RI pension fund earned 11% last year as market rebounds

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Rhode Island’s state pension fund earned 11.1% in the 2012-13 fiscal year, a big improvement over its 1.4% rise the prior year as a worldwide market rebound boosted returns, Treasurer Gina Raimondo’s office announced Wednesday. The fund’s assets totaled $7.55 billion as of June 30.

The 11.1% return came in below the 11.3% return of the fund’s benchmark over the same period. It was also less than the Massachusetts fund’s 12.7% return or CalPERS’ 12.5% increase. Meanwhile, a status conference on progress in mediating the union lawsuit challenging the state’s 2011 pension law is set for Aug. 6.

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• Related: Chart: How Raimondo has changed RI’s pension investments (April 4)

10 thoughts on “RI pension fund earned 11% last year as market rebounds

  1. One reason more money is going out than coming in to the pension fund is because now workers only contribute 5% of salary instead of the 8.75% and 9.5% before so-called pension reform. This is one way to “cook the books.” The formula is reduce projected rate of return to up the unfunded liability, and then require workers to contribute half the amount they used to. Guess what? More liability.

  2. Caprio will have his work cut out for him to try to restore the pension system.
    Gina never understood it and has Ruined it!

    • B you are correct but I believe he can do it. He needs to get reelected to thst seat. I watched a cable accexx program, STRAIGHT TALK. Several weeks ago, Raimondo appeared and this past week Caprio was on the program. There’s NO comparison. She is a lightweight in spite of her academic credentials. The host tiptoed around her with few questions. When Caprio was on the program, the same host peppered him with questions which he answered without hesitation. It’s too bad more people don’t see these programs. I have seen her on many of these programs and I don’t see interviewers challenging her answers the way they do to other politicians. Perhaps that is the only way they can get her to appear on their programs.

  3. Pension out flow double the inflow. That should raise a red flag for someone.
    Detroit had the same problem plus they had a decrease in population. As we go forward and more people leave RI and proper use of technology we will need fewer people on the state and local government payrolls, thus less inflow.
    Add in the pension cola increases you have a problem that our leaders do not want to acknowledge…..good luck

    • The reason the outflow is bigger than inflow is because employees now contribute less than half because of the pension changes. See my above comment.

  4. Hedge Fund Managers Capture Investment Profits Mostly For Themselves

    • From 1998-2010 hedge fund managers earned $379 billion in fees. The investors in their funds earned only $70 billion in investing gains.
    • Managers kept 84% of investment profits, investors netted 16%.
    • As many as 1/3 of hedge funds use feeder and/or fund of funds. This bringsthe industry fee total to $440 billion – that’s 98% of capture. Investors are left with $9 billion dollars – merely 2%.

    Source: Simon Lack, The Hedge Fund Mirage

  5. This is only impressive if you have money in the bank. The S&P is up 20%. She would have done better with an index fund. I am not impressed with her at all.

  6. Warren Buffet and John Bogle with over one hundred years of successful investment experience combined both agree that hedge funds over the long hall have underperformed the overall market . They cite the excessive fees charged as a major reason for this underperformance. So with that being in fact borne out by experience, of all types of investments pension funds with a significantly longer time horizon should heed the advice of these two exceptional investors and strive for lower fees. Yet Gina Raimondo has chosen to ignore the lessons of money managers far greater than she and has pursued hedge funds based on short term impacts related to the “crash” of 2008-2009. Had the pension system just maintained a less radical approach the market returns have substantially rebounded without the extra cost and short term hysteria the treasurer has engendered. There’s no doubt Gina’s fawning to Wall Street and outside donors is politically motivated and has nothing to do with protecting the pension system and its retirees.

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