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CT’s Pension Funds Lose Value in 2012

According to a report the state pension funds had a negative return.

Connecticut’s pension funds are due to a $44.8 billion deficit, according to one study. Now, the fund is dealing with more problems after experiencing a negative return in the 2012 fiscal year.

According to Reuters, the state’s two pension funds for teachers and the other for state employees lost .9 percent of their $24 billion value. The year before was a record year, with a 21 percent return. The budgeted annual rate of return is more than 8 percent for both funds.

As of the fiscal year 2010 — the most recent year included in a Pew Center on the States study — Connecticut’s pension was only 53 percent funded, leaving a liability of $44.8 billion. The only state with a worse percentage is Rhode Island.

Recent reforms enacted since Gov. Dannel P. Malloy have not been included in the time frame of the study, such as layoffs and reductions in benefits. According to the study, Malloy reportedly proposed a pension funding plan “calling for the state retirement system to reach 90 percent funding by 2025 and full funding by 2032." 

Howard Lasser August 10, 2012 at 11:46 PM
There is a lot of misinformation being posted here. This is totally incorrect. First of all you do not fund the full cost of the pension at 100%. You fund the calculated present value of the earned liability. Second, the recommendation by the Retirement Benefits Advisory Committee (RBAC) is not to borrow money to fund the Pension. That is totally wrong! As of the end of the fiscal year, June 30, 2012, the town added $1 million to fund balance. The recommendation is to use a portion of this to fund the pension at 100% of the Actuarial Recommended Contribution for the current fiscal year. They also offered a suggestion as to how we can continue to fund at 100% of the annual contribution amount going forward. In NO way does it involve any borrowing. To address other statements posted here, the Town Treasurer does not manage the pension funds. The Board of Selectmen is responsible for the management of the pension funds. This past year, based on the recommendation of the RBAC and after a long search and interview process, the pension funds, by act of the Board of Selectmen, were put under the management of Wells Fargo Investor Services. The Treasurer serves as one member of the RBAC which is also made up of a representative from the Board of Finance, the Board of Selectmen, the Town’s Controller, the Board of Education’s Financial Director and three members from the community.
Linda Taylor August 10, 2012 at 11:51 PM
Rob, I also do not dispute the fact that these people have earned these pensions and are entitled to them..The problem is towns are going bankrupt trying to fund these pensions now. There was no foresight! hindsight is 20/20!!
Rob Gianazza August 11, 2012 at 12:27 AM
Howard, I grow tired of your condescending attitude. Spin it anyway you want. First of all, the money that you wish to take from the fund balance was the money that was returned to the town from the insurance settlement for the tree issue several years ago. It wasn't a windfall. Second, the presentation was talking about how to make up the shortfall to get us to 100% funded which included interest payments. Perhaps you think that bonding and borrowing are different things. To taxpayers, it means the same thing. Here's a bit of advice, try talking TO the people instead of AT them, maybe your message will be better received.
Howard Lasser August 11, 2012 at 01:04 AM
Rob, you misunderstood the presentation. What was stated was that if we fail to fund the Actuarial Recommended Amount it could impact our credit rating so that when we go to borrow, for things already approved (roads, Kids Kingdom, Hucklebury roof, water lines, etc. Not Pension), it could cost the town additional interest. There is no spin here just that you apparently did not understand what was presented. That is good feed back . If someone who pays so close attention did not catch what was actually intended to be conveyed obviously the presentation needs to be more precise.
Steven DeVaux October 19, 2012 at 05:51 PM
The pensions lost money in the best market in 5 years? With this blot on his record it's clear that Malloy couldn't manage a lemonade stand without a lemonade tax.

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