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Tuesday, November 25, 2008

Pennsylvania state pension fund down $4.3 billion June-Sept; more loss ahead

 The Pennsylvania State Employees' Retirement System investment portfolio fell to $29.3 billion on Sept. 30, from $33.6 billion just three months earlier, as the fund's unusually large investments in hedge funds, private equity and real estate failed to protect from falling share prices combined with the usual pension payouts. Year-to-date, investment returns are down 14 percent, about the same as other big pension funds, said SERS in this statement. 

 The results don't yet include private equity and real estate losses from after June 30; SERS doesn't plan to report those losses until next year. Additional losses are expected during the current quarter, SERS added. Retiree pensions are safe, but, as pension assets drop, taxpayers will be expected to pay larger subsidies in future years.  

 Seeking to put the losses in context, SERS chairman Nicholas V. Maiale, a Center City lawyer, lobbyist, South Philadelphia ward leader and former state representative, said in the release that "in the 2000-2002 bear market, SERS incurred investment losses of $6 billion, but earned $23 billion in the five-year bull market that followed."
Posted by Joseph N. DiStefano @ 2:38 PM  Permalink | 2 comments
Comments   
  • 0 like this / 0 don't   •   Posted 5:38 PM, 11/25/2008
    $4.3 billion and counting. Something has to be done to stanch the flow because 2009 doesn't look very bright at all.
    — david wayne
  • 0 like this / 0 don't   •   Posted 5:40 PM, 11/25/2008
    This one again illustrates the problems with defined benefit plans, and with the process of promising something that the tax payers will eventually have to cover.
    — JFranklin


2 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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