CEO says pensions are safe

September 17, 2008

Donna M. Mueller, CEO of IPERS, wants all IPERS members and their families to remember IPERS benefits are secure, regardless of the current turmoil in the stock market.

“IPERS is a retirement plan that uses a formula to set your benefits,” said Mueller. “The stock market does not change the formula. We can and will continue to pay all the benefits we have promised.”

Mueller said that although the financial markets are troubling, IPERS is not panicking. IPERS is a long-term investor with a portfolio that mixes many types of investments. A diversified portfolio limits the impact when any one company fails.

“The companies currently in the news are included in all the major domestic and global market indices. This has resulted in negative returns across all markets and in our portfolio,” said Mueller. “But because we are a large fund that is highly diversified, our losses are small. Our preliminary estimate of losses due to Lehman Brothers is only two-tenths of one percent.”

In a defined benefit plan such as IPERS, the investment gains and losses are shared by everyone in the pool. The entire fund is managed to pay present and future benefits. People’s benefits are not contingent on the investment return on the day they retire.

IPERS’ one-year return as of June 30, 2008, was negative 1.33 percent, but the annualized five-year return as of June 30, 2008, was positive 10.14 percent.