Thanks to Private Equity, Pensions Across America Report Record-Breaking Returns
Throughout the summer, pension funds across the country reported on their returns for the fiscal year 2021. As Chief Investment Officer Magazine recently reported “private equity is consistently the top-performing asset class” within many pensions’ portfolios. In fact, pensions in Nevada, Iowa, Florida, Tennessee, and Massachusetts reported annual returns from private equity of over 60%.
American Investment Council President & CEO Drew Maloney issued the following statement discussing the critical role private equity investments play in supporting public pensions nationwide:
“Throughout the COVID-19 pandemic, private equity’s robust returns helped pensions around the country meet their obligations to public servants. A new 98% tax increase on private equity, real estate, and venture capital would hurt the very retirees that public officials are trying to help. The FY 2021 pension returns demonstrate that private equity is a responsible way for pensions to diversify their investments and help their beneficiaries.”
Please read the excerpts below to learn how private equity has delivered robust returns and helped strengthen the pensions of teachers, firefighters, and other public servants throughout the COVID-19 pandemic.
FLORIDA + 68.5%
- PENSIONS & INVESTMENTS: Florida posts 29.5% for fiscal year, surpassing its benchmark
“Florida Retirement System, Tallahassee, returned a net 29.5% for the fiscal year ended June 30, said a report posted on the website for the Florida State Board of Administration, which oversees the money management of the $199.6 billion pension fund. … By asset class, private equity led the way with a net return of 68.5% (above its benchmark return of 44%).”
IOWA + 68.3%
- PENSIONS & INVESTMENTS: Iowa Public Employees tops benchmark with 29.6% return
“Iowa Public Employees’ Retirement System, Des Moines, returned a net 29.6% for the fiscal year ended June 30, confirmed Greg Samorajski, CEO for the $42.9 billion pension fund. The net return was just above its policy benchmark return of 28.8%. … By asset class, the pension fund reported private equity returned a net 68.3% for the fiscal year.”
NEVADA + 67.8%
- PENSIONS & INVESTMENTS: Nevada Public Employees returns 27.3% for fiscal year, above its benchmark
“Nevada Public Employees’ Retirement System, Carson City, reported a gross return of 27.3% for the fiscal year ended June 30, according to an investment report posted on pension fund’s website. The investment return exceeded its policy benchmark of 25.6%. … Private equity was the pension fund’s top-performing asset class, posting a gross return of 67.8%.”
TEXAS + 55.4%
- PENSIONS & INVESTMENTS: Texas County posts 33.7% gain for year
“The $40.7 billion Texas County & District Retirement System, Austin, returned a net 33.7% in the year ended June 30, surpassing its 31.1% benchmark return, a performance report showed. … Net returns by asset class were led by private equity, 55.4%;equities, 42.7%; real assets, 32.3%; hedge funds, 23.9%; credit, 22.3%; investment-grade bonds, 1.5%; and cash, 0.1%.”
- PENSIONS & INVESTMENTS: Texas Employees’ 29.1% return surpasses benchmark
“Texas Employees Retirement System, Austin, returned a net 29.1% for the year ended June 30, exceeding the 20% return of the policy benchmark, an investment report showed. … Asset class returns for the year ended June 30 were led by the system’s private equity portfolio which returned 45.1%.”
MASSACHUSETTS + 72.2%
- PENSIONS & INVESTMENTS: MassPRIM surpasses benchmark with 30% gross annual return
“Massachusetts Pension Reserves Investment Management Board, Boston reported a gross 30% return in the fiscal year ended June 30, outperforming the pension fund’s benchmark of 20.6% for the year.
The return is the highest in the $95.7 billion pension plan’s history. … By asset class, private equity returned a gross 72.2% in fiscal 2021, followed by global equities at 42.4%; value-added fixed income, 18.5%; real estate, 17%; portfolio completion strategies, 15.6%; timber, 8%; overlay, 3.1%; and core fixed income, -0.8%.”
- BOSTON GLOBE: State’s pension fund posts its biggest investment gain ever
“The pension fund for more than 300,000 state employees, teachers, and other municipal workers rung up its best year ever, as financial markets continued to climb following an early 2020 meltdown caused by the outbreak of COVID-19. The Massachusetts Pension Reserves Investment Management Board said Tuesday that the retirement pool’s net investment return for its recently ended fiscal year was 29.5 percent, the highest since its creation in 1986. In dollar terms, the Massachusetts fund’s investments produced a gain of $22.1 billion, or $6.7 billion more than its benchmark, which is a way to measure how it performed compared with market indexes. PRIM’s private-equity portfolio led the way with a return of 70.5 percent, said Michael Trotsky, executive director and chief investment officer.”
WASHINGTON + 55.5%
- PENSIONS & INVESTMENTS: Washington Board’s Commingled Trust Fund Returns Net 28.7%
“Washington State Investment Board’s $142.5 billion commingled trust fund of defined benefit plan and defined contribution plan assets returned a net 28.7% for the fiscal year ended June 30. The trust fund’s return exceeded its benchmark return of 27.7% for the period, an investment report on the Olympia-based board shows … For the most recent fiscal year, private equity was the best-performing asset class with a net return of 55.5% for the year ended June 30th.”
NEBRASKA + 54.5%
- PENSIONS & INVESTMENTS: Nebraska Investment Council Records 29.9% Return For Fiscal Year
“The five defined benefit plans overseen by the Nebraska Investment Council, Lincoln, returned a net 29.9% for the fiscal year ended June 30. The plans, which have a combined $16.4 billion in assets, exceeded their 26.3% benchmark … For the most recent fiscal year, the best performing asset class was private equity, with had a return of 54.5%”
OREGON + 44.12%
- PENSIONS & INVESTMENTS: Oregon Public Employees registers 25% return for fiscal year
“Oregon Public Employees Retirement System, Tigard, returned 25.54% on its investments for the fiscal year ended June 30, underperforming its 26.89% benchmark. … The best performing asset class for the one-year period was private equity at a 44.12% internal rate of return, followed by public equity with 42.66%. It’s opportunity portfolio earned 31.52%, risk parity returned 21.51%, alternative investments, 11.48%, real estate at 8.18%, total fixed income with 1.27% and cash with cash overlays at 0.48%.”
MARYLAND + 51.85%
- CHIEF INVESTMENT OFFICER MAGAZINE: Private Equity Powers Record-Breaking Pension Returns
“The $67.9 billion portfolio for the Maryland State Retirement and Pension System (MSRPS), which also recently reported a record fiscal year return of 26.7%, was also led by its private equity investments. The asset class earned 51.85% for MSRPSduring the year, compared with its public equity investments, which returned 44.54%.”
ILLINOIS + 55%
- PENSIONS & INVESTMENTS: Chicago Teachers chalks up 28.7% return for fiscal year
“Chicago Public School Teachers’ Pension & Retirement Fund posted a net return of 28.7% for the fiscal year ended June 30. The $13.1 billion pension fund’s return exceeded its benchmark of 27%, Chief Investment Officer Angela Miller-May confirmed in an email. … For the most recent fiscal year, private equity led all asset classes with a net return of 55% for the year ended June 30.“
NEW MEXICO
- CHIEF INVESTMENT OFFICER MAGAZINE: New Mexico Pension Posts Highest Returns in 36 Years
“The New Mexico Educational Retirement Board (NMERB) reported its best performance in 36 years, as its investment portfolio returned 28.76%, or $3.6 billion, in fiscal 2021 to increase its asset value to $15.8 billion. … The strong performance was led by the portfolio’s private equity investments”
CALIFORNIA + 54.7%
- PENSIONS & INVESTMENTS: Los Angeles Water & Power generates 26.5% fiscal-year return
“The $19.6 billion Los Angeles Water & Power Employees’ Retirement Plan earned a net 26.5% for its fiscal year ended June 30, outperforming its 25.2% benchmark. … The pension plan’s top-performing asset class for the fiscal year was private equity with a 50.1% return.”
- PENSIONS & INVESTMENTS: University of California endowment returns nearly 34%
“University of California’s office of the chief investment officer reported its pension fund earned a net return of 30.5% and its general endowment pool returned 33.7% for the fiscal year ended June 30. … The pension plan’s top-performing asset class for the fiscal year were private equities at 54.7%.”
KENTUCKY + 38.66%
- PENSIONS & INVESTMENTS: Kentucky Teachers chalks up nearly 30% return
“Kentucky Teachers’ Retirement System, Frankfort, returned a gross 29.94% for the fiscal year ended June 30, spokesman Gregory A. Hall said in an email. The $25.7 billion pension fund’s return exceeded its policy benchmark return of 28.65%. … By asset class for the fiscal year ended June 30 … private equity (returned) 38.66%.”
TENNESSEE + 75.76%
- CHIEF INVESTMENT OFFICER MAGAZINE: How Nashville and Davidson County Pension System Got 115% Funded
“For the first time since 2000, the $4.4 billion Metro Government of Nashville and Davidson County’s pension system in Tennessee is fully funded, with the plan finishing the fiscal year at 115% funded on a market value basis. The Nashville & Davidson County Metropolitan Government Employees Benefit Trust Fund was up 35.99% for the fiscal year ending June 31 while the benchmark was up 25.78%. … Private equity was up 75.76% versus the benchmark of 62.02%.”
MISSISSIPPI + 58.87%
- CHIEF INVESTMENT OFFICER MAGAZINE: Private Equity Powers Record-Breaking Pension Returns
“And for the Public Employees’ Retirement System of Mississippi, not only was private equity the top performing asset class during the most recent year, with a return of 58.87%, but it’s also the pension fund’s top performing asset class over the past three, five and 10 years, returning 24%, 21.72%, and 16.61%, respectively, on an annualized basis.”
