Fla. pension fund drops nearly 19 percent

Florida’s public employee pension fund lost $27.2 billion, or nearly 19 percent of its value, during a tumultuous year in the financial markets, the state’s top investment official said today.

Although underfunded for the first time in 12 years, the retirement fund remained relatively healthy at $99.7 billion when the fiscal year ended on June 30, said Ash Williams, executive director of the State Board of Administration.

“We were fortunate to enter the most dramatic decline in the history of modern financial markets in better shape than most pension funds,” Williams said. “So, in relative terms the fund remains in solid shape with a funding ratio that may be the envy of many public pension funds.”

Florida’s fund has 93 percent of what it needs to fully cover everyone entitled to a pension, including teachers and other state and local government employees. That’s down from a 106 percent funded ratio at the start of the fiscal year, but still more than enough to pay benefits to those now retired.

In 2007, Florida was one of only seven states with a ratio of more than 100 percent in their public pension funds. The 50-state average was 83 percent.

Although ahead of its five-year and 10-year performance benchmarks, the fund missed its target by 1.07 percent the last year.

Florida’s pension fund was underfunded for 25 years from its inception through 1997. Its first surplus came in 1998 when it reached 106 percent and it peaked at 118 percent in 2000.

During the past year the fund underperformed in fixed income, private equity and strategic asset classes while real estate, domestic and foreign equities exceeded their benchmarks.

“We are certainly glad this difficult year is behind us, and I believe we are well positioned to benefit from the recovery,” Williams said.

The three-member Board of Administration, chaired by Gov. Charlie Crist, is responsible for various state investments but the pension fund is its largest account.