Texas Teacher Pension Needs 21% Return to Keep 80% Funded Ratio

[marmar]

(Bloomberg) The Teacher Retirement System of Texas needs an annual return of 21 percent in the year ending Aug. 31 to maintain an 80 percent funded ratio, the level actuaries consider adequate to cover liabilities, said its deputy director.

“We’d have to have remarkable investment returns for the rest of the year to reach 80 percent,” Brian Guthrie, the fund’s executive director-designate, said at a Texas House hearing today in Austin.

The fund’s investment return was 14.7 percent in 2010, the best among large public pension funds, Chief Investment Officer Britt Harris said at an April 7 board meeting. The fund had about $109 billion on April 1, up from $95.7 billion in September.

Even with the gains, the pension’s funded ratio -- the portion of promised benefits covered by current assets -- dropped to 81.3 percent as of Feb. 28 from 82.9 percent on Aug. 31, 2010, because of trading losses in 2008 and 2009 included through a process called smoothing, Executive Director Ronnie Jung said April 7. ............(more)

The complete piece is at: http://www.bloomberg.com/news/2011-04-19/texas-teacher-pension-needs-21-return-to-keep-80-funded-ratio.html

[Bozita]

1. I'd suggest using the assets to buy an investment bank

The 21% won't be a problem.