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SD Retirement System assets hit record high

Chet Brokaw, Associated Press

PIERRE, S.D. (AP) -- The South Dakota Retirement System's assets have grown to a record high of more than $9 billion after earning 19.5 percent on investments in the past fiscal year, officials said Monday.

The system's assets peaked at about $8.2 billion in 2007 and then plummeted during the recession. Those assets had risen to more than $9 billion by June 30, up more than $1.5 billion for the fiscal year.

South Dakota Investment Council Chairman Hugh Bartels, of Watertown, said the Investment Office staff in recent years has posted some of its best investment returns in the Retirement System's 40-year history.

"The staff for the last four years have hit home runs every year. This year, they hit a grand slam walk-off home run," Bartels told a legislative committee.

Bartels told the Executive Board, which handles management issues for the Legislature, that final numbers are not yet complied, but the South Dakota Retirement System's investment return for the past year is expected to be tops in the nation among similar state pension plans.

Retirement System Director Rob Wylie said unofficial records indicate the system ended the past fiscal year about 103 percent funded. That means the South Dakota system's assets are about 103 percent of all future potential future benefits to be paid to retirees in state and local government agencies, he said.

The system's good financial health means pension payments should increase by 3.1 percent on July 1, 2014, the maximum allowed by state law. When the system is fully funded, pension payments increase by 3.1 percent the following year. Because it was only 93 percent funded in June a year ago, benefit payments this July rose by only 2.1 percent.

The legislative committee endorsed the Investment Council's proposed budget for next year, which includes a plan to give investment staff a chance to earn larger bonuses for good results that outperform industry averages. Investment staff now can earn bonuses of up to 100 percent of their base salaries. The change would allow them to earn performance bonuses of up to 200 percent of their base salaries.

The bonus system is based on an assumption that investment staff will earn on average only 40-50 percent of the maximum bonus available. The change in the bonus system is needed to retain staff by getting their total pay closer to what they would earn if they worked for a private investment company, Bartels said.

Based on last year's investment performance, the legislative committee also approved a $372,550 bonus for state Investment Officer Matt Clark to be added to his base salary for heading up the agency. The bonus amounts to about 96.4 percent of Clark's base salary of $386,647 in the last fiscal year.