November 29, 2022

Pension Fund ‘Solid' Amid Market Volatility

Florida’s pension fund remains “solid” despite growing pressure from global market conditions, Lamar Taylor, interim executive director of the State Board of Administration, said Wednesday.

Overseeing about $250 billion in assets, the board invests money from the Florida Retirement System, along with 25 other funds, and manages the Florida Hurricane Catastrophe Fund.

Taylor, in a brief conference call with Gov. Ron DeSantis, Attorney General Ashley Moody and Chief Financial Officer Jimmy Patronis, said overall assets handled by the board are down 6.25 percent from the start of the current fiscal year, which will end June 30.

The pension fund is off $18.8 billion. While part of the decline is a result of $600 million a month in benefit payments, economic conditions, including inflation, are a major factor.

“What’s driving this performance is a significant repricing of risk in the public market space,” Taylor said.

Amid rising interest rates and inflation, Taylor said it’s important to maintain exposure through “real assets,” such as real estate, commodities, infrastructure and energy.

DeSantis, Moody and Patronis, sitting in their role as the State Board of Administration, said little throughout the 15-minute call.

Asked after the call about the condition of the pension fund, Taylor said, “We don’t know that there is going to be a recession, but there is definitely some pressure in the market as the market is repricing, based on these higher interest rates.”

Asked if state employees should be concerned, Taylor replied, “You have nothing to worry about.” He described the fund as “solid” and said the state invests long term.

“Last year, we had almost a 30 percent return,” he said. “Of course, we knew that was not going to be what you’d see year to year. So, we expect volatility, and we plan for that in our asset allocation. I think we are in good shape.”

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