Texas Public Pension Funds Ride 2017 Stock Market to 11 Percent Returns

HOUSTON (April 29, 2018) – The U.S. stock market’s stellar performance helped Texas’ public employee pension funds average 11 percent returns in 2017, according to a survey performed by Maples Fund Services for the Texas Association of Public Employee Retirement Systems. The 63 systems responding beat the average target rate of 7.5 percent in both the one-year and 15-year periods.

“The pension systems for municipal employees, firefighters, and police officers are doing their job, lowering risk and raising returns with money entrusted to them by their cities for the deferred retirement benefits of their employees,” said Max Patterson, executive director for TEXPERS. “This continuing excellent performance is surely one of the reasons public employees demonstrated such dedication to duty during Hurricane Harvey, flocking to those areas hardest hit and mobilizing to aid distressed Texans.”

TEXPERS’ yearly “Report on the Asset Allocation and Investment Performance of Texas Public Employee Retirement Systems," released at its 29th Annual Conference for pension fund trustees and staff, shows that local systems made few changes to their asset allocations from 2016. Stocks comprise 48.7 percent of their holdings, with alternative strategies and fixed income accounting for the rest. The 63 survey respondents manage $57.10 billion in combined total assets.

The local pension funds continued lowering the rate they target for investment returns. The average rate was 7.5 percent, down from 7.6 percent in 2016, and 8.0 percent in 2013. Lowering the target rate reduces portfolio risk but also requires larger contributions from plan sponsors.

TEXPERS released the report to 560 pension Trustees, administrators, system members and investment professionals attending its "Casting the Net for Retirement Security” educational conference held April 15-18 on South Padre Island.

Patterson recognized the following standout systems for 20-year average performance for the period ending September 2017:

Big Spring Firemen's Relief & Retirement Fund    7.74%
Austin Firefighters’ Relief & Retirement Fund    7.20%

The nonprofit Texas Association of Public Employee Retirement Systems (TEXPERS) provides state-mandated and advanced training for trustees, administrators, professional service providers and employee groups and associations engaged or interested in the management of public employee retirement systems. Today, TEXPERS' 75 member systems represent approximately 2 million active and retired participants and roughly $165 billion in assets.