Oregon PERS Information is Copyright Marc R. Feldesman (c) 2003 - 2017 All Rights Reserved. Posts may not be reprinted without prior consent.
Please don't post your comments more than once. I moderate all comments and a delay between posting and appearing is part of the drill here. I get to all comments in due time. Please don't continually repost the same comment. Only one will be posted.
Thursday, July 20, 2006
Thursday, July 06, 2006
In 2005, the variable simple earned less than the regular Tier 1 or Tier 2 accounts. This is because the variable is invested in a different pool than the other accounts. The variable pool is a more aggressive mix of equities. In a good year - as last year was - the variable *usually* does better than the regular, which is why there is so much confusion. Unfortunately, while last year was a good year, it was also an unusual year. It parallels a few earlier years in the mid-1980's when the regular outperformed the variable on a pure earnings basis. PERS is not holding back any earnings from the variable. It distributes what is earned. Read PERS' financial pages carefully. You won't find a shred of evidence that the variable earned any amount other than 8.29%. But if you read the summary page, you can be misled into thinking it SHOULD have earned more. You're reading more into the page than is there. Read it carefully.
Wednesday, July 05, 2006
Note added at 7 p.m. Not so fast is this the end of the story. Apparently the problem is a bit more complex and requires a clear statement from PERS about what is going on. According to PERS' website, the 2005 financials include the December earnings rate for the variable at 13+%. Since the December earnings are typically within a fraction of a percent of the earnings paid out after end of year accounting, it is somewhat disconcerting to see a 5% difference between the stated December penultimate earnings figure and the actual figure of 8.39%. While I'm certain there is an explanation for this huge divergence, PERS has some big explaining to do. My note above still stands - the variable earnings are supposed to be actual earnings on funds more aggressively invested than the regular Tier 1 fixed account. This year something doesn't add up. Hopefully my contacts at PERS can provide some guidance on this disparity.
Note added even later: My bad. The original statement stands. PERS shows at its variable listing that the 2005 December earnings are indeed 8.29%, not the 13+ I reported earning. I apologize for the confusion. The variable really *did* earn less in 2005 than the regular for the reasons noted above.