Iowa Public Employees’ Retirement System trust fund buffeted by volatile investment market

Iowa Public Employees’ Retirement System trust fund buffeted by volatile investment market


DES MOINES — Iowa’s largest public employees’ retirement fund took a $6.4 billion hit when the COVID-19 pandemic and other factors plunged the U.S. stock market into recessionary numbers this year, but has since rebounded somewhat as a federal rescue package eased some investor concerns, officials said Tuesday.

The Iowa Public Employees’ Retirement System trust fund had an estimated value of $36 billion on Feb. 14, but that portfolio dipped roughly $6.4 billion on March 20 before working its way back to the current $31.5 billion value, said IPERS spokeswoman Shawna Lode.

“Since then, the markets have improved, and IPERS has regained some losses,” she said Tuesday.

Lode noted that the $31.5 billion value of the trust fund portfolio is down about 12.5 percent, or $4 billion, since the end of the 2019 calendar year.

“The IPERS trust fund is strong, and we are positioned to make pension payments well into the future,” she added.

According to IPERS’ fiscal 2019 report, about 70 percent of the fund’s benefit payments come from investments for its 368,292 current, former and retired public employees of state government, school districts and local governments.

The U.S. stock markets have been rocked by extreme volatility due to concerns over the pandemic.

The year’s first quarter closed Tuesday, with the 124-year-old Dow Jones industrial average registering its worst quarterly drop since the fourth quarter of 1987. The three-month skid represented the steepest first-quarter drop in the index’s history, according to Dow Jones Market Data.

The S&P 500 also will be down, by 19.6 percent, its worst first quarter since 1938.

While the Dow has climbed back by more than 18 percent since it hit its bottom this quarter, on March 23, it still is far below its relatively recent record highs due to volatility related to the coronavirus, an economic “hangover” from an international trade war, and the plummet of oil prices due to a dispute between the Russians and the Saudis.

The market volatility comes at a time when IPERS is undergoing a leadership change with outgoing longtime CEO Donna Mueller set to retire at the end of this month and Gov. Kim Reynolds announcing Tuesday she has appointed Gregory Samorajski, former deputy commissioner of the Alaska Department of Revenue, to replace Mueller, who has served in that role since 2003.

Samorajski, who will be paid an annual salary of $205,150, will begin his new duties on May 1 in an appointment that is subject to confirmation by the Iowa Senate.

The IPERS trust fund serves more than 368,000 members. It pays out about $2.2 billion annually, $1.9 billion of which is paid in Iowa.

IPERS weathered a similar downturn in the 2008 recession that zapped investments by the billions.

Currently, the fund’s ratio of assets to liabilities to 83.73 percent as of last June 30.

Contributions by employees and employers totaled $1.294 billion during the past fiscal year, while benefits paid hit $2.223 billion (about $1.9 billion going to beneficiaries who remain in Iowa) with the remaining $929 million funded by earnings and sale proceeds from the investment portfolio — which posted a 8.35 percent rate of return last fiscal year.

IPERS’ average retiree puts in 23 years of service before ending work at age 61 and receiving an average annual benefit of $17,484, according to the IPERS’ fiscal 2019 annual report.

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