Like other investors, PERA took a significant hit during the global economic crisis. But even when that period is considered, PERA’s investments earned annualized investment returns of 9.3 percent over the quarter century ending in 2009. While the 2010 results haven’t been formally released yet, PERA’s investment returns last year comfortably exceeded our long-term 8 percent assumption.
Mr. Rollins is correct that PERA’s 8 percent annual return assumption is in line with other public pensions.
Over the quarter century ending in 2008, 21 percent of money in the PERA trust funds came from employees’ own contributions while 19 percent came from public employers who are supported by taxpayers. The rest (60 percent) comes from investing these contributions.
These investment returns allow PERA to provide reasonable benefits for public servants without placing an excessive burden on taxpayers. In fact, employer contributions to pensions account for just 2.16 percent of all Colorado state and local government spending, according to 2008 U.S. Census Bureau data
Jennifer Paquetteis chief investment officer of Colorado PERA.
