The Arkansas Judicial Retirement System's investments increased in value by $5.6 million to $233.1 million during this past fiscal year as the Arkansas State Highway Employees Retirement System's investments declined by $48 million to $1.44 billion.
The judicial retirement systems's investment return was 5.06 percent in the fiscal year that ended June 30, while the highway employees retirement system's investment return was 2.29 percent, officials for the two systems said.
Gail Stone, executive director for the judicial retirement system, said the system's investment return in fiscal 2015 ranked in the top 10 percent of the returns for public retirement systems with less than $1 billion in assets, while the median return for such systems was 3.17 percent. The system's investment return of 11.57 percent a year over the past five years ranks among the top 25 percent of similar systems, she said.
Larry Dickerson, executive secretary for the highway employees retirement system, said the value of the system's investments declined in fiscal 2015 because the system's costs for retirement benefits and other expenses exceeded the system's income from investment gains and the amount paid into the system by employees and the state.
Dickerson said he didn't know how his system's returns measured up to other comparable systems.
Figures on the investment performance of state government's two largest retirement systems -- the Arkansas Teacher Retirement System and the Arkansas Public Employees Retirement System -- will be available during the next few weeks, officials for the two systems said.
The Arkansas Judicial Retirement System's investment portfolio included $90.8 million in domestic stocks, $80.3 million in bonds, $34.1 million in international stocks and $17.8 million in real estate at the end of fiscal 2015, according to the Chicago-based investment consultant Callan Associates.
The trustees last week voted to reduce the system's projected annual investment returns from 7.25 percent to 6.25 percent at the recommendation of actuary Gabriel, Roeder, Smith & Co. of Southfield, Mich., Stone said.
Stone explained that "10-year capital market predictions from a basket of 8 different public fund investment consultants did not support a 7.25 [percent investment] return, given the AJRS fund's very conservative asset allocation."
Ten-year bonds are projected to return approximately 2.5 percent a year for the foreseeable future, and the judicial retirement system has an investment allocation of 40 percent to bonds, she said, so the board lowered the projected investment return to be more in line with the likely future outcomes of its investment portfolio.
The judicial retirement system included 140 working members with an average annual salary of $141,297 and 124 retirees and beneficiaries who received $10.11 million in retirement benefits (an average annual benefit of $81,608) in fiscal 2014, according to Gabriel, Roeder, Smith & Co.
The state paid about $6.1 million into the system in fiscal 2014, while the system's members paid $925,324 into the system, Gabriel reported.
The system's unfunded liabilities totaled $6 million at the end of fiscal 2014 with a projected payoff period of 29 years, Gabriel said.
Actuaries often compare unfunded liabilities to a mortgage on a house. Unfunded liabilities are the amount by which the system's liabilities exceed the value of its assets.
The system's figures for fiscal 2015 won't be available until November, Stone said.
The highway employees investment portfolio included $1.1 billion in domestic stocks, $197.2 million in bonds, $122.9 million in cash and short-term investments, and $1 million in foreign stocks at the end of fiscal 2015, said Dickerson.
The system has a projected annual investment return of 8 percent, he said, and system officials will discuss its projected return again this fall after they receive an actuary report for fiscal 2015.
Dickerson said the system had 3,524 working members with an average annual salary of $43,015 in fiscal 2014 and 3,162 retired members and beneficiaries with an average annual benefit of $23,342.
The state paid $19 million into the system in fiscal 2015 while the system's members contributed $9.1 million, Dickerson said.
The system's unfunded liabilities totaled $137.2 million as of June 30 with a projected payoff period of 23.2 years, he said.
Metro on 08/11/2015