Utah Retirement Systems Sees Highest Return on Investments in Decades  

The Utah Retirement Systems (URS) Defined Benefit Fund increased 13.57 percent or $3.33 billion for the year ended on Dec.31, URS General Counsel Dee Larsen told the Legislature’s Retirement and Independent Entities Interim Committee on May 23.  The gain brought the value of the fund to an all-time high of $31.9 billion; more than double what it was in 2008.During his presentation to lawmakers, Larsen said URS is still working to recover from the declines it suffered during the most recent recession. “There are a lot of numbers here that tell an important story,” he said. “I hope that one of the themes of this story is recovery.”

According to his presentation, which can be found here, the market value of defined benefitpPlan assets has increased from $15.9 billion in 2008 to $31.9 billion, with more than $12 billion paid out from the fund over that period.

URS attributes its success to Utah State Retirement Board members who, according to a statement from URS, have been “fiscally prudent and conservative as they set the [return on investment (ROI)] based on forward-looking capital market expectations.”

While these estimates don’t always translate into actual returns, they do affect the net pension liability for URS participating employers. If URS was currently using an assumed ROI of 7.95 percent, instead of 6.95 percent, the defined benefit plans would be more than 100 percent funded, with a $446 million net Pension asset. As of now, at the current assumed ROI, the plans are 90.3 percent funded.

Sheri Nelson, the Utah Public Employees’ Association (UPEA) representative on the URS board, said she believes URS is in a healthy position moving forward. “Whenever changes are made to the assumed rate of return, the Retirement Board carefully considers the impacts before making modifications,” she said. As a board, our main goal is to ensure we can meet our financial obligations to current and future retirees.”

Despite the past and current investment returns, URS recognizes the “investment headwinds” that may influence future returns. In a closing statement, Larsen said, “even with the lower assumed rate of return, the URS defined benefit plans are among the best-funded statewide plans in the country.”

 

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