State Pension System Reports Record-Setting Earnings

Fund grows more than $13 billion to nearly $68 billion.

The Board of Trustees of the Maryland State Retirement and Pension System (MSRPS) announced that its portfolio returned a record-setting 26.7%, net of fees, on investments for the fiscal year that ended June 30, 2021.

The fiscal year earnings far exceeded the System’s 7.40% assumed actuarial return rate and surpassed its policy benchmark of 24.41 by 230 basis points. In addition, the fund’s performance raised the System’s assets to $67.9 billion, an increase of $13.3 billion over the prior fiscal year.

Source: MSRPS

The fund’s performance over 10-year, 5-year, 3-year, and 1-year periods is above the 7.4% return assumption at 8.2%, 10.7%, 11.8%, and 26.7%, respectively.

Half of Maryland’s counties participate in the State’s pension system, and the other half support their employees through local pension systems.

“It was an extraordinary year for the performance of System assets, the best in 35 years,” said Andrew C. Palmer, Chief Investment Officer. “The attractive investment opportunities provided by the pandemic and subsequent monetary and fiscal policy responses are apparent in the rearview mirror but were not always clear in real-time. Fortunately, working with the Board and the investment staff, the System was able to fully participate in the very strong returns available in most markets. Importantly, the System maintained its moderate risk posture and portfolio implementation, resulting in impressive risk-adjusted returns as well.”

Board Reduces Actuarial Assumed Rate of Return

The Board also voted to reduce the System’s actuarial assumed rate of return on its investments from 7.40&% to 6.80%. The System’s lower rate will become effective July 1, 2022.

“The Board is committed to improving the strength of our retirement System and sustaining the State’s promise of a secure retirement for its members,” said State Treasurer Nancy K. Kopp, Chair of the MSRPS Board of Trustees. “The Board has taken this action in recognition of ongoing changes in the financial markets, even as the System continues to achieve the investment returns required over the long term.”

The Board based its decision upon an analysis by its actuary, Gabriel Roeder Smith & Company (GRS).

Visit the MSRPS website for more information.

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