Three large public pension plans in Minnesota have not only bounced back from dismal returns on their investments, but surpassed expectations in 2012, according to a state auditor's report.
The results could be another indicator of a rebounding economy. The report reviews the investment performance of three local retirement plans for public employees: the Bloomington Fire Department Relief Association, the Duluth Teachers' Retirement Fund Association and the St. Paul Teachers' Retirement Fund Association.
The combined net assets for the plans totaled $1.2 billion at the end of 2012, and the three had returns ranging from 12.5 to 15 percent. Compare these numbers with 2011, when each plan showed a return of less than 1 percent. The most recent numbers appear to be a return to normal.
The three plans are required by state law to report their investment information to the State Auditor, which oversees local governments. Other large statewide plans such as the Public Employees Retirement Association (PERA) and Teachers Retirement Association are not included in this report because they are overseen by the Legislative Auditor.
"It's very apparent the markets improved for 2012," State Auditor Rebecca Otto said, noting that's no guarantee of future returns. "No one has that crystal ball. Everyone always prays for strong market returns, but no one knows for sure."
Most of the contributions to the plans were made by employers and employees, but the state also pitches in.
Here's more from the auditor's report, by the numbers:
• Net assets stood at $882 million for the St. Paul Teachers' Retirement Fund Association; $194 million for the Duluth Teachers Association and $122 million for Bloomington Fire. Between good and bad years, the plans remained about average over the past decade.
• None of the three pension plans was fully funded. (Funding ratios are the balance of a plan's assets vs. its liabilities. A plan funded at more than 100 percent would have a surplus.) In 2012, Bloomington Fire was nearly there, with 98.7 percent funding, while St. Paul and Duluth Teachers were just above 60 percent. Still, all three exceeded their benchmarks, or expected goals.
• Bloomington Fire's pension plan showed a 12.6 percent investment return, exceeding its 11.1 percent benchmark. Duluth Teachers returned 15 percent, bettering its 12.3 percent benchmark. Only St. Paul Teachers fell short of its 13.2 percent benchmark with a 12.5 percent return.
• Employers and employees contributed $43 million to the plans in 2012. St. Paul Teachers received the bulk of the state's nearly $4.6 million in contributions.
• The average member of the Bloomington firefighters pension fund contributed $7,120 annually, with retired beneficiaries receiving an average of $24,206 annually. Duluth Teachers contributed $1,884, with an $18,000 average payout. For St. Paul Teachers the average member contribution was $3,760 annually, with a $31,205 payout for retirees.
• Compare those values to the number of members in each. St. Paul Teachers: 10,432 members. Duluth Teachers: 3,355 and Bloomington Fire: Just 311 members.
You can read the full report at http://bit.ly/1iVLiFj.
The week ahead
Attorneys will argue motions at 9 a.m. Wednesday in a lawsuit filed last fall by former Republican State Rep. Jim Knoblach challenging a proposed $90 million Senate office building and parking facilities.
