PERSI fund weathering economic storm
Fund remains stable despite recent market drop;
Prudent investment policy ensures member benefits are safe
The Board of Directors for the Public Employee Retirement System of Idaho (PERSI) wants to reassure members and retirees that despite recent market volatility, it remains a stable and secure fund.
“Although the stock market plunge has shaken the stability of the financial system and hurt many public pension funds, including PERSI, I want to assure our members that their retirement is safe,” says PERSI Retirement Board Chairman Jody Olson. PERSI will continue to monitor market fluctuations, but does not plan to alter its basic investment strategy.
Investment performance is a major factor in producing system assets, and a key factor in determining contribution rates for active employees and cost of living adjustments (COLAs) for retirees. PERSI’s investment policy is consistent with the objective of reducing the risk of significant losses. Consequently, the total portfolio is prudently maintained so that assets are chosen in a way that they will respond differently to market stimuli.
Because of this prudent diversification approach, the volatile market is having less impact on the PERSI fund. For example, during the week of September 15th, when the market first began to plummet because of the Lehman Brothers bankruptcy and the AIG rescue, the PERSI fund lost only one half of one percent (-.51 percent).
Over the years, PERSI has learned to position its portfolio to minimize market fluctuations to the extent possible. “Our approach is simple, transparent, very diversified with no leverage, no hedge funds and no derivatives, in large part because there are periods in the market like this every six to 10 years,” says PERSI’s Chief Investment Officer Bob Maynard.
“The reasons for a market downturn may change, but they are anticipated. In fact, current fluctuations are not as bad as one might expect,” notes Maynard. “The investment strategy at PERSI has never been to just get the highest returns; instead, we focus on doing well long-range and over time”
It should be noted that PERSI was up nearly 20 percent at the end of Fiscal Year 2007.
“Our portfolio will continue to be well-funded and provide long-term stability for our members’ retirement future. Defined Benefit Plans managed similar to PERSI, reduce their exposure, so retirees can feel secure their benefits will remain intact. Bob Maynard, our investment managers, and the rest of our portfolio team are to be commended in times like these,” notes Olson. “They will guide PERSI through this down market and put us in a position to quickly rebound when economic conditions improve.”
Questions about PERSI investments or benefits should be directed to the PERSI Answer Center at 334-3365 from the Boise area, or toll-free at (800) 451-8228 from elsewhere in Idaho. For current fund updates, visit the PERSI Web site at www.persi.idaho.gov .
PERSI announces that Don Drum has accepted the role of Executive Director at PERSI. He will replace long-time director Alan Winkle, who is retiring after 22 years of service to PERSI. After months of searching,the retirement board interviewed candidates from a short list the first week of September.
Each candidate had wonderful credentials, the PERSI newsletter indicates. “But Don stood out because of his:
Experience dealing with the Idaho Legislature
Knowledge of the pension industry
Executive level experience
Familiarity with the PERSI staff
Motivational leadership style
Vision for PERSI’s future
Understanding of the job
Accounting/business administration degree"