Indiana pension fund assets grow to record high

Indiana's pension fund for public employees and teachers has grown to a record high of $30.2 billion in assets thanks to "a great year" of returns on its investments, the fund's leader says.

The pension fund's investment return for the 2014 budget year that ended June 30 was 13.7 percent — or more than double the 6.75 percent target, said Steve Russo, the executive director of the Indiana Public Retirement System.

"It was a very good, and some might say, a great year," Russo told the Legislature's Pension Management Oversight Committee last week.

With its 11-percent growth in net assets over 2013, the fund's growth in net assets means the combined funded status of Indiana's seven pre-paid pension programs for state and local public employees and teachers now stands at 88.9 percent, up from 85.3 percent.

Pension experts generally consider a funding ratio of at least 80 percent satisfactory to meet future payment obligations, The Times of Munster reported.

Russo said Indiana public employers paid 99.4 percent of their actuarial determined contributions last year.

Nearly 1 in 10 Hoosier adults are INPRS members. Fifty percent of those individuals are still working but qualified for a pension, 29 percent are receiving benefits, 14 percent are inactive and not qualified for a pension and 7 percent are not working in a government job but are pension-eligible.

Indiana's pension program is known as a hybrid plan because it features both a modest employer-paid pension and an employee-owned but state-managed annuity savings account to which employees must contribute at least 3 percent of their annual salaries.

INPRS assets have grown by $13 billion since the 2009 low point for the stock market.

Russo said Indiana remains on track to cover its obligations in the pay-as-you-go teachers retirement fund that was closed to new members in 1995.

State appropriations to fund that plan are set to grow 3 percent a year from $776.3 million in 2014 to an estimated $841 million in 2017 before peaking at $1.1 billion in 2029.

Required state funding then gradually will shift to the $2.6 billion pension stabilization fund, made up in part of Hoosier Lottery profits, that will cover pension benefits until there are no more participating retired teachers.