State employee retirement, state investments topics before a Legislative committee

May 3, 2018

North Dakota's Public Employees Retirement System is looking toward the future -- and some potential funding challenges.

"We're currently funded at about 70 percent," said PERS acting executive director Sharon Schermeister. "Our goal is to be at 100 percent."

Schermeister said to get there, PERS has come up with some options. One of them would be to implement the fourth part of a recovery plan, begun in 2011, after PERS went through some challenges in its investments.

"The fourth year of that recovery plan would mean a one percent contribution increase for the employers, and an additional one percent from the employees," Schermeister said. "That would take the contribution level to 7 percent for the employees, and the employer share would be 7.12 percent."

But Schermeister said the state is in a different environment now than it was inn 2011 -- in that the state has been facing a challenging budget picture.

"It's difficult for the state to commit to that extra one percent," Schermeister said. "And from an employee's standpoint, the fact that they didn't get pay increases for this two year period, make it more difficult to get their support, looking for a one percent pay reduction to pay into the retirement plan."

PERS has proposed some other options, which would mean some reduced benenfits. That would include reducing the retirement multiplier for new hires, and reallocating the employer contribution for health insurance to the general funding pool.

The Legislature's

Credit ND Retirement and Investment Office

Employee Benefits Committee will look at the options.

Meanwhile, investments controlled by the State Investment Board continue to do well.

State Chief Investment Officer David Hunter said 2017 was a great year.

"The pension plans earned over 17 percent," Hunter said. "The Legacy Fund earned over 14 1/2 percent. And just about every one of our clients beat their benchmarks, which was great."

Hunter said so far, fiscal 2018 is looking good, too.

"The PERS and TFFR (Teacher's Fund for Retirement) plans are up over 8 percent so far," Hunter said. "Our long-term goal is 7.75 percent, so anytime we're above that for PERS and TFFR, it's good."

The Investment Board now oversees #13 billion. About half of that is the Legacy Fund.