The pension systems for Texas cities’ firefighters, police and municipal employees beat actuarial investment return targets for the last 20-year period and outperformed global 60/40 returns in the 10- and 15-year periods.
The findings were tallied from an annual survey conducted for the Texas Association of Public Employees Retirement Systems by the Maples Group, market leaders in the provision of legal, fiduciary, fund, regulatory and compliance services. Forty (40) Texas pension funds representing approximately $26.69 billion in total assets responded to the survey for the period ending September 30, 2021.
Combined, their FY2020 dollar-weighted portfolios allocated 52 percent to domestic, international, and global equities; 25 percent to alternative strategies; 23 percent to fixed income; and -0.6 percent to cash and short-term securities. The alternative strategies component included private equity, real estate, venture capital, marketable alternative strategies, commodities, and diversified infrastructure.
The study confirmed that the local pension systems who provide secure retirement benefits for public servants successfully exceeded their average 7.3 percent target return with a 7.7 percent average annual return for the 20-year period. For the trailing 15-year period, survey respondents’ 6.85 percent average annual return outperformed the Global 60/40 portfolio return of 6.0 percent for the same period. For the trailing 10-year period their 8.86 percent return outperformed the Global 60/40 portfolio return of 7.99 percent.
“When dedicated public employees retire after 20-plus years of service, their retirement security hinges on pension fund investing performance that meets or exceeds investment targets,” said James Smith, the president of TEXPERS’ Board of Directors. “Even as pension systems have lowered their target returns because of reduced expectations for global economic performance, the pension systems’ diversified portfolios have delivered. The partnership of the City sponsors with their pension systems to maintain appropriate funding has been a major contributing factor to the success of Texas pension funds.”
TEXPERS released its yearly “Report on the Asset Allocation and Investment Performance of Texas Public Employee Retirement Systems” at its Annual Conference for pension fund trustees and staff in Fort Worth, held April 3-6. Approximately 523 people attended the event at The Worthington Renaissance Hotel.
NOTE: The global aggregate index referenced in the fourth paragraph is combination of 60% of the MSCI ACWI equity index and 40% of the Bloomberg Barclays Global Aggregate fixed income index
