RI pension fund earned 11.6% during 2016-17

PROVIDENCE, R.I. (WPRI) – Rhode Island’s $8-billion state pension fund earned 11.6% on its investments during the 2016-17 fiscal year, General Treasurer Seth Magaziner’s office said Wednesday.

The pension fund, which pays for the retirement benefits of state and local workers, added $851.4 million and beat its benchmark during the year, according to the treasurer’s office. The fund’s value stood at $8.04 billion as of June 30, its highest level since May 2015. Its all-time record high was $8.7 billion in October 2007.

Last September, Magaziner announced that he would significantly scale back the pension fund’s investments in hedge funds, which were added to the portfolio by his predecessor, Gov. Gina Raimondo, when she was treasurer. His office dubbed the new approach “Back to Basics.”

“Our ‘Back to Basics’ investment approach is improving investments returns for the fund,” Magaziner, a first-term Democrat, said in a statement. “My office will continue to work on strengthening retirement security for our public employees.”

Connecticut said earlier this week its $32-billion pension fund earned a 14.2% investment return for 2016-17, nearly three percentage points more than Rhode Island’s. The Massachusetts Pension Reserves Investment Management Board has not yet announced its results.

The state’s two largest pension systems, for state employees and teachers, were 56% and 58% funded, respectively, as of June 30, 2016, according to their most recent actuarial valuations. The unfunded pension liability was $1.9 billion for state employees and $2.7 billion for teachers. Those shortfalls are supposed to be closed over the coming decades through rising contributions from taxpayers and workers, as well as investment returns.

Here is a breakdown from the treasurer’s office of how the pension fund’s assets were invested as of June 30:

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter and Facebook