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MONTGOMERY, Alabama – Investment returns of the Retirement Systems of Alabama’s second-biggest pension fund compared well nationally for the six months that ended March 31, but not for longer periods, reports show.

The Employees’ Retirement System on March 31 held $9.05 billion in stocks, bonds and other assets. It provides pension coverage for about 58,000 active and retired employees of non-education state agencies and about 80,000 active and retired employees of cities, water boards and other local governments or boards statewide.

The Employees’ Retirement System posted an investment return of 12.21 percent for the six months that ended March 31.

That was better than the median six-month return of 10.56 percent for 60 public pension funds, each with more than $1 billion in assets, surveyed nationwide by State Street Investment Analytics, a division of State Street financial services corporation in Boston: Half had higher returns than the median and half had lower returns.

But for the year ending March 31, the Employees’ Retirement System (ERS) posted a return of 12.96 percent, less than the State Street national median of 13.99 percent.

The average annual investment return over three years was a loss of 0.24 percent for the ERS and a gain of 3.06 percent for the State Street median.

For the 3-year, 5-year and 10-year periods ending March 31, the average annual investment returns for the ERS trailed those of more than 90 percent of the pension funds surveyed by State Street.

Investment returns matter, since weak returns can cost taxpayers’ dollars: In general, if average annual returns fall below 8 percent, state and local governments pay more to keep the pension fund sound, but if returns exceed 8 percent, the governments pay less.

The state in this fiscal year is budgeted to pay $191.1 million to the ERS for pension coverage of state employees and retirees. That’s an increase of 110 percent from what it paid five years earlier.

ERS board member and state Treasurer Young Boozer said he was encouraged by the six-month results. ”I wish we had done better in the past, but we didn’t. But we’re doing better now and hopefully in the future,” Boozer said.

Returns for the Teachers’ Retirement System, the Retirement Systems of Alabama’s biggest pension fund, were similar to those for the ERS, said Marc Green, RSA’s chief investment officer. The TRS board of control on June 3 is scheduled to review its system’s results. The ERS board reviewed its system’s results today.

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