The Arkansas Highway Employees Retirement System’s investments fell in value in the fiscal year that ended June 30 by $246 million to $1.46 billion amid turmoil in the stock and bond markets, system executive secretary Robyn Smith said.
The system’s return on investment in fiscal year 2022 was minus 9.16%, Smith said.
That ranks just ahead of the minus 9.35% average for similarly sized public pension systems, according to San Francisco-based investment consultant Callan Inc.’s performance evaluation program.
Meanwhile, the Arkansas Judicial Retirement System’s investments fell by $50.3 million in fiscal year 2022 to $296.9 million, the system’s investment consultant, Callan, reported.
The judicial pension system’s return on investment was minus 12.32%, trailing the average of minus 10.10% for pension systems of similar size, Callan reported.
The Highway and Judicial Employees’ Retirement Systems are two of the smaller state government retirement systems.
The second largest state government retirement system is the Arkansas Public Employees Retirement System.
The Public Employees Retirement System’s return on investments in fiscal 2022 was minus 10.54%, falling $1.5 billion in the latest fiscal year ended June 30 to $10.04 billion amid lower stock and bond markets, Callan reported in mid-August.
The system’s return on investment ranks in the bottom 32% among similar public pension systems nationwide, Callan reported to the Arkansas system’s board of trustees.
Fiscal year 2022 figures for the state’s largest pension system, the Arkansas Teachers Retirement System, won’t be available until late next month, according to the system’s executive director, Clint Rhoden.
In mid-August, Rhoden said his preliminary estimate of the system’s return on investment for fiscal year 2022 was roughly minus 4.5%.
Rhoden has estimated that the system’s investment was last valued at approximately $20.3 billion and the system’s investment was valued at $21.1 billion as of June 30, 2021. The value of the system’s investment in fiscal year 2022 was bolstered by net proceeds from a litigation settlement at the beginning of this year.
The General Assembly, through Act 454 of 1949, established the Arkansas State Highway Employees’ Retirement System.
Over the course of fiscal year 2022, the Highway Employees Retirement System made changes to its portfolio to reflect turbulence in the overall market, Smith said. This led to a reduction in equity investments of $1.11 billion on June 30, 2021, to $743 million on June 30, 2022, it said.
In addition, the system’s government bond holdings increased from $244.3 million to $319.2 million and cash holdings increased from $244 million to $297 million, while corporate bonds decreased from $105.9 million to $105.6 million. dollars, according to Smith.
The system earned a return on investment of 29.86% in fiscal year 2021, which ended on June 30, 2021, as its investments grew to $1.71 billion.
The system has averaged an investment return of 8.63% per year over the past five years to rank in the top 5 percent of similarly sized pension systems nationwide. Its average return of 8.39% over the past 10 years ranks it in the top 23 percent of similarly sized pension systems nationwide, Callan reported.
The system’s target rate of return is 7.5% per year, Smith said.
As of June 30, 2021, the system’s unfunded liabilities totaled $198.4 million with an expected payback period of 12 1/2 years, she said.
The Highway Employees Retirement System has more than 6,000 working and retired members.
The system paid out $125.6 million in retirement benefits in fiscal year 2022, Smith said.
The employer paid $27.9 million into the system in fiscal year 2022, while employees contributed $11.9 million into the system, she said. The state pays 14.9% of the salary into the system, while employees pay 7% of their salary into the system.
As of June 30, 2021, the system had 3,367 members working at an average salary of $46,532 a year and another 306 members working in deferred retirement at an average salary of $31,917 a year, she said.
As of June 30, 2021, the highway retirement system also had 2,603 service retirees with an average benefit of $34,874 per year, 415 disability retirees with an average benefit of $16,971 per year, and 517 beneficiaries with a average benefit of $15,908 a year, she said. .
JUDICIAL PENSION
Arkansas’ judicial retirement system—created by the General Assembly through Act 365 of 1953—is for the state’s Supreme Court, Court of Appeals and circuit judges.
In fiscal year 2022, the value of the Judicial Retirement System’s domestic stock investments fell from $131 million on June 30, 2021 to $108.9 million, while the value of its international stock market investments fell from $49.9 million to $32.1 million dollars, according to Callan.
The system’s domestic bond investments fell in value from $139.8 million on June 30, 2021, to $122.5 million on June 30, 2022, while real estate investments increased in value from $26.2 million to $33.2 million, Callan reported.
This comes after the system saw a 25.99% return on investment in fiscal 2021, ending that fiscal year worth $347.2 million.
The system has averaged an investment return of 6.28% per year over the past five years to rank in the top 45% of pension systems of similar size and 7.05% per year over the past 20 years to rank in the 39% higher pension systems. of similar proportions, Callan reported.
The system’s target rate of return is 5.75% per year.
As of June 30, 2021, the system’s unfunded liabilities totaled $5.9 million, according to the system.
The system has more than 300 working and retired members.
In fiscal year 2022, the system paid $17.06 million in pension benefits, while employers contributed $8.6 million to the system and working members contributed $1.3 million to the system, according to the system.
The system includes 145 working members with an average annual salary of $181,097 and 176 retired members with average annual benefits of $97,386 per year.