The Free Press, Mankato, MN

January 30, 2013

Your View: State pension systems better off after 2010 reforms

Laurie Fiori Hacking, executive director, TRA Dave Bergstrom, executive director, MSRS Mary Most Vanek, executive director, PERA Susan M. Barbieri, communications officer, Teachers Retirement Association, Public Employees Retirement Association Minnesota State Retirement System

— A recent Associated Press article picked up by the Mankato Free Press stated that Minnesota's public pension plans are "worse off than they were" before sustainability legislation was enacted in 2010. This claim is incorrect in our opinion.

The numbers used in the article to back up this claim average gain and loss experiences of the funds over five years. Since only two years have passed since the 2010 pension reforms, it is highly misleading to cite these numbers and build a case that the funds are worse off.

In fact, on a market -- or real -- value basis, the Minnesota State Retirement System General Plan has improved from 65.6 percent funded in 2009 to 82 percent funded in 2012, thanks in large part to the 2010 reforms. The Public Employees Retirement Association General Plan went from 53.8 percent funded in 2009 to 73 percent funded in 2012. And the Teachers Retirement Association went from 59.8 percent funded in 2009 to 72.5 percent funded in 2012. In total, the 2010 reforms reduced benefit liabilities for the pension funds by $5.9 billion.

In addition, the article unfairly cherry-picked a particularly bad investment return year to create the wrong impression about the period following the 2010 reforms. The article stated that the State Board of Investment "saw only a 1.5 percent rate of return" in 2011. True enough. But SBI also returned 14.4 percent in 2010 and 13.7 percent in 2012, facts that the article omitted. Since 1980, the SBI has returned an average of 9.9 percent per year, placing it in the top third among institutional investors nationwide.

The boards of directors, executives and stakeholders of the three statewide retirement systems continually monitor the funds" health and have a history of recommending proactive reforms that the state Legislature has adopted in a bipartisan manner to ensure financial stability. Skewed stories such as these do a disservice to our 729,000 active and retired members as well as taxpayers. Please be more thorough and accurate in the future.