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City retirement funds don’t escape downturn
Friday, February 27, 2009 by Michael Mmay
City staff members brought some grim, but not very surprising, news about the state of the city’s retirement funds to the Audit and Finance Committee on Tuesday. The three retirement funds (for general employees, police and firefighters) each lost around a quarter of their value in 2008. The only silver lining is that the struggling funds actually beat the market. In comparison, the S&P 500 lost 37 percent last year.
City Treasurer Art Alfaro put the losses in context. This was “the worst market conditions since the Great Depression,” the city was “not alone in its pain,” and the losses were “indicative of a turbulent market.” He had few words of comfort, except that “no one knows when the market will bottom out, but many experts predict that stocks will outperform bonds over the next 20-30 years.”
Steve Edmonds, the executive director of the City of
In 2008, the city hired a chief investment officer to manage the fund, which
The downturn won’t affect pensions or benefits paid out to employees, which are guaranteed by the Texas Constitution. It’s one advantage of this system over a 401k. But it could have an impact on future cost of living adjustments and funding levels. Knodel said they would be looking for input from Council on how to proceed. Council Member Sheryl Cole, who chairs the committee, asked the staff members to update the Audit and Finance Committee on a quarterly basis.
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