Office of Program Policy Analysis and Government Accountability
Office of Program Policy Analysis and Government Accountability

Retirement Fund Investments Decline with the Economy But Still Meet Several Performance Benchmarks; SBA Must Improve Communication with Its Stakeholders

Report 09-16, March 2009




Report Summary

Nationwide, pension plan investment returns are falling, and Florida Retirement System (FRS) investment returns are consistent with this trend. Short-term losses will likely continue until the economy rebounds. However, in the context of the global economic downturn, the State Board of Administration's investment results have generally outperformed other public and private institutional pension funds. While both the pension and investment plans lost more than 4% of their value in Fiscal Year 2007-08, the most recent FRS actuarial valuation shows the pension plan was sufficiently funded to pay plan participant benefits.

Although the board has several procedures in place to help ensure appropriate oversight of FRS funds, independent consultants report that these procedures need to be strengthened. In particular, the board has lacked an independent compliance function and needs better internal controls that segregate its management and oversight functions. The board is working to correct these deficiencies. In addition, the board needs to improve its accountability to stakeholders through better communication of its investment results, activities, costs, and the pension plan's future funding needs.


Related Reports
  1. Florida Retirement System Funds and Investment Returns Declined with the Economy; the SBA Reports That Its Investment Strategy Is Designed to Withstand Losses
    Report 10-19 February 2010
  2. Several Options Are Available for Modifying the Florida Retirement System's Class Structure to Reduce System Costs
    Report 10-15 January 2010
  3. Economically Targeted Investment Program Under Development
    Report 08-72 December 2008
  4. Use of Investment Returns Has Increased; Plan for Addressing Associated Risks Should Be Documented
    Report 06-68 November 2006
Copies of this report in print or alternate accessible format may be obtained by email OPPAGA@oppaga.fl.gov, telephone (850) 488-0021, or mail 111 W. Madison St., Room 312 Tallahassee, FL 32399-1475.
Copies of this report in print or alternate accessible format may be obtained by email OPPAGA@oppaga.fl.gov, telephone (850) 488-0021, or mail 111 W. Madison St., Room 312 Tallahassee, FL 32399-1475.
State Board of Administration, SBA, Florida Retirement System, Defined Benefit Plan, Pension Plan, Defined Contribution Plan, Investment Plan, Funding Status