PIERRE, S.D. (AP) — The South Dakota Retirement System has recovered all its losses from the nation's economic downturn, putting it on track to be fully funded to cover future benefit payments, officials said Wednesday.
Investment earnings have allowed the system's assets to grow more than 23 percent since the state budget year began July 1, State Investment Officer Matt Clark told the system's board of trustees. Gains in stocks and other investments have pushed the system's assets to about $7.8 billion, he said.
Rob Wylie, executive director of the Retirement System, said if those investment gains hold through June 30, the annual date for measuring the system's financial condition, the system will be fully funded. That means the system's assets would be at least 100 percent of the value of all potential future benefits to be paid to retirees.
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The recovery is the result of investment returns and benefit changes approved by the Legislature at the Retirement System's request, Wylie said.
"It's taking us to a number today I don't think any of us expected to see at this point in time," Wylie said.
Clark said the State Investment Office, which manages the Retirement System's assets, has outperformed all other similar pension funds since the economy started to recover.
"For the two years coming out of the crisis, we're the top-performing fund," Clark said.
The system's assets peaked at $8.2 billion before the national recession, and investment returns have now recovered all losses, Clark said. Assets are below that peak value because of benefits paid out in the past few years, he said.
The system has more than 70,000 members, most of whom are still working. It includes employees of state government, cities, counties and school districts. The system pays retirement benefits of more than $300 million a year.
After the Retirement System assets hit a peak, they fell to $7.3 billion in June 2008. In the midst of the recession, the fund lost 20.4 percent of its value to end June 2009 with assets of $5.6 billion. After gaining 18.7 percent on investments a year ago, the system had assets of $6.5 billion in June 2010.
At the Retirement System's request, the 2010 Legislature limited annual inflationary increases in retirement benefits. The change set the annual cost-of-living increase in benefits at 2.1 percent initially, down from 3.1 percent. The annual increase now can vary between 2.1 percent and 3.1 percent as inflation and the system's financial condition change in future years.
The Board of Trustees has already set the inflationary increase at 2.1 percent for the year beginning July 1 this year.
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