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An analysis printed Wednesday by the Wall Street Journal says fiscal 2022 was a bad year for public pension funds — in fact, their worst year since 2009.
The analysis by the Wilshire Trust Universe Comparison Service says nationwide, public plans lost a median 7.9 percent.
Much of the damage came in the final three months of the year when global markets came under intense pressure, Michael Rush, a senior vice president at Wilshire, told the Journal.
According to the story, the primary culprits were inflation and a highly volatile stock market. He and other analysts said plans with more equity in stocks were harder hit than more conservative plans.
Nevada PERS, which provides pension benefits to over 100,000 public employees in the state, also took a hit. But Chief Investment Officer Steve Edmundson says the state wasn’t hit as bad as a lot of public plans or the industry as a whole.
He said Nevada PERS finished the year June 30 down 5.2 percent net of all fees. He said that puts the Nevada PERS performance in the top third of all public pension plans for the year.
Nevada PERS is considered a large public pension plan despite the small size of the state because it includes all public employees — state and local government workers, police and fire as well as teachers and even small improvement districts.
Its portfolio is worth about $50 billion and, several years ago, the Wall Street Journal rated it as one of the best managed public pension plans in the nation.
Edmundson said that the plan shouldn’t be measured by what happened in 2022.
In fact, he said all public pension plans should be measured by “long term” performance.
He said over the last three years, Nevada PERS was up 9 percent and 9.1 percent over the last 10 years.
“We’re not one-year investors. We’re 30-year investors,” he said.
Edmundson said Nevada’s long-term assumption is a gain of 7.5 percent annually and that, with the exception of 2022, nearly every recent year has been above that.
“I’m very pleased with the way the portfolio performed last year,” he said.
But he said the rollercoaster ride probably isn’t over yet: “Over the coming 12 to 24 months, it wouldn’t surprise me if the markets continue to be volatile.”
The good signs, he said are higher interest rates and lower values for equities.
In particular, he pointed to the rise in interest rates. Edmundson said the 10-year Treasury Bond interest rate was 1.5 percent at the start of the year but finished in June at 3 percent.
“That’s a really positive event for pension funds,” he said.
He said bond yields are higher now, “which really helps public funds on a long-term basis.”
Finally, he said stocks were, “up a bunch” in July.
“We’ll keep our seatbelts fastened over the next year or so but we’re in a much better position now because of the increase in interest rates.”
Edmundson will present his annual report to the PERS board at its meeting on Thursday, Aug. 18.
