Nevada Public Employee Retirement System earns 8.5 percent return
Nevada’s Public Employee Retirement System earned a whopping 8.5 percent interest on its investments in Fiscal Year 2019.
That is higher than the system’s 8.3 percent benchmark and well above the 7.5 percent rate of return the system projected for the year — a rate that critics of PERS said at the time was unattainable.
PERS finished the year with assets totaling $44.1 billion. By comparison, California’s PERS plan earned 6.7 percent on its investments during FY2019.
In fact, Nevada’s plan not only bested California’s in the current year but in the three-year, five-year and 10-year cycles. Over the past 10 years, Nevada PERS has achieved a 9.9 percent return on investment.
In 2016, a Wall Street Journal analysis praised Nevada PERS as one of the best run public pension plans in the nation. In the three years since that article was published, total PERS assets have grown nearly $10 billion and its percentage of assets compared to potential liabilities has improved for four years straight.
The analysis pointed out that, while many public pension plans in the country are only funded well enough to cover a small portion of their total projected liabilities, Nevada PERS was at that time able to cover about two-thirds of its liabilities.
For the FY2018 cycle, the most recent report of system actuaries, the PERS funding ratio was 75 percent — leaving an unfunded liability of 25 percent.
That number is the shortfall PERS would face if the system was dissolved and it had to pay retirement benefits to its more than 100,000 state, local, school district and other public employee members.
The FY2019 valuation won’t be completed and presented to the board until the November meeting but is expected to improve even more.
That, however, is still well short of the 100 percent the American Academy of Actuaries recommends.
The PERS portfolio is spread across a variety of investments with the largest amount — just over $20 billion — in U.S. stocks and another $8.1 billion in international stocks. The system has some $11.1 billion in U.S. bonds and a small amount of cash in private markets including real estate.
Heather Ashbridge, who started with Nevada State Development Corporation in 2008, previously served in several roles with the organization, including assistant vice president and loan officer. She is based in NSDC’s Reno office.