Report: State Pension Investments Gain 10 percent

By Beacon Staff

HELENA — Managers of state pension money performed better than average, showing a return of 10 percent on three-year investments, a new report reviewed on Wednesday showed.

The benchmarking report from consultants was discussed by the Montana Board of Investments and indicated the returns exceeded the average for other public investment systems.

“We are doing an excellent job,” said Chief Investment Officer Cliff Sheets. “I think if you take a look at it with the underlying explanations, it is all good and it is getting better.”

Board member Gary Buchanan said he was concerned about big growth in outside costs for managing the money. The issue needs to be closely watched, he said, adding that he hopes a final tally will show costs decreased during the past year.

Investment managers said the performance takes those costs into account. They also said the board has improved its way of managing the funds.

“I don’t think there are any excuses we need to make,” Sheets said.

Earlier this summer, the board reported that Montana’s pension funds had returned to their pre-recession market value.

The net gain on pension fund investments was just over 13 percent for the fiscal year ending June 30. That put the total value of the funds at $8.54 billion, reaching their late 2007 value before the 2008 financial meltdown resulted in a loss of a quarter of their value.

The Legislature earlier this year passed two major bills reforming the pension systems that ask employees and their public employers to pay more into the system. The moves are expected to avoid multi-billion dollar shortfalls that had been projected in the coming decades.

The board was expected to earn about 8 percent on investments in order to help balance the systems.