Streams

State pension fund down more than 7 percent this quarter

Tuesday, November 22, 2011 - 02:35 PM

Despite the reality, you have to give it to State Comptroller Thomas DiNapoli for trying to put the best spin on the situation possible in the headline, "DiNAPOLI: PENSION FUND REMAINS STRONG IN MIDST OF SLUGGISH ECONOMY."

Strong, of course, is a relative term. But concretely, the state's pension has fallen by an estimated 7.48 percent this fiscal quarter. The fund now stands at $133.8 billion.

“Like almost all investors, the Fund has been affected by the sluggish economy and increased volatility in the markets,” DiNapoli said in the statement. “The Fund remains one of the strongest in the U.S. and our diversified portfolio will keep it secure and poised for strong returns in the coming months.”

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Comments [2]

Larry Littlefield

Consider this, if the state (or NYC) were to sell its stocks to pay benefits this year or the next few, what could be used to pay the benefits of current public employees, all of whom are owed pensions?

The answer is that pension funds can't sell their investments, net.  They can just sell some to buy others.

So what can be used to pay benefits?  Interest and dividends.  The current dividend yield is 2.0%.  The interest rate on 10-year Treasuries is about the same.

Meanwhile, the payout level keeps going up due to ongoing pension deals and automatic "cost of living" increases.

Nov. 22 2011 08:24 PM
Larry Littlefield

Consider this, if the state (or NYC) were to sell its stocks to pay benefits this year or the next few, what could be used to pay the benefits of current public employees, all of whom are owed pensions?

The answer is that pension funds can't sell their investments, net.  They can just sell some to buy others.

So what can be used to pay benefits?  Interest and dividends.  The current dividend yield is 2.0%.  The interest rate on 10-year Treasuries is about the same.

Meanwhile, the payout level keeps going up due to ongoing pension deals and automatic "cost of living" increases.

Nov. 22 2011 08:24 PM

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