Connecticut's other post-employment benefits trust fund generated a risk-adjusted return, net of expenses, of 6.45% for calendar year 2013, according to state Treasurer Denise Nappier, who said it surpassed the fund's actuarially assumed rate of return of 5.7%.
The fund's performance helped propel the overall value of the fund to $127 million as of Dec. 31, 2013, the highest market value it has ever posted, Nappier said in a March 27 statement. Buoyed by strong equity gains, according to Nappier, the fund's overall investment return added a gross $7.1 million of market value to assets in 2013; net of management expenses, it added $6.9 million.
"Since 2008, we've gone from zero to $127 million in assets: in my view, a good start," said Nappier. "The state's obligation to pay retiree health benefits is considerable, though. And if we are to meaningfully invest these assets over the long term, the state must establish a clearer funding policy and prohibit benefit payment withdrawals, until such time as the fund has accumulated enough assets to ensure preservation of its principal."
In January 2013, Nappier directed the transfer of the assets of the OPEB trust fund from the state's short-term investment fund to the Connecticut retirement plans and trust funds, and after a comprehensive asset allocation and liability study conducted in consultation with the state's independent investment advisory council, a long-term investment strategy was implemented.
Fund assets are now diversified across global equity, fixed income and alternative asset strategies.
