Archive for Friday, July 26, 2002

Market woes hit public pension funds

July 26, 2002


— Pension funds for state, school and city employees have taken sharp hits because of the stock market's plunge, but benefits for current and future retirees are in no danger, fund managers say.

The value of the state's retirement fund has fallen to $8.9 billion, down 16 percent from its peak in June 2000.

The drop includes money paid out to retirees as well as the market losses.

"We're certainly suffering along with the rest of the market, but it has not had an impact on our business of paying benefits, nor will it," said Rob Woodard, chief investment officer for the Kansas Public Employees Retirement System.

Woodard said the bear market would not require state and city governments or their employees to increase contributions to keep the funds viable.

About 56,000 retirees and 2,500 disabled workers receive benefits from KPERS, which covers state, school district and most local government employees.

An additional 177,000 current or former employees are vested in KPERS, which was set up in 1962. The plan pays out $551 million a year in benefits.

Woodard said he was disturbed by recent corporate accounting scandals that have shaken investor confidence in the stock market.

However, he said, KPERS' investments are widespread enough that trouble at any one company poses no threat to the overall system.

KPERS, for example, lost about $1.2 million when Enron collapsed less than a hundredth of a percent of the fund's value.

Commenting has been disabled for this item.